When we go to a store, we have all noticed that prices keep going up. Although the cost of gasoline has recently decreased to below where it was a year ago, almost everything else seems to cost more – or the amount in a package has decreased, with cost remaining the same. The Consumer Price Index keeps track of these changes. For the 12 month period ending October 2022, these are the price increases: food + 11%; transportation + 15%; clothing + 4%; energy + 17%.
TVA provides Powell Valley Electric Cooperative (PVEC) with electricity. Over the past year. TVA has increased its fuel adjustment rate (what it charges utilities like PVEC) to reflect the increased cost TVA pays for natural gas to supply power. Typically TVA’s rate moves between 1.5 to 2.5 cents per kilowatt hour. This year the rates were as follows: June 2.7 cents; July 3.8 cents; August 4.6 cents; September 3.1 cents; October 3.2 cents.
This fuel adjustment rate is part of what you are charged on your power bill. You may have noticed this on your power bill – as these adjustments have recently been 50% higher than a year ago. PVEC also charges for its direct services, but its base rate has remained the same for about 20 years.
People are familiar with the Consumer Price Index, but there is also a Producer Price Index. This index keeps track of manufacturing costs, including those for the electrical equipment industry. Costs for this industry have increased over 20% from March 2020 to March 2022. This data can be found here: https://tradingeconomics.com/united-states/producer-price-index-by-industry-electrical-equipment-manufacturing-fed-data.html
Besides the increases in the cost of power (from TVA), electrical utilities like PVEC are facing serious supply chain issues for a wide variety of electric distribution equipment, and most significantly distribution transformers. Supply chain disruptions are tied to worldwide material demand and shortages caused by the pandemic, labor constraints, shipping issues, and even the war in Ukraine.
For example, consider transformers. They vary in size and are rated in kVAs (amps). In 2020 orders for large transformers typically took between 6–12 weeks to fulfill. Now there is a lead time of one year or more. In many cases, transformer orders slated for arrival in mid-2021 have been postponed several times, with final arrival dates yet to be determined.
As supply has decreased, prices have risen accordingly. 25kVA pad-mounted transformer pricing rose nearly 400% from 2020 per-unit pricing, and 50kVa unit pricing jumped 900% since 2020. Pole-mounted transformers have seen similar price increases, as well as extended lead times with no guarantees of meeting price quotes.
One more example of cost increases is wiring. At the November PVEC board meeting, the board was informed that the cost of underground wiring has jumped from about $3.50 per foot to $7 per foot. These increases are typical for other types of wiring, including the fiber for high speed internet. Cost of vehicles and other equipment have seen similar price increases.
As we adjust our lives to adapt to the increasing cost of food, rent, energy, and other items, so must electric cooperatives consider how to absorb these current price increases while maintaining necessary services.
Everyone needs to learn more about our electric cooperative. For more information, go to pve.coop.