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Polar Vortex Still Pushing Power Prices Up

Polar Vortex Still Pushing Power Prices Up

Summer heat has arrived, but the Polar Vortex of this past winter is still putting price pressures on electric bills.

The winter of 2014 brought the coldest temperatures seen in decades, and along with the frigid weather came record consumer demand for electricity.

According to Sam Houston Electric Cooperative CEO Kyle J. Kuntz, electricity demand by the Cooperative’s 52,000 members set an all-time high in January, and then set another new record in early March.

“When the weather turns extremely cold or hot for a prolonged period of time, consumers use more kilowatt hours, and electric bills naturally are higher,” Kuntz said. “Even though we’ve had a relatively mild spring, a number of factors are continuing to push wholesale electricity prices up. And when the price the Cooperative pays for wholesale electricity rises, those costs have nowhere to go but to our consumer-members.”

Kuntz said the main driver of higher wholesale electricity costs in recent months has been spikes in the price of natural gas, especially during the periods of extreme cold.

According to Kuntz, a perfect storm of sorts has occurred in the first months of 2014, with frigid temperatures, low natural gas inventories, and equipment malfunctions in April and May at coal and hydroelectric generating facilities that provide electricity for the Cooperative to deliver to its consumer-members.

To compound matters, when demand for electricity is high, coupled with the repair downtime at generating facilities, more power must be moved along the high-voltage transmission lines from Arkansas, through Louisiana and into Texas. This creates transmission congestion, which causes spikes in electricity prices as well.

“Some relief is anticipated by mid-June, but wholesale prices are still expected to be higher than normal through the summer,” Kuntz said. “We want our members to know that the Cooperative board and management are spending countless hours working to mitigate the effects of all these factors.”

“Sam Houston Electric Cooperative is a not-for-profit, member-owned organization. We understand the impact that higher prices have on family budgets, so our first priority is to look out for our members. And please keep in mind that energy conservation is one of the most effective ways we can all reduce our electric bills,” Kuntz added. “Over the coming weeks, we will continue providing information to our members, letting them know what we are doing on their behalf to keep costs, and electric bills, down.”