June 9th, 2023 Information on Rates
At Lake Worth Beach Electric Utility we know and understand customers have been facing rising costs caused by the global fuel crisis. To provide transparency and help customers better understand the situation we are breaking down what has caused this to happen and what residents can do to limit the amount of financial pain caused by this rise.
Information on Rates
At your Lake Worth Beach Electric Utility, we know and understand customers faced rising costs in 2022 and early 2023 caused by the global fuel crisis. To provide transparency and help customers better understand the situation we are breaking down what caused this to happen and what residents can do to control their electric bills.
What external factors led to increases in your bill?
To understand how these affect us we must first understand that our electric rates are made up of two major costs, a portion referred to as the “base energy charge” and a variable cost referred to as the “purchased power cost” (listed in your bill as “Power Cost Adjustment”).
Our base energy rates are reviewed annually but aren’t likely to change by a large amount as this category is made up of things like debt service on infrastructure improvements, and maintaining the power plant, poles, wires, transformers, and substation equipment you see throughout the community. Base energy charges also include the cost of nuclear power, which is relatively stable. Base energy costs, for the most part, are known ahead of time, remain relatively stable throughout the year, and have somewhat predictable escalation.
In Lake Worth Beach we often like to think of ourselves as being in control of our destiny due to having the benefit of owning our own utilities. Even though we own our own power plant it is antiquated and expensive to operate, but has served us well for since the 1960s. To save you money we purchase electric energy and capacity under a competitive bid process that yields much lower costs than we could achieve if we produced the electricity ourselves, and it is this cost that varies based on external factors such as the cost of natural gas. These costs are included in the Power Cost Adjustment or “PCA” portion of your bill.
Fifty to sixty percent of our electricity is produced by natural gas in highly efficient power plants located across the state, with a small percentage of our electricity coming from coal. The most efficient power plants use natural gas as a fuel source to power large turbines and make electricity. Natural gas is transported by pipelines from sources along the US southeast gulf coast and has a cost just like the gasoline you use to power your car. Changes in global demand for natural gas without a commensurate increase in market supply have led to increased prices, as did increases in demand as our economy and manufacturing sector rebounded from the effects of the Covid pandemic. As the nation’s electricity producers seek to reduce their carbon footprint we continue to see demand for natural gas increase as older coal power plants are retired and replaced or converted in part with more efficient and cleaner natural gas fueled power plants. A lack of sufficient pipeline capacity to get natural gas from production wells to markets, has played a role in increased natural gas prices, as have growing exports of natural gas from the US to overseas markets. In 2022 these market forces beyond our control combined to drive the cost of natural gas to historic highs, in turn leading to high electricity prices and increases in our customers’ electric bills.
Right now, utilities across the state are recovering from the last year’s rapid cost increases for natural gas. Utilities statewide experienced a stresses on operating funds and working capital as energy costs increased faster than costs could be recovered from customers. Fortunately for our customers we are now in a position to lower our rates and have already issued two successive rate decreases, one in May and another in June of 2023 in time for the summer air conditioning season.
With the benefit of prudent planning and steps taken over a period of many years we were able to lessen the effect of natural gas prices on our rates:
We enjoy a lower exposure to natural gas prices than most utilities by virtue of being a part owner of the FMPA St Lucie Project, a Nuclear Power Plant investment from which we’ve received energy since the 1980s. This power plant produces approximately 36% of our electricity, and with a low cost of fuel and refinancing of debt undertaken when interest rates were at historical lows, it produces electricity for us at a stable and competitive cost. This power plant will remain a low-cost and carbon-free feature of our portfolio at least through 2043 and will enable us to reach our net zero goals for emissions.
Coal plays a small part in our portfolio by virtue of us being a part owner of the FMPA Stanton I Project, a coal plant investment from which we’ve received energy since the 1980s. This produces up to 10% of our electricity over the course of a year. This plant is scheduled for retirement by year-end 2025 and we will replace its output with clean solar energy.
We invested in our own 1.7 Megawatt solar field. In 2017 we placed in service our own solar field on top of the closed City landfill, which is now a source of clean electricity. This solar field produces up to 0.75% of our electricity over the course of a year. While it yields the most expensive power in our portfolio, it does demonstrate our commitment to clean energy and is constant in price, and operates with zero air emissions.
We’ve committed to significant increases in solar energy purchases. Our 2018 and 2022 Resource Plans called for significant increases in solar energy purchases. To date we have approved contracts to purchase solar energy from the Florida Municipal Community Solar Project over a period of twenty years from two large solar fields totaling nearly 60 Megawatts and which cover hundreds of acres. These projects are currently in the process of being permitted and constructed. As these solar power plants start producing electric energy for us in late 2023, 2024, and 2025 we will see our reliance on natural gas lessen even further, allowing for much more stable rates over the long term.
In addition to the steps we have already taken to reduce our reliance on natural gas and reduce our carbon footprint we are also updating our electric transmission & distribution system to both improve the efficiency of the system and improve reliability, making what fuel we use go even further for you.
What internal factors that can raise your electricity bill?
First it is important to note that your Lake Worth Beach utility bill is actually a combined bill for multiple but vital utility services: electric, water, sewer, and refuse service. Often when people see a sudden unexpected increase in their bills it may not actually be due to a change in the electric portion of the bill, but for example could be caused by a water leak or high irrigation use which causes the water portion of the bill to increase. Another scenario is if you are cited for putting out trash on the wrong day or for infractions such as too much yard waste being put at the curb, these too would appear on your bill and of course are not part of the electric bill. When reading your utility bill it is important to look at each section to see if the increase has been caused by a change in your electric usage or by one of the other City utility portions of the bill. If you see an unexpected increase in the water portion of the bill, and you haven’t made a lifestyle change such as adding a swimming pool or sprinklers to your property, do not delay and reach out to a plumber and/or the water utility so you can find and stop the potential leak.
A recent change for many households is the addition of an electric vehicle. It is important to note that charging an electric vehicle has a cost, so although you no longer have to pay for gasoline at the pump, your electric bill will increase based on how many miles you drive. Electric vehicles are much cheaper to operate than gasoline vehicles, so your overall household budget will benefit from your decision to buy or lease an electric vehicle.
Appliance end of life. If your AC unit or refrigerator are reaching the end of their service life it is not uncommon for them to be drawing more electricity to maintain cool temperatures. Often this cost can be limited by replacing filters, annual service checkups, and cleaning refrigerator coils. Dust and pet hair are particularly common sources of clogged refrigerator coils. Check your appliance maintenance requirements as stated by the manufacturer and follow their guidance. When the time comes try to replace the unit in a timely manner as this will save you money in the long term.
Another aspect of AC usage that can escalate electric bills is keeping is keeping your home or business too cool during summer months. The advised thermostat setting is 78 degrees during the day and no lower than 74 at night. Remember setting your thermostat lower will not speed up how fast your house cools down, but it will cause your AC unit to work harder to keep the house at too low of a temperature. If you set the thermostat in the 60s it is unlikely your unit will be able to reach and sustain that temperature and it will run continuously, which will not only shorten its life but will also use a LOT of electricity.
Lifestyle changes. Have you or a member of your household recently started working from home? It is easy to overlook that when we increase our time at home we naturally increase the amount of electricity we use in a regular day. You can limit this by turning off lights and other electronics such as computers and monitors when not in use, close the blinds to reduce heat load on the sunny side of the house, and by making eco-friendly changes to LED lighting in the home.
Energy efficiency. If your home or business still has old windows and doors, or poor attic insulation, you will certainly experience high electric bills to keep the living space comfortable. Please consider upgrading your windows, doors, and insulation. We can help you with a free energy audit, and our partners at the Solar Energy Loan Fund (SELF) can help you with sources of financing and assistance with your project (www.solarenergyloanfund.org) .
Your Lake Worth Beach Electric Utility team is working hard to minimize the negative effects of market changes, improving reliability and reducing outages, and offering free energy audits to find ways to save you money.