Higher bills due to hurricanes, ice storms, increase in operating costs, extreme temparatures and rising fuel costs
PINEVILLE, La. – Aug. 19, 2021 – Multiple factors are contributing to higher than usual Cleco Power bills, but some of the increases are temporary.
“By early next year, our fuel costs will be lower,” said Shane Hilton, president of Cleco Power. “The higher fuel charges from the February ice storms will roll off of bills in April 2022, and we intend to close Dolet Hills Power Station in Mansfield by the end of the year which will save customers who use 1,000 kWh approximately $9 to $15 per month in fuel costs. These savings will be higher for customers who use more than 1,000 kWh.
“We understand these increases come during the time of the year when customer bills are historically higher because of the hot summer months, but we will work with our customers, large and small, on an individual basis like we always have to assist them in navigating the changes to their bill.”
Factors contributing to higher customer bills include:
- The 2020 hurricane season was record-breaking for Cleco Power. Three major hurricanes impacted the company’s service territory – Hurricanes Laura, Delta and Zeta – costing Cleco Power over $240 million to restore power, the largest combined storm expense in the company’s history and larger than Hurricanes Katrina and Rita combined.
- The logistics associated with restoration efforts include mobilizing all Cleco Power crews, as well as securing contractor crews from across the country which lead to additional expenses for wages, transportation, lodging and more. Added to those expenses are the costs to repair and rebuild damaged systems including renting specialized equipment, purchasing and replacing poles, transformers, cross arms, wire and more.
- The interim storm restoration charge went into effect June 1. The charge will be approximately $2.23 per month for the average residential customer using 1,000 kWh.
Increase in Operating Costs/New Rate Structure
- While Cleco Power has multiple projects underway to better serve customers, strengthen power reliability and support future load growth, rates have remained steady since 2014. Prior to 2021, there had been no base rate increase for over seven years.
- Changes to rates are necessary periodically to help recover expenses, including, but not limited to, increases or decreases in operating costs and reliability investments in our power generation facilities, transmission and distribution equipment.
- As the costs of other goods and services have risen, the cost of providing electricity also has increased. According to the U.S. Energy Information Administration, Louisiana residential customer electricity bills are among the lowest nationwide. However, consumption by Louisiana customers is above the national average.
- Cleco Power’s new rate structure went into effect July 1.
Extremely High Temperatures
- Louisiana has long, hot summers. From June to September, temperatures are usually above 90 degrees Fahrenheit. The high humidity and dew point make the heat feel like 120 degrees Fahrenheit. Because of the long hot summers and humidity, usage tends to be higher in the summer.
- Cleco Power measures usage by cooling-degree days, and thus far, the company’s highest cooling-degree days have been in July and August. In July, heat advisories were issued for parts of southeast Louisiana due to the heat index values being 108 degrees Fahrenheit or higher. When temperatures are high, the demand for electricity increases. Higher usage means higher energy and fuel charges. While rates and other factors contribute to the total bill, reducing energy usage can significantly lower a customer’s bill.
- Cleco Power has programs to help customers reduce their energy usage on its website at www.cleco.com/energyefficiency and on Facebook @ClecoPower.
February Ice Storms & Rising Fuel Costs
- To generate electricity, Cleco Power uses multiple fuels to meet customer demand. Fuel costs incurred by Cleco Power are passed directly to customers at cost. In other words, Cleco Power makes no profit on fuel.
- In February 2021, there was a significant spike in the cost of fuel primarily due to the back-to-back ice storms, extremely low temperatures and higher customer usage. To assist customers with higher fuel costs from February, Cleco Power spread the increase in fuel costs over 12 months. Initially, the average cost would have been approximately $65 per customer at once for an average residential customer using 1,000 kWh. Instead, the cost is being billed over a 12-month period (May 2021 through April 2022). While the February ice storms are currently contributing to higher monthly fuel charges, the increase is temporary. After April 2022, customer bills will no longer reflect the fuel costs related to the February ice storms.
- The high cost of lignite (coal), the fuel used at Cleco Power’s Dolet Hills Power Station in Mansfield, is a significant factor in the increased fuel charge on customers’ August bills. Higher lignite mining costs and environmental legislation have led to Cleco Power determining it is in customers’ best interests to close the plant at the end of the year. Thus, the increased fuel charges from Dolet Hills are temporary and will end early next year at the latest after the plant is closed.
- Rising natural gas costs also are contributing to the increase in fuel charges on customers’ August bills when compared to July. Natural gas prices, which fluctuate based on market prices, have doubled since last summer.
- Customers who need assistance with their bill can visit a customer service office, call 1-800-622-6537, use the Contact Us form on cleco.com or direct message Cleco on Facebook @ClecoPower.
- Cleco Power encourages customers who need assistance paying their bill to apply for funds from the U.S. Treasury Emergency Rental & Utility Assistance Program being administered by the State of Louisiana at https://www.lastaterent.com/. The state program, which launched in March 2021, helps renters and landlords impacted by the COVID-19 pandemic. The program was expanded in May to include utility assistance for renters.
- Cleco Power also encourages customers who need assistance paying their bill to apply for funds from the Low-Income Home Energy Assistance Program, a federally funded program, that assists eligible low-income households with their heating and cooling energy costs. In Louisiana, funds are administered by the Louisiana Housing Corporation (LCH) and distributed by community action agencies throughout the state. A list of all agencies is available on the LHC website at www.lhc.la.gov/energy-assistance.
Cleco Corporate Holdings LLC is a regional energy holding company that conducts its business operations through its subsidiaries, Cleco Power LLC and Cleco Cajun LLC. Cleco Power is a regulated electric public utility company that owns 10 generating units with a rated capacity of 3,360 MWs and serves approximately 290,000 customers in Louisiana through its retail business and supplies wholesale power in Louisiana and Mississippi. Cleco Cajun is an unregulated utility company that owns 14 generating units with a rated capacity of 3,379 MWs, and wholesale contracts serving nine Louisiana cooperatives, three wholesale municipal customers and one electric utility. For more information about Cleco, visit us at www.cleco.com.