IID electric customers to catch a break in May

IMPERIAL — Imperial Irrigation District electric customers will see a slight savings on their electric bills for usage in the month of May, But a volatile fuel market could mean higher fees in later months.

The IID Board of Directors earlier this month approved a reduction in the Energy Cost Adjustment (ECA) fee levied to customers to $0.0267 per kilowatt hour (kWh). That is down from $0.0432 per kWh in April.

“This would be an average pass-through to the customers of about 0.0053 cents per kilowatt hour for the month of may,” Belen Valenzuela, IID chief financial officer, said during the regular April 19 IID Board Meeting.

Altogether, IID would collect about $780,000 less from customers in May to offset a $16 million overcollection from customers year to date. The reduction also was made as projections for fuel prices have declined.

IID has long used the ECA apart from regular electrical rates to recoup variable costs such as power purchases and the fuel the district uses to generate electricity. ECA accounts for fluctuations in market prices, meaning either higher or lower monthly rates for customers based on current market prices.

The intention is to lower ECA billing factors for customers during the summer months during periods of higher energy usage, and increase ECA during winter and spring when customer energy usage is lower.

During the April 12 regular meeting, IID directors voted to reduce the annual net fuel power purchase budget, which also impacted the projected needs for ECA heading into summer.

The previous budget approved by the board in October was $316.7 million. It was then set at $302.3 million on April 12. The budget may again be lowered, depending on market fluctuations, to $293 million. It was that projection that led IID staffers to recommend an ECA of $0.0267 per kWh in May.

“The department was able to recognize in the first three months in actual reduction costs ($10.5 million) compared to the approved budget,” Mark Printy, IID manager of Energy Resource Planning, said during the April 12 meeting. “Primary reduction in cost is due to lower energy and natural gas transactions and spot market price compared to the initial forecast. In January and February … it was an ideal situation for our marketing group to go out and take advantage of the negative market. The negative market is — there is energy out there that utilities are paying you to take for them, which reduces our budget quite a bit.”

IID also saw a 3 percent decrease in load reduction in the first three months of the year, Printy said.

IID currently is projecting a peak usage in demand this summer at about 1,121 megawatts.

“As of right now, that is what we are expecting ... is somewhat of a mild summer compared to the last two years,” Printy said.

Still, those forecasts are subject to change, Printy said.

“As we go through the summer — as the team here in real time optimizes our portfolio and what we have and go after some of the market abilities that we can do — we are hoping to provide further adjustments to the budget as we go.”

There could be anticipated savings of about $24 million in fuel prices through the end of 2022, Printy said.

“There are some savings there, but we are prudent at reminding the board that we can’t guarantee anything [about] forecasting or pricing that is going on out there. But that is what we are seeing right now, a potential lowering of the budget.”

Overcollection

With an overcollection to date from customers of about $16 million, Eric Reyes, Brawley resident and a member of the Energy Consumers Advisory Committee, said those monies should be returned to electric customers quickly.

“We should not overcollect anymore and that money should be given back. It would be an incredible victory for this board that we can all rejoice in. And we can work with our underserved communities and explain to them how hard everyone is working. But it has to be given, and it has to be given now.”

Henry Martinez, IID general manager, said the overcollection will be returned by the end of the year.

“If the trend continues to drop and go in the downward direction, we don’t want to get into an overcollection situation,” he said. “Director (James) Hanks was very clear. At the end of the year, ECA has to be at zero. Adjusting the rates is going to be an ongoing function over the next several months.”

If there is overcollection, the ECA will be reduced or the customers credited, Martinez said.

“We are not going to be carrying over monies collected this year into next year.”

However, the ECA could be raised again if the market price for fuel increases.

“We are not asking the board to approve reductions for the rest of the year,” Martinez said. “We are just asking the board to consider the May adjustment for ECA. If we see a trend that goes in the wrong direction, in other words if we are undercollecting … we would come back and adjust the next month’s ECA rate to stay on balance.”