Carrollton locks in energy prices for coming year
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By Carmen Ensinger
What goes up, must come down – even energy prices. Carrollton School District found this out Monday night, July 17, at their regular board meeting when they signed a one-year agreement for electric renewal with QFB Energy at a price that was almost half the cost it was last year.
Last year, the district saw the rate for skyrocket from around .05 cents per kilowatt hour up to .134 per kilowatt hour.
Brian Frerichs, with QFB Energy, explained why the energy costs have come down this year.
“The biggest thing has come down in relation to energy cost is your capacity cost,” Frerichs said. “Last year when I was here, the capacity cost was just one of the components of your energy supply cost and last year at this time it went from $5 a megawatt per day up to $236 a megawatt per day.”
Capacity costs are the rates customers pay to ensure a sufficient supply of energy is available on a power grid during “peak” hours of electricity usage.
“Now, that capacity cost has come back down – it is like $10 megawatt per day,” he said. “The reason for this is that instead of going to auction once a year – every April for the full year, they are doing it on a seasonal basis, every quarter.”
According to Frerichs, the capacity cost during the summer months will be $10 per megawatt per day; fall, $15 per day; winter, $2 per day and spring, $10 per day.
“So that is like a 93 percent decrease in capacity cost over that time,” Frerichs said. “As I mentioned, your rates were for the electric supply that expires on Aug. 23. The rate signed last year was .13468 per kilowatt hour and with the capacity cost coming down and the energy itself coming down what I’m recommending is to just lock in certain components but leave your capacity cost at a pass through.”
The reason to leave the capacity cost as a pass through is because if it goes up, even though they are at a fixed rate, the rise will be passed on to the district.
“However, if it comes down and your rate is fixed, they are not going to pass it through if your rate is fixed,” Frerichs said. “In other words, they are not going to lower your cost. So if you do the capacity pass through just at market rate you are paying what the capacity actually is for those months so that is what I’m recommending to do is fix the other components and just have the capacity cost pass through.”
Frerichs also recommended continuing with just a 12 month contract rather than a two or three year contract.
“So, if we fix that on a 12-month contract the energy cost will be .07029 and I’ve put a little fluff on the estimated capacity cost at .003 so you would be looking at .07329, which is about 6 cents less than what you are paying right now.”
Frerichs said the district does about 1.1 million kilowatt hours so they are looking at about $66,000 in savings over the next year.
