The price of natural gas spiked during the recent winter storm, and Kentucky electricity customers are likely to see the impact.
Spot prices for natural gas soared during last month’s deep freeze, reaching record levels.
While the typical recent price for a unit of natural gas was $3, it reached nearly $31 on Jan. 23. It stayed high for several days, including $25 on Jan. 26 and $17 on Jan. 27.
“That's like driving up to a gas station to fill your car and turning on the pump and watching it go from $2.59 to $10,” said Don Mosier, president and CEO of East Kentucky Power Cooperative.
Mosier said those costs are passed along to customers, who pay for variations in fuel prices.
“I call it market manipulation, whatever you want to call it, when the fundamentals don't suggest it, and the market explodes in price, there's something going on, and our consumers are paying for it.”
A bill enacted by the legislature and signed by the governor allows utilities to spread out those costs, lessening the impact. Still, electricity customers are likely to pay more in the short term.
Nick Comer, a spokesman for East Kentucky Power, said the cooperative planned to file a complaint with the Federal Energy Regulatory Commission over the price fluctuations.
A report in December by a coalition of groups concluded that Kentucky electricity customers could save money in the long term if large utilities would move away from fossil fuels.
Renewable resources such as wind, solar and battery storage do not leave consumers exposed to the price volatility of coal and natural gas.
Mosier of East Kentucky Power and other utility executives say that renewables are too weather-dependent and can’t be relied on for consistent power in weather extremes.
A shift in policy at the federal level has worked in favor of keeping coal plants on the grid longer and building more natural gas generation.
Still, the U.S. Energy Information Administration forecasts that solar, wind and battery storage will dominate new electricity generation this year, despite the Trump administration’s policies.
Also, the cost of coal generation has increased. A backlog of orders for gas turbines mean new gas generation won’t be ready for several years.
Nuclear power, which has seen a resurgence in interest, could take at least a decade to come online.
