CLECO: ‘Perfect storm’ of fees and increases lead to higher bills
Published 6:00 am Sunday, August 22, 2021
When August bills arrived, CLECO customers suffered from a collective sense of sticker shock.
That shock, according to CLECO officials, is the result of a perfect storm of fees and increases, some of them due to the slew of weather events that occurred over the last year and others from the company’s rate increase that it took this year.
According to CLECO Communications Strategist Fran Phoenix, the company took its first rate increase in seven years in 2021. As under the old rates, the company has different fees for the winter and summer months. Under both the new and old rates, there are different rates for the summer and winter. Under the old plan, the rate in winter dropped after the first 750 kWh. Under the new plan, winter rates remain constant. That constant — $69.77 per 1,000 kWh — is the lowest rate charged in the summer.
Old vs. new
Unlike most other things that you may buy, electricity runs inverse to the rule of bulk buying. So instead of paying less for more power, the more you consume the higher your rate per unit becomes.
To put it in perspective, it would be like Costco charging you 20 percent more for the 36-roll pack of toilet tissue as compared to nine of the four-roll packs.
Needless to say, you’d buy the smaller packages. But you can’t do that with electricity. It’s either on or off. And in the teeth of a Louisiana summer, it’s almost always on.
In the summer months under the old rates from May through October, residential customers paid $71.25 per 1,000 kilowatt-hour for the first 3,500 kWh, then $100 per 1,000 kWh after that.
The new summer rate is structured differently. For the first 1,000 kWh, customers will pay $69.77 per 1,000 kWh, which is slightly lower than the old initial rate. But it rises more quickly. From 1,001 to 1,500 kWh, the rate rises to $83.72 per 1,000, then the rate goes to $100 per kWh for all electric usage above 1,500 kWh.
Although that initial 1,000 kWh is lower, everything above that point is more expensive. So for a customer who used 2,000 kWh in a month, under the old rate structure they would pay $142.50. Under the new system, they would pay less for the first 1,000 kWh, $69.77. But they would pay 41.86 for the next 500 kWh and $50 for the 500 after that, for a total of $161.63.
That would bump the charge for that 2,000 kWh residential bill by $19.13. But if the home used 3,000 kWh, which is not uncommon when temperatures teeter around 100 degrees for a week at a time, what used to be a $213.75 bill would now be $261.63 — $47.88 higher.
Icy math
If the rate change were the only thing customers were dealing with, that would be enough. But, as Ron Popeil used to say, wait — there’s more.
Customers are also seeing an additional fee for the mercenary prices charged for natural gas to fire plants during February’s ice storm across the south. So in addition to the higher cost per kWh for electricity, customers were put on a 12-month payment plan in April to pay off the huge fuel surcharge that the frigid temperatures entailed.
According to Phoenix, that 12-month finance agreement comes to $65 for the customer who uses 1,000 kWh a month, or about $5 a month for that customer. But like everything else, that fee is based on the number of kWh used. So the 2,000 kWh household would see closer to $10, and the 3,000 kWh family more like $15.
So, to add that in, customers are now paying between $24 more for the 2,000 kWh household and about $63 more for the 3,000 kWh household.
But wait — there’s more.
Burning coal
During the summer months, CLECO has an older plant in north Louisiana that uses lignite coal as its power source. The Dolet Hills Power Station in Mansfield will be decommissioned next year, but for now it is brought online during peak periods, like summer, when demand is greater to prevent the utility from either browning out or resorting to more drastic measures, like rolling blackouts.
According to Phoenix, the fuel charge for the lignite to fire up that old plant adds from $9 to $15 a month to the bill of a 1,000 kWh home. So for the more realistic 2,000 kWh home, that increase is anywhere from $18 to $30. For the 3,000 kWh home, it’s between $27 and $45.
Because the plant is being decommissioned by the end of the year, this is the last summer its operating cost will be a factor in the average customer’s bill. But for now, if we take the average cost, it now puts the increase on August bills for the 2,000 kWh home at $44. For the 3,000 kWh home, that figure jumps to an additional $93.
But wait — there’s more.
Stormy weather
Last year’s killer hurricane season took its toll on homes and businesses across southwest Louisiana, with large parts of the western portion of the state still trying to recover from the damage.
That damage ran up huge bills for utility companies as well. CLECO estimates that its cost from the multiple hurricanes that crossed the state is in excess of $240 million. To recoup some of those costs, the company has instituted a storm fee of $2.23 per 1,000 kWh of electricity.
That puts the 2,000 kWh per month residence at about a $49 per month increase. The 3,000 per month home is now over $100 more per month.
And, of course, wait — there’s more.
The typical increases
Those are all one-off types of changes in the amount customers see on their bills each month. But Phoenix said that there is also the traditional fuel adjustment cost that has increased over the last year as well.
“Natural gas prices have doubled over the last year,” Phoenix said. “So that increase is also figured into the billing.”
She said that the fuel adjustment costs usually run two months behind the actual burning of the fuel. So, for example, the additional fuel charges for the February ice storm did not hit until April. The charges being seen on the August bills are based on costs in June.
And, because oil prices have been stable at around $70 to $73 a barrel for the last month or two, September’s bill may be higher.
Phoenix also said that some customers who have meters that could not be read, either digitally or physically, may have had estimated usage used to determine their billing.
“If there is a problem and they think their bill has been calculated incorrectly, customers have 30 days to contact us,” she said. “If it was an estimate and it was incorrect, we will take care of it.”
For many, however, the high prices may be here to stay. And, in Iberia Parish at least, they may go up a little more in coming months as the parish debates the idea of franchise fees for utility vendors in the parish.
Under its current rate schedule, CLECO would be allowed to pass half of any franchise fee on to the customers, with the company assuming responsibility for the other half.
Customers who need assistance with their bill can visit a CLECO 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 state-administered U.S. Treasury Emergency Rental and Utility Assistance Program at https://www.lastaterent.com/. The state program, which launched in March, 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.
The recent rate increase, fuel surcharge, storm recovery fee and other adjustments in rates have pushed CLECO bills higher. Here’s what we calculated the differences would be for a 1,000, 2,000 and 3,000 kWh home:
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+$105.75 |
NOTE: This does not include the regular monthly fuel adjustment for fluctuations in the price of natural gas, which has been increasing in price as well.
