Why were energy prices so high in February?
Extremely cold temperatures led to increased demand for electricity and natural gas used to heat homes and businesses across the country. Natural gas wells froze in the southern United States, limiting supply. In addition, wind turbines and power plants in the south also experienced weather-related failures.
The price utilities across the country paid on the market for natural gas during the storm increased to record-breaking prices, up to 100 times the normal price. The extreme market prices lasted for several days. To understand the scope of this market event, customers can relate purchasing natural gas to filling up a car with gasoline. Imagine filling up a 20-gallon gas tank in a car one day for $50. With a price jump like utilities experienced, the next day it would be $5,000.
Even with conservation efforts, customer natural gas and electric usage for heating was up significantly during the extreme cold.
What did CFU do to mitigate the effect of high market costs for customers?
During the extreme weather, CFU urged customers to conserve natural gas to minimize the amount of expensive energy the community needed to purchase.
In addition, CFU has long-term natural gas supply contracts that protect customers as much as possible from price volatility. CFU’s advance purchase contracts that locked in prices for natural gas prior to the February event helped mitigate some market price impacts for customers. Total savings from contracted gas during the event total $4.4 million.
CFU is supporting national regulatory agencies and State of Iowa investigations into the price of natural gas and electricity before, during and after this extreme weather event. CFU will continue to pursue potential relief for customers.
In the Electric Utility, CFU’s ownership of electric generating power plants helped mitigate the effect of extreme prices and maintained system reliability during the February event. CFU continues to own and operate the Streeter Station power plant in Cedar Falls. In addition, CFU owns shares of large power plants in western Iowa. The Streeter Station power plant and CFU’s share of the western Iowa units combined to provide most of the energy needed to power Cedar Falls during the cold snap. That drastically reduced the amount of energy CFU had to buy to supply to customers when market prices were high.
What kind of bill impact can customers expect?
Natural gas: According to current projections, an average residential customer will see an increase of approximately $45 per month for one year due to increased market costs and higher than normal usage. Bill impacts will vary depending on customer natural gas usage. Natural gas bill adjustments will begin in April. Impacted customers will receive notification with their total February natural gas usage and monthly natural gas market adjustment.
Electric: CFU’s Board of Trustees decided to spread the electric bill impacts from this event over two months. The Electric Cost Adjustment (ECA) was modified beginning in March. CFU projects that an average residential electric utility bill will increase by approximately $55 in March and $20 in April due to the adjusted ECA and higher than normal usage during the extreme cold. Bill impacts will vary depending on customer usage.
How was my natural gas market adjustment calculated?
The natural gas billing adjustment reflects the cost of the natural gas used from February 1 through February 28. February usage is based on multiple meter reads at your property and adjusts for February weather. This method allows CFU to account for any conservation efforts at your property during the event and meter reads occurring at different times of the month across the community. Your natural gas market adjustment is calculated by dividing the total cost of the natural gas you used in February into 12 payments.
Please note, this installment payment amount will be applied to your gas utility bill for one year. If you move or discontinue service during that time, the remaining balance will be due on your final bill.
Is financial assistance available?
We are here to help. Cedar Falls Utilities encourages any customer facing financial hardship to call Customer Service at 319-268-5280. There are resources available including payment plans, Add-A-Dollar customer assistance funds, the Low-Income Home Energy Assistance Program (LIHEAP) and special assistance for customers dealing with COVID-19 related circumstances. To find out if you qualify for the COVID relief utility program, contact Operation Threshold at 319-291-2065.
CFU offers Budget Billing to help customers ease bill fluctuations. The program is free to customers and averages utility charges that vary by season and different energy usage patterns.