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Co-op Business Up, Up, and Away!


High fuel prices and freezing winter temperatures punctuate volatile natural gas market Did anyone expect such an


extreme and extended winter? In April, shorts were coming out of the closet one day; snow flurries were flying around the next. We are all ready for the warm up—especially after the bitter cold we experienced this first quarter of 2014. With temperatures almost 30


percent below normal for much of the winter 2014 season, our power supplier, Western Farmers Electric Cooperative (WFEC), hit multiple all-time peaks culminating with 1,676 megawatts (MW*) on March 2, when the temperature dropped to 3 degrees. Tis new peak was not only higher than any winter peak before it, but it surpassed last summer's highest usage day by 149 MW. Te lingering frigid temp-


eratures wreaked havoc on the fuel market and OEC's power cost adjustment, which was lowered with the 2014 rates. Due to incessant drought conditions in this part of the country, hydro delivery this winter was extremely low. Freezing temperatures caused icing at many wind farms across the state limiting turbine use. WFEC ramped up coal-powered generation to take advantage of the cheaper priced power, but maintenance (scheduled for April to take advantage of traditionally low power demand), has taken the coal plants off-


6 www.okcoop.org May 2014


line. Natural gas generation and purchased power (mainly from natural gas) proved costly. Natural gas prices are volatile


in normal circumstances, but with over two-thirds of the United States suffering through similar or worse winter conditions, the demand for gas went through the roof. WFEC reported natural gas prices in March fluctuating as high as $25 per MMBtu** to a low of $4.40 per MMBtu. March ended with usable


natural gas inventories at their lowest levels in 11 years, according to the U.S. Energy Information Administration (EIA). "With these market costs, we


were paying, on average, [double our normal cost]," explained WFEC CEO Gary Roulet.


WFEC expects high fuel costs


to continue for several months before prices level out to a "normal" level. "Stability today in the natural gas markets is non-existent," commented Roulet. "Natural gas prices are likely


to remain very strong through the remainder of 2014, and are currently averaging [in April] around $6.25 per MMBtu," reported Roulet in a WFEC update.


On the other hand, coal


remains affordable. "WFEC's average cost for coal in March was $2.30 per MMBtu," said OEC


V.P. of Engineering Patrick Grace, "which equates to approximately 2.3¢ per wholesale kWh. Tat is a huge difference from gas and a huge difference to OEC members." Nationally, EIA data indicate 4.7 gigawatts (GW) of coal capacity was retired during 2013 (following 10.3 GW in 2012), and yet coal- powered generation increased 1.4 percent compared to the first quarter of 2013. Tis increase was driven primarily by rising natural gas fuel costs, which in turn drove down natural gas-powered generation by 1.8 percent the first quarter of 2014 compared to the same period last year. EIA predicts coal to fuel 40.3 percent of total generation during 2014 while natural gas supplies only 26.5 percent.


Tis is not the time to restrict


coal generation—the only reliable, low cost generation available in February and March for this region was from coal plants. Natural gas prices will continue to rise; we need a multiple fuel approach to respond to demand spikes and variances. Go to www.action.coop to learn


more and ask the EPA and the current administration to support an "all-of-the-above" energy strategy that balances energy needs and environmental concerns. Te bottom line is our pocketbooks need it.


* 1 megawatt (MW) = 1 million watts; 1 kilowatt (kW) = 1,000 watts; 1 kilowatt hour (kWh) = 1 kW expended for one hour **MMBtu = One thousand thousand (1 million) British thermal units Sources: WFEC updates and newsletter


Tory Tedder-Loffland


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