AUSTIN (KXAN) — Thousands of electric customers are about to see a temporary rate hike on their bills thanks to the February winter storm.
The Pedernales Electric Cooperative buys electricity from the Lower Colorado River Authority and distributes it to members. During the winter storm, demand increased and now the Co-Op has to pay off debt from the energy used.
“I sound like the old man complaining about the kids on his front yard,” said Greg Gibby, PEC Customer.
Instead of kids on his yard, it was the snow that piled up on Greg Gibby’s yard months ago. It’s now costing hum nearly $9 extra per month.
The increased rate comes out to $8.75 a month which is based on the average 1,250 kWh of use.
“We’ve lived here for 25 years and I feel like I’m being held hostage by this utility company,” said Gibby.
Gibby isn’t alone in that feeling.
“I think it’s absolutely ridiculous and unfair,” said Giovanna Cruz. “It was my understanding, unless I’m wrong, that the state was going to step in and prevent these rate hikes from taking place.”
As it stands, state lawmakers and regulators have not taken any action that would allow energy companied to recover the cost incurred due to the winter storm.
Pedernales Electric says the winter storm costs them $160 million — $20 million of that was recouped through a settlement with ERCOT, which runs the state’s grid. PEC borrowed the leftover $160 million to pay the bills, most of which went to the Lower Colorado River Authority.
According to the PEC’s recently asked questions, the utility says it should recover $10 million in storm response, restoration, equipment and system repair costs.
“We funded this debt and we are now in a position where we need to work that debt into our current credit rating,” said Randy Kruger, PEC Chief Financial Officer.
Randy Kruger says any damage to the Co-ops credit rating would mean more in the long run.
“Our suppliers look to credit ratings. Having good credit ratings allowed us to have more favorable terms,” said Kruger.
More electric companies could see these rate hikes, according to an energy expert with AB Power Advisors.
“Those could be lower and spread out longer. It could look more like 50 cents or $3 spread out over 30 years,” said Caitlin Smith, AB Power Advisors. “They got to the point where they had nothing else to do. These entities had to pay for energy during the storm. They probably tried to do that without leaning on customers and realize they must do it now.”
Smith says there’s an item in the special session regarding COVID relief funds, and it’s possible some of that money could be positioned towards storm relief.
KXAN’s Kaitlyn Karmout reached out to Bluebonnet, another Central Texas Co-Op to see if they plan to impose rate hikes.
The utility company said it has the capacity to absorb, mitigate and defer the impacts of costs from the February winter storm through existing financing options. Any future rate increase would be administered through the wholesale power portion of the rates, according to Bluebonnet Electric.
“We will determine how to spread the costs among our members so that it has minimal impact on them,” said a Bluebonnet spokesperson. “Bluebonnet has twice reduced power costs to members since 2019. We do not expect any cost increase as a result of the February storm to be more than those recent cost reductions.”