Fuel and Purchased Power Cost
Background Information
The fuel and purchased power cost, or FPPC, collects the actual cost of fuel and purchased power to generate a kilowatt-hour of electrical energy. It appears as a line item on your monthly bill. The FPPC reflects price changes in fuel and the cost of purchased power from Solomon Gulch Hydroelectric Project.
FPPC is directly tied to the cost of crude oil. Rising oil costs have impacted the nation for well over a year, and recent natural disasters have resulted in even more dramatic increases in oil prices. CVEA members started to see those increases reflected on electric bills in October 2005.
The following chart lists those fuel costs historically, as well as crude oil and purchased power costs. CVEA's fuel credit program, which saved members over $2 million in energy costs, was a temporary strategy to hold back the price increases instead of passing them through the fuel and purchased power charge. Fluctuations in FPPC can be attributed to two things: fuel prices and which plant generates the electricity.
| QTR | YEAR | SOLOMON GULCH KWH | FUEL CB DIESEL PLANT GALLON | FUEL VZ DIESEL PLANT GALLON | FUEL COGEN GALLON | FPPC | FUEL CREDIT | NET AMOUNT BILLED |
| 1 | 2000 | $ 0.0680 | $ 0.7867 | $ 0.8192 | $ 0.7800 | $ 0.0779 | ||
| 2 | $ 0.0680 | $ 1.0013 | $ 1.0003 | $ 0.8900 | $ 0.0764 | |||
| 3 | $ 0.0680 | $ 1.0013 | $ 1.0003 | $ 0.8957 | $ 0.0734 | |||
| 4 | $ 0.0680 | $ 1.0010 | $ 1.0010 | $ 0.8190 | $ 0.0806 | |||
| 1 | 2001 | $ 0.0680 | $ 1.0010 | $ 1.0010 | $ 0.8190 | $ 0.0901 | ||
| 2 | $ 0.0680 | $ 1.0003 | $ 1.0006 | $ 0.8870 | $ 0.0880 | |||
| 3 | $ 0.0680 | $ 1.0006 | $ 1.0009 | $ 0.8100 | $ 0.0744 | |||
| 4 | $ 0.0680 | $ 1.0003 | $ 1.0007 | $ 0.8225 | $ 0.0840 | |||
| 1 | 2002 | $ 0.0680 | $ 0.8058 | $ 0.8408 | $ 0.6626 | $ 0.0704 | ||
| 2 | $ 0.0680 | $ 0.8742 | $ 0.9002 | $ 0.7834 | $ 0.0654 | |||
| 3 | $ 0.0680 | $ 0.8225 | $ 0.8575 | $ 0.8874 | $ 0.0748 | |||
| 4 | $ 0.0680 | $ 0.9792 | $ 1.0142 | $ 0.7810 | $ 0.0857 | |||
| 1 | 2003 | $ 0.0680 | $ 1.0000 | $ 1.0300 | $ 0.9845 | $ 0.0828 | ||
| 2 | $ 0.0680 | $ 1.0000 | $ 1.0300 | $ 0.7969 | $ 0.0828 | |||
| 3 | $ 0.0680 | $ 1.1000 | $ 1.1000 | $ 0.9019 | $ 0.0711 | |||
| 4 | $ 0.0680 | $ 1.0142 | $ 1.0490 | $ 0.9131 | $ 0.0926 | |||
| 1 | 2004 | $ 0.0680 | $ 1.1117 | $ 1.0667 | $ 1.0469 | $ 0.0944 | ||
| 2 | $ 0.0680 | $ 1.2750 | $ 1.2750 | $ 1.0979 | $ 0.0992 | |||
| 3 | $ 0.0680 | $ 1.4967 | $ 1.4967 | $ 1.3310 | $ 0.0713 | |||
| 4 | $ 0.0680 | $ 1.6133 | $ 1.6133 | $ 1.1286 | $ 0.1057 | $ 0.0300 | $ 0.0757 | |
| 1 | 2005 | $ 0.0680 | $ 1.6159 | $ 1.5760 | $ 1.2280 | $ 0.1126 | $ 0.0300 | $ 0.0826 |
| 2 | $ 0.0680 | $ 1.8775 | $ 1.7283 | $ 1.4214 | $ 0.1051 | $ 0.0150 | $ 0.0901 | |
| 3 | $ 0.0680 | $ 1.8792 | $ 1.9000 | $ 1.8206 | $ 0.0834 | |||
| 4 | $ 0.0680 | $ 2.1276 | $ 1.9418 | $ 1.6254 | $ 0.1535 | |||
| 1 | 2006 | $ 0.0680 | $ 1.9708 | $ 2.1601 | $ 1.7844 | $ 0.1336 | ||
| 2 | $ 0.0680 | $ 2.1636 | $ 2.0804 | $ 1.9673 | $ 0.1294 | |||
| 3 | $ 0.0680 | $ 0.1094 | ||||||
| 4 | $ 0.0680 | $ 0.1094 |
How CVEA Produces Power
CVEA operates the Solomon Gulch Hydroelectric Project and Cogeneration Project under seasonal and contractual constraints. Solomon Gulch contributes almost all of the energy needs June - September but only 60% of annual energy needs. The Cogen Project provides 30% of annual energy needs. The CVEA Diesel Plants contribute 10% of annual energy needs.
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August 2006 Update
July electric bills reflected a lower fuel and purchased power cost (FPPC) based on action the CVEA Board took at the July 19 meeting. The FPPC for July bills was 10.94¢ per kWh, down from the 12.94¢ FPPC that has been in effect since February 2006.
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Since 2004 the Board has been exploring strategies to lessen the impact of high fuel prices on members. Historically the FPPC has changed quarterly. Increasingly high fuel prices have resulted in CVEA monitoring and updating the FPPC more frequently. As seen in the graph above, members have traditionally seen a reduction in the third quarter due to hydro power providing the majority of the system's energy requirements. With continued increases in fuel prices, the Board voted to levelize the FPPC over the remainder of the year. This should help reduce the impact of high FPPC on members' electric bills when CVEA transitions to winter generation and significantly more fuel is used.
Winter 2005 FPPC Increase
An Action Alert was mailed to members in September to notify them of an increase. It said the following:
There will be a very significant increase in the fuel and purchased power cost (FPPC) line of your October electric bill. The revised FPPC for the fourth quarter of 2005 has not yet been finalized but is estimated to be 16 ¢ - almost twice what was billed for June - September. The FPPC collects the actual cost of fuel and purchased power to generate a kilowatt-hour of electrical energy. Crude oil prices directly impact the fuel portion of FPPC. The 16 ¢ FPPC does not consider price increases which could result from Hurricane Rita . Because oil and fuel prices continue to rise, the FPPC will be finalized closer to October billing time.
Copper Valley Electric is a non-profit cooperative that provides electricity at cost. CVEA cannot control the increase in oil costs. The Board of Directors and Staff is very concerned about the effects of rising fuel costs on CVEA members and is looking for ways to mitigate the impact.
For the last year members have seen a fairly stable FPPC, despite rising fuel costs. The increases were absorbed, in a large part, by the three cent fuel credit program that ran from October 2004 - May 2005 . The program, which saved members $1.7 million in energy costs, was a temporary strategy to hold back the price increases instead of passing them through the fuel and purchased power charge. CVEA does not have the resources to continue this pro gram.
CVEA encourages members to be prepared for the rise in FPPC on October electric bills. Your October bill will reflect energy used September 10 - October 10. You can help hold the line on future electric bills by CONSERVING ENERGY NOW.
The fuel and purchased power cost (FPPC) collects the actual cost of fuel and purchased power to generate a kilowatt-hour of electrical energy. The FPPC reflects price changes in fuel and the cost of purchased power from Solomon Gulch Hydroelectric Project. "
The graph below illustrated the increasing cost of oil that directly impacts FPPC. The fuel component of FPPC is a blend of the fuel cost per gallon at the cogeneration and diesel plants.
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