Updated Purchase Power Adjustment 2023
Over the past year, natural gas and purchased power prices have been extremely volatile and rose dramatically. Specifically, the market price of natural gas has been affected by many factors, on both the supply and demand sides of the equation. Conflict in Europe has created volatile energy markets and is putting upward pressure on natural gas prices. The natural gas markets are global and the demand for liquefied natural gas has risen dramatically over the past year. Sellers are currently able to demand a premium for their products and buyers; especially international consumer nations are willing to pay substantial premiums.
In addition, the post-COVID lockdown has seen demand increase as business production and consumer demand dramatically increased within the United States markets. Climate change has also affected demand as our climate becomes increasingly hotter. All of these factors have caused the market for natural gas to more than double.
Drought conditions have also affected GRICUA’s ability to replace or backfill its energy production with hydroelectric. GRICUA currently relies on natural gas fuel for 86% of its energy production. In the future, GRICUA will reduce its reliance on natural gas when future utility-scale solar projects come to fruition.
GRICUA’s Purchase Power Adjustment component on customer bills can be used to recover unexpected changes in the cost of purchased power as previously described. During this unprecedented time, the GRICUA Board monitored the changes in the cost of purchased power and chose to adjust the Purchase Power Adjustor in Fiscal Year 2022.
Unfortunately, as GRICUA’s Board has reviewed the Fiscal Year 2023 budget there will be a need beginning on October 1, 2022, to increase its Purchase Power Adjustor to $.028500 since GRICUA’s rates are still under recovering the cost of natural gas and purchased power. Please see below an example of an AVERAGE use Winter Bill and an AVERAGE use Summer Bill.
GRICUA has received notice that the monthly HEAP assistance program, which benefits residential customers, will be increased from $225 a month to $325. GRICUA believes that this benefit increase will be sufficient to cover the increase in the PPA for an AVERAGE residential customer.
Example of Winter and Summer AVERAGE bill:
| GRICUA | WINTER | JAN |
|---|---|---|
| WINTER | ||
| Customer | $15.00 | $15.00 |
| Energy (1st 500) | $0.09500 | $47.50 |
| Energy (next 1000) | $0.10500 | $73.50 |
| Energy (next 1000) | $0.11200 | $0.00 |
| Energy (all above) | $0.11300 | $0.00 |
| PPA (all kWh) | $0.02850 | $34.20 |
| Total Bill | $170.20 | |
| Winter Average | 1200 kWh |
| GRICUA | WINTER | JAN |
|---|---|---|
| Summer | ||
| Customer | $15.00 | $15.00 |
| Energy (1st 500) | $0.09500 | $47.50 |
| Energy (next 1000) | $0.10500 | $105.00 |
| Energy (next 1000) | $0.11200 | $67.20 |
| Energy (all above) | $0.11300 | $0.00 |
| PPA (all kWh) | $0.02850 | $59.85 |
| Total Bill | $294.55 | |
| Summer Average | 2100 kWh |
Should we begin to see that natural gas prices have substantially decreased GRICUA will reduce its Purchase Power Adjustor. GRICUA’s inflationary situation is not unique and is being experienced by most utilities and their customers across the region and the United States.
If you have any questions about the Purchase Power Adjustment or any questions about your electric bill, please call our Customer Service Department at (520) 796-0600.