Economic impact of Winter Storm Uri
By Brandon Young
Dear Members,
I've reported on the physical infrastructure damage and economic impact caused by Winter Storm Uri in many previous articles. I’ve also shared that we have been awaiting the outcome of the Brazos Electric Cooperative bankruptcy brought on by Winter Storm Uri, so we would know the financial burden this event will place on your cooperative.
Before reporting the bankruptcy outcome, I want to recap what took place, my thoughts on actions taken by government officials to mitigate the economic damage to Texas citizens, and where we go from here.
First, I want all our members to know that during this event, as hundreds of Texans died, your welfare was always our priority. While some may have taken action to mitigate economic damage by reducing load, we did everything in our control to keep power flowing to your homes to minimize the risk for our members, including possible fatalities due to the elements; property damage to your homes due to busted pipes and broken wells; damage to other resources such as water systems, lift stations, grocery stores, gas stations and other facilities which serve our members’ vital needs. We put your lives, your property and the resources that serve your daily needs ahead of economic gain.
So, how did we get here? The abnormal weather event known as Winter Storm Uri brought to light the fragility of not only the Texas electric system and economic model but also the major—and I emphasize major—flaws of the Texas natural gas infrastructure and economic model. As URI made its way south, the power and gas markets took note and began to raise prices significantly. Ultimately, as URI unleashed its fury and electric generation became inoperable primarily due to a lack of natural gas supply to generators, we began to experience a load shed event. This was necessary due to the loss of almost 50% of the Texas generation capacity. When there is not enough generation, the only way to preserve the grid is to shed load. Had ERCOT not mandated load shedding during URI, we would have experienced a complete blackout of the grid, and it would have taken weeks or longer to restore power across the state.
What did that mean economically? Prices in the market were extraordinarily high, and generation was failing at a level never before experienced.
Many utilities have contracts with generators to control costs and provide a reliable source of power. Heart of Texas EC had a contract with Brazos EC for power. When your generator fails to deliver—and you continue to have load to serve—you must purchase power in the real-time market.
Some of you may recall that the Public Utility Commission of Texas issued mandates to position the price of power at the market cap of $9,000/MWh in the utility market during the storm, and it has been noted many times since they did not handle the situation correctly or legally, for that matter. But Texans are expected to pay for it, nonetheless.
The PUCT actions signaled to the natural gas market they could get away with pushing their prices much higher. As a result, natural gas prices were hundreds of times greater than just a week earlier. Don't forget this focus on economics was happening as Texans were dying due to the extreme weather, and federal and local government officials declared the entire state of Texas under an emergency and disaster order.
Ultimately, the price gouging created billions of dollars in debt for utilities across the state, and, unfortunately, your cooperative was not spared. Our focus was preserving life first and property second, but due to the economic situation, we suffered doing so.
Much of the economic damage Brazos EC and its 16 members suffered was due to the natural gas providers’ failure to deliver. Charges are being made that many participants in the natural gas market manipulated the situation to maximize profits by restricting market supply.
Unfortunately, the astronomical power bills forced Brazos EC to file for bankruptcy to mitigate damage. We had hoped that when things settled down, action would be taken to protect the citizens in Texas from the economic damage caused by this unprecedented weather event and the broken economic gas and electric model. Regrettably, that never came to pass.
Utilities such as your cooperative that serve the citizens, members and ratepayers were told to pay what the market settled at. We were offered the option to securitize the debts to spread them out over a long term and not issue immediate bills that would have otherwise been many thousands of dollars per residential member. In my opinion, the entities that grossly price-gouged unfairly got to keep the money, and the citizens of Texas were left to pay the bill over time with interest.
Once a legislative correction to the market was no longer an option, the focus was to mitigate the damage through the bankruptcy court. Brazos EC fought a hard battle in court with Federal Bankruptcy Judge David Jones presiding. Judge Jones instantly noted the market’s catastrophic economic failure and lack of resiliency. During the testimony phase, many of the officials that were in positions of power during the event were called to the stand. This included PUCT Chair and ERCOT’s CEO. Neither of their testimonies impressed Judge Jones, and they were severely admonished on the stand for multiple reasons. Ultimately, the trial was postponed, and the parties entered negotiations for a mediated settlement. I am glad to report that through this mediation, Brazos EC negotiated an approximate 28% reduction, reducing debts for all its members.
It is disheartening to report that the average residential bill for members will increase by approximately $15 per month due to this securitization debt service. Still, I assure you we did everything possible to mitigate the damage through the legislature and the bankruptcy court.
Although this increase is impactful, one thing that is working in our favor is your cooperative is growing rapidly. This growth will lower the cost per household over time as there will be more billing units to spread the debt service across.
As a nonprofit member-owned business mainly serving rural Texas with only six meters per mile, I'm incredibly proud of how efficiently we operate, how reliable our service is, and how competitive our rates are against the entire Texas market. We will continue to leverage our efficiencies to ensure this remains true.
On December 15, 2022 Brazos EC emerged from bankruptcy, but it looks much different than when it entered. Brazos EC will no longer serve members’ power supply needs and will be forced to liquidate their generation assets. This means they will continue to build, own and maintain transmission assets and build, own and maintain our substations.
Some of you may ask if the total liquidation of Brazos EC’s assets was contemplated to use proceeds from those assets to service debt. The answer is yes. However, although it would have reduced the debt somewhat, HOTEC’s ongoing ability to offer reliable service to our members could have been severely compromised. We would have been at the mercy of the new transmission line owner to build all future transmission lines which could have serious implications and risk possible loss of our substation assets to investor-owned utilities.
Your cooperative dominantly serves rural areas, and the loss of these substations would have put restoration times post-storm damage in severe jeopardy. The new owners would likely also have damaged assets in more populated areas which would take priority over our service area for repairs. We currently have ample resources provided by Brazos EC locally to respond immediately, which significantly reduces outage time caused by substation or transmission failure.
There are so many other ways this situation should have turned out. In my opinion, many decisions were made that did not focus on the citizens’ welfare but more on the profits of the businesses that made billions during a time of hardship.
As the state contemplates restructuring the market, it would be great to assemble a task force of industry leaders to offer guidance. This market impacts every Texan’s life, and it should be a process driven by those who intimately understand how system resiliency and market economics align so that it is both capable of reliably serving us during extreme conditions and affordable. It should not be decided by lobbying efforts. My wife, who has been a teacher for over 20 years, firmly believes that if more classroom teachers were part of the process in Austin, we might have a better school system. Now, I feel the same about the electric system.
The past two years have been extremely difficult, but everyone on your team at Heart of Texas EC has worked hard to do their best to serve you, our members, and will continue to do so for many years to come.
This article appears in the March 2023 issue of Texas Co-op Power.
The start of the new year always seems to bring about the inevitable lists of resolutions to improve one’s life: Lose weight, stop smoking, exercise more … conserve electricity.
Well, that last one maybe isn’t actually on your resolutions list, but it can be just as important as any personal health goals—both to your financial bottom line and the overall health of our cooperative and the state’s electricity system.
As one saying goes, it takes 21 days to create a new habit. During that time, it may take a conscious effort to change your behavior—for instance, remembering to switch off lights as you leave a room. But, you may find, after a few repetitions of a new behavior, you won’t even have to think about it. You’ll turn off the lights automatically.
Here are some other energy-saving resolutions that you might consider for 2022:
- Unplug computers, TVs and phone chargers, plus the coffeemaker and other kitchen countertop appliances, when you’re through using them. These items draw electricity as long as they are plugged in, even when they’re turned off.
- If any of the overhead fixtures, table lamps or outdoor lights around your home or business still have those old, inefficient incandescent lightbulbs or CFLs, change them to LEDs, which use less electricity and can reduce your power bill.
- Install a programmable thermostat. Use it to lower the heat by a few degrees when the family leaves the house every day and to raise it back up just before everybody gets home. You won’t feel any less comfortable at home, but you’ll notice a dip in your energy bill.
If everyone in Heart of Texas Electric Cooperative’s membership embraced just one or two of these ideas, or took other energy efficiency measures, the effect would be greatly magnified. And if everyone in Texas embraced even the simplest of these ideas, like turning off unused lights, it could add up to significant savings and perhaps help keep the lights on for all of us.
When your power goes out, your first response is to alert Heart of Texas Electric Cooperative. After all, Heart of Texas EC is the name that appears on your electric bill. We deliver power to your home, and when there’s an issue with that power, it’s typically our team who are tasked with getting your lights back on.
But that’s just a small part of the vast infrastructure required to light up your home. Your co-op builds and maintains the lines and equipment that deliver power, but we don’t generate electricity. That’s the job of our generation and transmission cooperative.
G&T cooperatives are wholesale power suppliers owned and governed by electric distribution co-ops, like Heart of Texas EC. They produce electricity directly or buy it in bulk in the ERCOT market from other companies, then dispatch it over high-voltage transmission lines to local distribution cooperatives.
Our G&T is Brazos Electric Power Cooperative, which generates its own electricity and purchases power from other providers. Brazos’s responsibility is to generate and procure the power necessary to serve the load of its member cooperative owners.
Just as you are a member of Heart of Texas EC, Heart of Texas EC is a member of Brazos EPC. In all, Brazos EPC’s 16 member co-ops serve hundreds of thousands of consumer-members like you across 68 counties, from the Texas Panhandle to Houston.
By joining forces with other distribution cooperatives through the G&T, we reduce our costs. In addition, Brazos EPC’s diverse energy mix combined with the long-term nature of our power purchase agreements helps maintain reliability and price stability.
That said, we can’t control every aspect of our power costs. For example, fuel supply fluctuations, extreme weather, such as Winter Storm Uri, and unexpected events can cause power prices to surge.
When power costs increase, Brazos EPC passes those costs along to its member co-ops. Heart of Texas EC covers those costs through a component on your bill that adjusts to reflect changes in the price of electricity. We collect only the amount needed to cover the power costs, and if the market cost of power drops, so does your bill.
As I’ve reported in past articles, Winter Storm URI caused tremendous financial damage to ERCOT market participants. This economic damage wreaked havoc on Brazos to the magnitude of forcing them to file for Chapter 11 bankruptcy protection. The bankruptcy proceedings are still in progress, and HOTEC, along with the other 15 Brazos cooperatives, waits anxiously in hopes of mitigating the financial claims imposed during this time of crisis. Unfortunately, due to a few days of catastrophe, ratepayers across the state will pay increased rates for many years to come. It saddens me to know this will ultimately affect HOTEC members, but a poorly constructed financial and engineering model failed, and now Texans will pay the price.
Solar Energy is booming as many homeowners turn to harnessing the sun’s rays to produce their own electricity using rooftop solar panels.
But with the increasing popularity of solar power, some businesses are taking advantage of the surge in consumer interest. While many solar companies are genuine and truly want to help consumers with a successful solar installation, there are bad actors to watch out for.
You’ve likely heard a story or two about solar vendors who promised rooftop panels that would generate enough electricity to power an entire home. Then, after the homeowner has paid thousands of dollars for the installation, the panels don’t work, and the vendor is nowhere to be found. Sadly, this story has been the reality for many consumers.
If you’re interested in solar panels for your home, consider these tips before installation to avoid getting swindled:
Talk to an energy adviser at Heart of Texas Electric Cooperative first. We want you to feel confident about any decisions you make about your home energy use, especially decisions about generating energy at home.
Collect quotes from at least three solar companies to ensure you’re getting a competitive deal. As with any major purchase, research is key, so thoroughly read customer reviews for each solar vendor and check that they’re listed on the website of the Texas Solar Energy Society, txses.org.
If you speak to a solar vendor and they use high-pressure tactics—like an offer that’s only good for 24 hours—run! Any reputable solar company will recognize that you need time to review a proposal and consider your decision.
If it sounds too good to be true, it probably is. So if a solar company is making promises that sound unachievable and outlandish, they probably are. Remember, if you have questions, you can always count on your electric co-op for advice.
When it’s time to review and sign a solar contract, make sure the language is clear and easy to understand. Ensure any verbal promises are included in the contract. Our experts will be happy to sit down with you and your solar provider to review quotes and specifications you receive.
Heart of Texas EC is now offering solar and generator sales. We can offer you another option when purchasing these products and services. Contact us at 254-840-5136.
Going solar is a major decision that can cost tens of thousands of dollars, so do your homework first.
If you were asked to associate an image or a person with Heart of Texas Electric Cooperative, I bet you would picture a lineworker. Among the most visible employees of the co-op, lineworkers work tirelessly to ensure our community receives uninterrupted power 24/7.
Line work is one of the most dangerous professions in the U.S., requiring detailed tasks while in close contact with high-voltage power lines. Regardless of the time of day, in stormy weather or other challenging conditions, lineworkers must climb 40 feet in the air, often carrying heavy equipment to get the job done.
And yet line work isn’t glamorous. The job requires years of specialized training, ongoing education and dedication. Equally important for lineworkers at co-ops—and what sets them apart—is a deeply held sense of service and commitment to the community. That’s why co-ops set aside the second Monday in April each year to celebrate and recognize the men and women who work around the clock to keep the lights on.
Lineworkers may be the most visible employees at HOTEC, but equally critical is the team of highly skilled professionals working behind the scenes.
Engineers provide ongoing expertise and guidance on the operations side of the co-op. Member service representatives are always standing by to take your calls and questions. Our information technology experts continually monitor our system to help safeguard sensitive data. And these are just a few of the folks who work together to ensure we can deliver the service and reliability you expect and deserve. Without them, our lineworkers wouldn’t be able to light up our community.
Our dedicated and beloved lineworkers are proud to represent Heart of Texas EC, and they deserve all the appreciation and accolades that come their way on Lineworker Appreciation Day.
On April 11, and any time you see a lineworker, I hope you’ll join me in thanking them for their exceptional service. I also hope you’ll remember that you have a dedicated team of professionals working at the co-op whose commitment to service runs just as deep.
Spring is a busy time on the meteorological calendar in Texas—peak tornado season and just weeks before hurricane season begins in June. The U.S. counted 22 extreme weather events in 2020, defined by the National Oceanic and Atmospheric Administration as causing at least $1 billion in damage. Last year, there were 20 such events.
Unfortunately, extreme storms can lead to power outages, which recently have spurred some folks to resort to portable generators—sometimes to tragic effect. After last February’s awful winter storm, at least 10 people in Texas died from carbon monoxide poisoning caused by improper portable generator use. A single generator can emit as much deadly gas as 450 cars, and all told, generators kill an average of 70 people in the U.S. each year, sending thousands more to the hospital.
Some 1,400 Texans were treated for carbon monoxide poisoning after last year’s polar vortex. While malfunctioning furnaces and other gas-powered appliances can also lead to CO poisoning, no other consumer product has caused more CO deaths than generators, according to the U.S. Consumer Product Safety Commission. Many models lack crucial safety features such as automatic shut-off switches that detect high levels of CO or even clear instructions for use.
With that in mind, I’d like to share some important ways to stay safe in the event you decide to use a portable generator. You might have seen similar reminders in this magazine before, but we at Heart of Texas Electric Cooperative would rather repeat ourselves if it saves just one family from tragedy.
Position your generator outdoors and at least 20 feet from your home. Even if your generator has a CO detector and shut-off switch, if it’s situated near an open window, the sensor is unlikely to detect any buildup even though the gas may be infiltrating your home.
Don’t mislead yourself that running a generator in a partially enclosed structure, like an open garage, is safe. Fatal levels of carbon monoxide can build up in those settings, too.
If your home doesn’t have a carbon monoxide detector, install one. Heart of Texas EC wants you and your family to be safe while you ride out whatever weather comes our way in May.
We all know how it goes in Texas: When the summer temperatures start to soar, the power bill often follows. Running the air conditioner comes with a price, and we can only do our best to soften the blow—by consciously monitoring our consumption and conserving energy.
But this year, forces beyond any of us are poised to make summer electric bills even worse.
Heart of Texas Electric Cooperative has not and is not raising our rates, but the runaway cost of natural gas is having a volatile effect on electric bills across Texas. The cost your co-op pays for wholesale power has been much higher this year, and there’s no relief on the horizon.
Since the winter storm in February 2021 that impacted most of our state’s grid, prices for natural gas—which fuels about half of Texas’ power generation—have risen sharply. Natural gas cost an average of $1.91 per million Btu in February 2020 but $4.69 in February of this year—nearly 2.5 times higher with no sign of slowing down in the near future. The Energy Information Administration expects those prices to stay north of $3.50 through 2023.
That means most electric generation providers are paying far more to generate power—costs that get passed along to Heart of Texas EC and that we unfortunately must pass along to our members.
Don’t get me wrong: We’re not happy about this either. All of your cooperative’s directors and most of its employees, like me, are members of the co-op. Our power bills are impacted by this, too.
As a nonprofit electric cooperative, none of this additional revenue goes to the co-op; it passes right through to our power provider. The increased wholesale power cost on your bill simply ensures that we can continue to pay our bills and provide power to homes and businesses.
We know times are hard right now, and this is the last thing you want to hear as the summer months start to heat up. The cost of everything is on the rise, and we do not know when this inflationary period will end, or how much worse it will get before we see improvement.
But, by working together as friends, neighbors, and colleagues, we’ve made it through some challenging times over the past couple of years. We’ll get through this, too.
During these past few years, families and businesses faced many challenges and changes in our daily lives. While many look forward to the return to business as usual, others have adapted to the new normal. These life adjustments have highlighted the value of time - spending it with family and friends - at the top of our list of priorities.
Because we know the value of your time, we are constantly evaluating our business practices, programs, and services to make sure that our members are our top priority. As always, we do so with a focus and commitment to exceeding your expectations.
This past year, we have made a positive investment in you here at Heart of Texas Electric Cooperative. This significant change results from listening to you and learning about your priorities and needs.
You may have noticed a SmartHub logo on materials we have published recently. SmartHub is a new innovative tool for managing your electric account. Through SmartHub, you will be able to securely store your payment information to pay your bill with one quick click, view your current and past usage history, contact member services, and report and receive outage updates. All of this will be available from your smartphone or tablet.
What does this mean for you? It means the taking back of time. SmartHub will create a "one-stop-shop" that will allow you to efficiently manage your utility service from the comfort of your home or even on the go.
Our staff is working hard behind the scenes to make the transition as seamless as possible. Some of those changes include bill format, account numbers, and autopay. More information on our website is available on our website.
SmartHub will officially launch July 4th. We invite you to check out more information by visiting www.hotec.coop and click on the SmartHub logo. As always, if you have questions during the SmartHub transition, don't hesitate to get in touch with us. We always look forward to hearing from our members.
We’re in the thick of it. Summer’s heat is near its peak, school’s out, vacations are underway, and the Fourth of July is here again. As you plan celebrations, travel or simply go about enjoying the rest of the season, take a cue from the holiday and declare independence from needlessly high electric bills.
Here are a few simple, low-tech ways to rein in midsummer energy costs.
- Run the washer and dishwasher only when each appliance is full, and beat the peak by not using either between 3 and 7 p.m.
- Set your thermostat to your highest comfort level when you’re home and turn on ceiling fans in occupied rooms to add to the cooling effect. Run the blades counterclockwise to create a cooling downdraft and turn off the fan when you leave the room.
- Take a break from devices and screens and get outside after dinner—after the heat relents just a little—and use that much less electricity while you digitally detox. Take a walk, water plants, say hello to a neighbor, or just enjoy the sunset and nature with a cool drink.
While you’re outside, consider some areas around your home that might benefit from energy-wise landscaping. Providing shade for an outdoor air conditioning unit can increase its efficiency, and planting deciduous trees on the east, south and west sides of your home will create shade in the summer while still allowing sunshine in the winter. You might also see some opportunities to plant trees to shade windows now; as they mature, they’ll shade your home’s walls and roof.
Once you’re back inside, unwind with a cool treat from the freezer and a tech-free activity like a board game or book. The long light and lazy days of this time of year are fleeting, so make the most of them. Heart of Texas Electric Cooperative wishes you and your family a restorative summer.
Working with electricity can be a hazardous job, especially for lineworkers. In fact, USA Today lists power line repairers and installers among the most dangerous jobs in the U.S. That’s why, for Heart of Texas Electric Cooperative, safety is the No. 1 priority.
This is not empty talk. Over time, we have created a culture of putting our crews’ safety and that of the community above all else.
Our mission is to provide safe, reliable and affordable energy to you, our members, but it’s equally important that our employees return home safely to their loved ones each night. This requires continuous focus, dedication and vigilance—and your help!
Distractions Can Be Deadly
While we appreciate your kindness and interest in the work of our crews, we ask that you remain outside of their work zone and let them focus on the task at hand when they’re out in the community. Even routine work has the potential to be dangerous, and it takes crew members’ full attention to ensure their safety and that of their colleagues. Distractions can have deadly consequences for them.
If a lineworker is on or near your property during a power outage, for vegetation management or for routine maintenance, please allow them ample room to work. These small accommodations help protect our crews—and you.
If you have a dog, try to keep it indoors while lineworkers are working near your property. While most dogs are friendly, some are defensive of their territory and can’t distinguish between a burglar and a utility worker. Our crews work best without a pet “supervising” the job.
We recognize that for your family’s safety, you want to make sure only authorized workers are on or near your property. You’ll recognize Heart of Texas EC employees by their uniform and the service trucks with our name and logo on them. You may also recognize our lineworkers because they live right here in our local community.
Move Over or Slow Down
In addition to giving lineworkers space, we also ask that you move over or slow down when approaching any utility vehicle on the side of the road. That extra buffer of safety helps those who help all of us.
Over the past several years, Heart of Texas Electric Cooperative and its members have faced some extraordinary challenges, and we continue to deal with their effects. That includes inflation, inventory scarcity and the bankruptcy of Brazos Electric Power Cooperative, our generation and transmission provider.
We can all agree that none of these issues bring warm, fuzzy feelings to mind. Honestly, they bring a feeling that is just the opposite. Though they present new challenges, we are working within our limits to mitigate the damage caused by each.
Let’s take them one at a time. The first is inflation and its impact on wholesale energy prices. For many years, inflationary pressure in our economy has been nominal, but it has roared back over the past one to two years. I’m sure you’ve noticed the steep increases in the cost of food, fuel and travel and, unfortunately, your electric bills. I’ve addressed in previous articles the drivers for these steep wholesale power increases, but it’s worth doing again.
What are the primary drivers? The extreme increase in the cost of natural gas and the Electric Reliability Council of Texas market is primarily an energy-only, scarcity-driven model. The table below shows the Henry Hub spot price for June 2019–22, but this inflated price has been the case for more than a year.
You can see on the pie chart in the next column that natural gas drives the generation resource capacity for electricity in the ERCOT market. With 45.2% of installed capacity driven by natural gas, it becomes clear why the steep increase in commodity cost is impacting all Texans’ electric bills.
We are also dealing with an energy-only scarcity market. That means during high usage periods like we experienced this summer due to excessive heat, the energy price per interval rises. It’s purely a function of supply and demand. Unfortunately, this scarcity model is not doing Texans many favors this summer. The scarcity of generation is not only creating economic consequences, but also driving our 
grid to the edge. As I write this column in early August, we have made it through this summer so far without rolling blackouts, but we have come very close, and there are still many scorching days ahead.
Another issue that can cause scarcity pricing to increase is the loss of generating resources. You may recall my article after the 2021 winter storm explaining that energy prices reached $9,000 per megawatt-hour due to a lack of generation, caused largely by the inability to provide natural gas to generators.
Another example would be a missed forecast. The pie chart above shows 23.3% of ERCOT generation capacity comes from wind resources. If the estimates for wind generation are missed and we receive substantially less wind-generated power than forecast, it creates significant supply issues, impacting price. Moreover, ERCOT’s more conservative approach after last year’s winter storm has been to add substantially more ancillary services daily, which drives up costs. This isn’t necessarily a bad thing, as it does add resiliency, but resiliency comes at a price.
You may be wondering when it will it get better. Unfortunately, based on forecast forward prices, it may be a year or more before we get much relief. The forecasts indicate lower energy prices in mid to late 2023, but I emphasize these are forecasts, and many things can happen that can alter them.
For example, European nations are importing American liquified natural gas to satisfy supply that may be lost from Russian and other imports. Many other geopolitical concerns could heavily impact global energy costs, and domestic energy policies are also a heavy driver.
The ERCOT economic model is broken, impacting financial decisions necessary to incentivize capital investment for firm supply generation projects. We must engineer a resilient power generation and delivery system to handle current load conditions and incorporate what is needed to serve the ample load growth projections. If we do not, we will suffer heavy economic consequences and create more intermittent power supply issues.
Inventory Scarcity
Inventory scarcity is causing a multitude of problems, both economic and logistical. We have operated on very short lead times for materials for many years, but that is no longer a luxury we have. Lead times for many items continue to increase, and they are very volatile, which complicates managing inventory. We have received quoted lead times on several occasions that within weeks are extended. It alters planning each time this happens, and adjustments must be made.
These lead times aren’t caused by the many distributors we purchase from but by manufacturers. However, manufacturers are battling logistical issues procuring raw materials, labor shortages and market orders that exceed their past experiences. Ultimately, there are only so many production slots for the items, and the demand is greater than production capability.
Unfortunately, we are experiencing escalating costs due to these shortages. Now that demand tremendously exceeds supply, the market continues to inflate. As a result, inflation for these items has been much more significant than in the broader economy. The table to the right shows some examples of escalating lead times and prices over the past few years.
Brazos EPC Bankruptcy
The February 2021 winter storm may have long passed, but its impact still looms. In previous articles, I have explained how the economic effects of the storm caused harm to utilities and other entities. Natural gas price gouging and the state’s inability to adequately address the issue will continue to tax Texans for many years. We can all agree that with the price of energy from ERCOT this summer and the need for repeated requests for the public to conserve power that the problem may not be as remedied as some wish us to believe.
Many of you may recall Griddy, which sold electricity to residential customers on a real-time settlement basis. Some customers received bills due to the winter storm for thousands of dollars for a few days’ consumption. Other entities did not send invoices immediately due to tariff structures, contracts and the fact that most Texans were not able to pay the charges in a single installment. For those studying ERCOT market economics recently, you have seen the drastic increase in cost per kilowatt-hour, which, as I explained earlier, is heavily driven by natural gas and power scarcity. Still, another factor causing the market to increase is utilities’ need to service debts resulting from the winter storm’s economic devastation.
Sadly, due to the storm, Brazos EPC filed for bankruptcy protection in March 2021, and we continue to await the outcome. Chief U.S. Bankruptcy Judge David R. Jones is presiding over the case. The litigation trial began in February 2022 but only lasted eight days before ERCOT requested to enter mediation. Brazos EPC accepted entering mediation, and Jones appointed
U.S. Bankruptcy Judge Marvin Isgur to conduct the process. Brazos EPC remains in a period of exclusivity as it prepares to file an exit plan. As part of its proposed exit plan, it must liquidate its generator assets, and any proceeds from that sale will be applied to debts. Brazos EPC will also exit ERCOT as a power supply provider. However, it will continue to provide transmission and substation services upon exit.
As I began, I will end. The past two years have been very difficult for numerous reasons, but I’m optimistic we will work through this period like so many before it and see better times ahead. Our goal should always be to ensure the next generation has a solid foundation to build on, and we will do our part to make sure that happens.
All Cooperative, including Heart of Texas Electric Cooperative, adhere to the same set of seven principles that reflect our core values of honesty, transparency, equity, inclusiveness and service to the greater community good. October is National Co-op Month, so this is the perfect time to reflect on these principles that have stood the test of time and provide a framework for the future. Let’s take a look at the first three cooperative principles.
Voluntary and Open Membership
Heart of Texas EC was created out of necessity—to meet a need that would have been otherwise unmet in our community. A group of neighbors banded together and organized our electric co-op. They worked together for the benefit of the whole community, and the newly established electric lines helped power economic opportunity in our community. Key parts of that heritage remain—the focus on our mission and serving the greater good. In this, we include everyone to improve the quality of life and economic opportunity for the entire community. Membership is open to everyone in our service territory.
Democratic Member Control
Our co-op is well-suited to meet the needs of our members because we are locally governed. Each member gets a voice and a vote in how the co-op is run, and each voice and vote are equal. Heart of Texas EC’s leadership team and employees live right here in the community. Our board members also live locally on co-op lines, and they have been elected by neighbors just like you.
Members’ Economic Participation
As a utility, our mission is to provide safe, reliable and affordable energy to our members. But as a co-op, we are also motivated by service to the community rather than profits. Members contribute equitably to, and democratically control, the capital of Heart of Texas EC. At least part of that capital remains the common property of the cooperative. Members allocate surpluses for co-op programs, initiatives, capital investments and supporting other activities.
Because we are guided by the Seven Cooperative Principles, it’s not just about dollars—it’s about opportunity for all and being fair when engaging with our members.
Heart of Texas EC is a reflection of our local community and its evolving needs. We view our role as a catalyst for good and making our corner of the world a better place. And that, by the way, sums up the seventh co-op principle, Concern for Community.
In the past year, consumers have felt the effects of price increases at gas pumps, in grocery stores and with most goods. Unfortunately, these increases have affected wholesale power prices as well.
Heart of Texas Electric Cooperative has worked diligently to keep our controllable costs as low as possible, but the price of natural gas continues to rise, affecting the price of power through your cooperative.
To help members understand why, I want to answer some frequently asked questions about the situation.
Who controls the power market in Texas?
The Public Utility Commission of Texas and the Electric Reliability Council of Texas collectively manage the power market for most of the state. The PUCT is the regulating authority, and ERCOT ensures there’s enough power being generated to meet the demand of consumers.
Why is the cost of natural gas so high?
There are several factors recently influencing natural gas prices:
1. The Texas power market began operating much more conservatively after the electricity shortage during the severe winter storm in February 2021. ERCOT plans to hold more electricity in reserve to aid during times of disaster. Holding onto this extra power has a cost associated with it; however, the hope is the reserve will make the grid more stable for all of us in the future.
2. The war in Ukraine has disrupted energy markets across the world, particularly as Russia reduced the amount of natural gas it supplies to Europe, which has historically been very reliant on Russian gas. As the largest natural gas-producing state in the U.S., Texas has been exporting natural gas to other countries at a higher price than it would sell for here. This contributes to the tightened supply.
3. Due to federal regulations, drilling for natural gas has slowed down, driving the price higher.
Is Heart of Texas EC the only electric utility that is being affected?
No, electric utilities across Texas are experiencing impacts from higher natural gas prices. Still, Texas co-ops’ electric rates remain comparable to or lower than the national average.
How is Heart of Texas EC helping members during this time?
We have programs in place to help manage your usage. We encourage all members to use the SmartHub app, which allows you to set notifications if your daily usage strays beyond your high threshold. Other options include average monthly payment and prepaid billing.
What can I do to lower my electricity bill?
Changing your habits is the easiest way to lower your electricity usage. Simple changes like adjusting your thermostat to a comfortable level, swapping incandescent bulbs out for LEDs, opening blinds to bring in the
sunlight and unplugging electronics when not in use help conserve electricity.
Please feel free to reach out to me or one of our member service representatives if you have any questions about your electric bill or need suggestions on ways to save energy.
Everyone has their thoughts about the advancement of technology, but I must say that mostly I’m a fan. The modern conveniences we enjoy because of technology are plentiful and often taken for granted. When you think about heating and cooling your home at the touch of a thermostat, it likely doesn’t even register that it wasn’t that long ago we could not control those comforts. When we look at a cellphone—on which you may be reading this article— did you ever dream of having a handheld device that allows you to do so many amazing things? And just 10 years ago, our cars did not have nearly as many comfort and safety amenities as new models now offer.
Although I’m generally a fan of technological advancements, at times I suffer from technological advancement fatigue. The constant need for manufacturers to push out updates just when I’ve gotten comfortable with the device and features is often frustrating. Is this designed obsolescence for economic purposes, or purely driven by increased technological ability? I’m not sure, but like many things in life, it’s probably a little of both.
Mechanical Meters
At Heart of Texas Electric Cooperative, one area we’ve seen tremendous technological advancement is in electric meters. Many of you may recall around 30 years ago, our members read their meters and mailed the monthly meter reading to us with their bill payment. Then, once a year, a co-op employee would visit each meter to perform a safety inspection and read the meter. If reading true-ups were necessary, they would be handled on the next bill.
First Automated Reading Meters
During the late 1990s, power line carrier communications were invented. This allowed a digital device to be connected to the mechanical meter, which could measure disc revolutions and transmit meter readings through the powerline to a collector in our substation. The collector was connected to a modem that uploaded the data to our system and was used to populate meter readings in our billing system. This technology also sent additional data, allowing us to monitor and build a more efficient and resilient distribution system. This included peak load data that could be used for proper transformer sizing and blink counts, allowing us to identify failing equipment and vegetation control issues. However, this system was slow, and the data packets were only received daily due to its inability to rapidly deliver large amounts of data.
New Solid-State Meters
Approximately eight years ago, we began to deploy a new generation of PLC solid-state meters which offered significant advancements. Additionally, we were informed the early PLC technology would no longer be supported or sold by the manufacturer so upgrading was pretty much mandatory. As we know, this is not uncommon in our rapidly advancing technological world. Most of us replace iPads, laptops and cellphones every three to four years. Based on what we are experiencing in the advanced metering market, the life span of this technology ranges from 10 to 15 years.
The new technology did offer many advancements that we have used to increase engineering efficiencies and it interfaces with our outage management system. With this metering system, we received voltage at each location, 15-minute load-interval data for our engineering models to ensure we had proper available capacity throughout the system and two-way communications for relay.
The Latest in Metering Technology
We were recently notified that the PLX PLC meter technology will be deemed end of life, with final orders submitted in 2023 and software support terminated shortly thereafter. In response, Heart of Texas EC is strategically deploying the new RF Mesh system technology. We plan to deploy the RF Mesh system in phases until full implementation is complete. We estimate this will take 4 years.
The new technology offers 16-channels for transmitting metering and engineering data in near real-time, which will provide additional distribution efficiencies. The system also interfaces with our outage management and meter data management systems.
I have to admit, however, that the technology fatigue is setting in. Although the system’s speed and robust data options are useful, the added incremental value is not as great as the previous upgrades.
I believe that planned product obsolescence due to technological advances is just a part of our world I have to learn to accept, no matter how fatiguing. The only real option we have is to move to the next generation. Reverting to the simplicity of the old mechanical meter—while tempting—is just not practical.
Over the past 27 years, I’ve experienced significant changes in the electric utility industry— some of it for good, but some of it not so much—but change is inevitable.
What Meters Do
Regardless of the technology, meters do one thing—they measure watts and do it exactly the same way whether the meter is mechanical or digital. A watt is a watt. Your residential account meter measures your use of kilowatt-hours, a measurement of energy consumed over time. For example, if you have a 1,000-watt lightbulb and turn it on for one hour, you have consumed one kilowatt-hour. This is similar to a water meter or gas pump that measures gallons. Just as with the gas pump, you don’t see the fuel or electrons funneling through the meter. However, you observe the performance of those electrons as they power your lighting, HVAC system, refrigeration, water heater and most everything else in your home.
Contrary to some social media reports, the meters on the Heart of Texas EC system—and at utilities nationwide—are extremely accurate in tracking usage. If you ever have concerns about the accuracy of your meter or your home’s electric consumption, please reach out to us. We’ll be happy to check the meter and offer suggestions to increase your home’s energy efficiency.
Rest assured, while challenging at times, your cooperative is using technological advancements to run the most cost-effective and efficient distribution utility possible to provide our members with reliable service.
The holidays are a time of reflection. I’m grateful for my own family as well as my co-op family at Heart of Texas Electric Cooperative. We’re driven by a sense of mission and purpose, and our team feels a strong connection to our community and our members because we live here too.
While many of our community-focused programs and activities ramp up this time of year, we have several programs and services in place to help our members year-round. I’d like to remind you about some of these offerings in hopes you’ll find them beneficial.
We hope you’ll take advantage of our smartphone app, SmartHub, which empowers you to monitor your electricity usage and pay your energy bill through your phone.
Our Operation Round Up program helps the nonprofit civic groups and organizations in the HOTEC service area. By simply choosing to round up your electric bills to the next whole dollar, you can help your neighbors. Through members’ generous donations over the years, we’ve been able to give to those in need. If you’d like to participate in our Operation Round Up program, please contact us at 800-840-2957.
One of the most important investments we make is in our local youths. Heart of Texas EC awards scholarships to local students. And each year, through our Government-in-Action Youth Tour program, we send high school students to Washington, D.C., for an immersive weeklong experience of democracy in action.
At the heart of all these programs is you—the members we proudly serve. Looking back, I’m grateful for so many wonderful community partners and for the positive impact we can continue to make.
This holiday season, I wish you and your loved ones’ peace, joy and prosperity. Speaking on behalf of our team at Heart of Texas EC, I know the future will be bright because of you.
