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CoServ answers your questions about higher electricity bills

By NICHOLAS SAKELARIS | CoServ

For 84 years, CoServ has prided itself on having an affordable electric rate along with excellent service and safe, reliable electricity.

That commitment continues today despite the current challenges in the energy market, particularly related to rising natural gas prices.

“CoServ has heard Members’ concerns about higher electric bills loud and clear,” said CoServ Director of Customer Care Stephen Meers. “We always strive to keep prices low and we never mark up wholesale electricity for profit – that’s not how CoServ does business.”

In an effort to help Members understand the ever-changing energy market and answer their concerns, CoServ tackled three of the most frequently asked questions. 

So why are electric bills increasing?

In Texas, there’s a direct correlation between natural gas prices and wholesale electricity costs, said Director of Energy Services Gary Franzen. Natural gas prices have increased rapidly in the second half of 2021 because of increased demand, a larger energy crisis in Europe and weather events, including a pair of hurricanes in the Gulf of Mexico.

When natural gas prices averaged $2.39 per million British thermal unit (MMBtu) in October 2020, the wholesale price of electricity during daytime hours (on-peak) averaged $38 per megawatt-hour (MWh). Compare that to October 2021 when natural gas prices increased to $5.48 per MMBtu and the price of wholesale electricity jumped to $60 per MWh.

That means CoServ must pay more to buy wholesale electricity from our two primary sources:  Brazos Electric Power Cooperative and the larger Electric Reliability Council of Texas (ERCOT) grid.

Doesn’t CoServ’s electric rate stay the same?

That’s correct, CoServ’s Standard Base rate doesn’t change. Every month, CoServ makes adjustments to your actual energy charge using the Power Cost Recovery Factor (PCRF). This is how CoServ accounts for fluctuations in wholesale electricity costs.

Since 2009, the PCRF has been a negative number, which means CoServ subtracts it from your base rate to calculate your bill.

“We look at the actual historical cost of power and project for the rest of the year so that we only bill the actual cost of power over time,” said Director of Accounting Scott Grass. “We review this every month to update those projections.”

As wholesale electricity prices increase, CoServ has had to adjust the PCRF to account for the higher costs.

A year ago, CoServ’s PCRF was -041, which means it knocked 4.1 pennies off the energy rate. Compare that to October 2021 when the PCRF was -026, which subtracts 2.6 cents off your final energy charge.

Would I pay less if I had retail choice in Texas’ deregulated electricity market?

Unlikely. Retailers in Texas’ deregulated market are facing the same increases in wholesale power costs that CoServ is, and their retail rates have risen accordingly. A look at retail electric provider (REP) plans at PowertoChoose.org in October showed 12-month plans starting at 11 cents per kilowatt-hour (kWh) and going up quickly from there.

REPs are also for-profit businesses with shareholders. Once the introductory rate expires, REPs often move existing customers to higher rates. Free nights or weekend plans are also tricky because the rate for the remainder of the time could be sky high, as much as 19 cents per kWh.

In contrast, CoServ’s final energy charge for October was 10.3 cents per kWh after factoring in the PCRF. Our plans have no gimmicks or fine print to try to turn a bigger profit and our Standard rate never expires. Another big difference: CoServ is owned by its Members and run by a democratically elected Board of Directors, who are also Members.

Concerned about high electricity or gas bills this winter?

CoServ’s Budget Billing could be the answer.

Budget Billing averages your yearly usage so that you pay the same amount every month. This brings predictability to your electric bill, making it easier to budget through those extremely hot or cold seasons.

  • Your monthly payment will be calculated before you agree to the terms of enrollment so there’s no risk or surprises.
  • Every six months, the amount you pay is recalculated to ensure that you neither overpay or underpay.
  • Signing up for Budget Billing through your SmartHub account is easy. Log into SmartHub to get started.
  • Combine Budget Billing with Auto Pay so you can set your bill and forget it.

Requirements: CoServ Members and Gas Customers must have a zero balance to enroll in Budget Billing.
Budget Billing is only available for residential accounts.
Accounts must have six months of billing history at that same address to be eligible for Budget Billing.
If your balance is not paid by the due date, you will be subject to immediate removal from Budget Billing and any outstanding credit/debit will be applied to your next statement.

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