Electric and gas utilities across the plains states and Midwest saw a significant increase in energy use during a record-breaking cold snap. Individual members and FreeState's overall energy cost is expected to be significantly higher. Members will see higher bills associated with higher usage. FreeState wholesale power costs will be higher. We encourage members to be prepared for an increase in monthly electric bills beginning in February.

Electric bills could see an increase over the next four to six months due to this winter weather event.

What happened?

The record low temperatures drastically increased the residential, commercial, and industrial demands for natural gas. The extreme cold caused many natural gas facilities to freeze, causing a reduction in the amount of available natural gas. Demand skyrocketed due to the weather, and reduced availability caused a severe spike in natural gas prices. There were gas-powered electric generation units that we're unable to operate due to this shortage.

The Southwest Power Pool (SPP) is responsible for the electric grid, and its job is to maintain system demands to make sure the power grid is reliable and up and running. When energy demands outweighed supply, the SPP put out Energy Emergency Alerts (EEA).

 

Maintaining reliability

During February 15-18, 2021, SPP declared multiple EEAs at varying levels to bolster system reliability and mitigate the risk of worsening conditions.

• An EEA level 1 is declared when all available resources are scheduled to meet firm load obligations, and SPP is at risk of not meeting its required operating reserves.
• An EEA level 2 is declared when SPP can no longer provide expected energy requirements and is an Energy Deficient Entity. When SPP foresees or has implemented procedures up to, but excluding, interruption of firm load commitments, this level requires SPP to direct its member utilities to issue public conservation appeals.
• An EEA level 3 is declared when SPP foresees or has implemented firm load obligation interruption. An EEA level 3 is triggered if SPP utilizes operating reserves below the required minimum or asks members to implement controlled service interruptions.

Importantly, these alerts are necessary to mitigate the risk of more widespread and longer-lasting outages.

 

How did FreeState's power suppliers react?

FreeState is a distribution cooperative. This means the cooperative purchases power to distribute to members—FreeState purchases from Evergy and Kansas Electric Power Cooperative (KEPCo). Power suppliers communicated with FreeState, who then shared directly with cooperative members.

In compliance with SPP's directives, KEPCo advised FreeState immediately upon learning of SPP's Energy Emergency Alert declarations and requested that FreeState operate their four substation generators and ask end-use member-customers to conserve energy, including, where appropriate and possible, to curtail load.

FreeState complied with this request by running generators at four substations in the McLouth District. This assisted in controlling temporary power interruptions while helping SPP balance the load with available energy resources.

 

What about the financial impact?

FreeState is unique in that it purchases power from two wholesale power providers. Evergy for the Topeka (west) District and KEPCo for the McLouth (east) District.

FreeState is working with both suppliers and has representation on the KEPCo board, who will analyze information and work together to obtain the necessary information to determine such impacts. KEPCo buys power from multiple suppliers. Those suppliers are still determining the cost impacts; therefore, we do not have all of the information we need to quote a total cost impact. 

It could take a significant amount of time before the full cost impacts are realized for either district.  

 

What is FreeState's plan?

Right now, FreeState is working daily with our staff, trustees, and our power suppliers to understand the impact of wholesale billing. There is not a lot of detail available due to the timing of billing from wholesale power providers and the SPP. It could be months before we realize the full impact of this weather event on member bills.

FreeState is committed to mitigating the direct impact to members, and we will be working with individual members to make sure payment options are in place and bills are manageable.

Please understand that this is a very complex issue. We are doing everything we can to maintain our promise to members to provide reliable, safe, and affordable energy to businesses and homes. We will continue to update our members on this issue as information is available.

 

A few points to highlight:

It takes more energy to heat homes and businesses when the temperature drops.

• The more difference between the outside temperature and the thermostat setting inside, the harder your heating system works and the more energy it will use, even if the thermostat stays the same temperature.
• The impact of increased energy use on electric bills can be substantial as temperatures dropped to historic lows.
• The National Weather Service in Topeka reported, "A record-breaking arctic outbreak occurred during the week of February 7th through February 16th when several records were broken in Topeka. The temperature never made it above 15 degrees for 10 consecutive days. Record lows were set on the 14th, 15th, and 16th. And the observed high of -1 on the 15th was the coldest high temperature ever recorded for this day."

What factors cause increases other than energy use?

• There was a sudden spike in natural gas prices due to a shortage in the supply of natural gas, which was triggered by an increase in demand for natural gas due to historically low temperatures.
• Natural gas is one of the primary resources used to generate electricity. Before the winter storm, electric providers had access to natural gas ranging from $2.75 per MMBtu to $4.15 per MMBtu. Natural gas prices ranged from $339 per MMBtu to $999 per MMBtu during the winter storm.
• Renewable generation could not perform as efficiently due to freezing temperatures. Wind generation did not stop entirely but did decrease efficiency significantly.
• The natural gas supply could not meet the energy demand. 

Various reports from other electric providers and news stories cover rising energy costs from other utilities in Kansas and even Texas. Many FreeState members are expressing concern there will be a sharp spike in next month's bill.

FreeState is working behind the scenes to communicate with members and find solutions that can assist our members during these unprecedented times.

FreeState does not yet know all the costs associated with February's winter storm, and it is still unclear what the financial impact will be on our members. Please know FreeState is focused on solutions to evaluate and mitigate the effects of any increased energy costs. As a not-for-profit electric cooperative, any costs for wholesale power are passed to members. Still, we are determined to implement solutions that help minimize the financial impact of future electric bills on our members.

FreeState's board of trustees evaluates solutions and will be working with management to maintain our commitment to providing affordable power for our friends and neighbors. 

FreeState's mission is to provide our members with reliable, safe, and affordable electricity. And while we don't yet know all the impacts of this historic winter weather event, please know our members are the priority. This is a continually evolving situation. As we learn more in the coming days and weeks, we will continue to communicate updates directly to our members via our website, Facebook page, emails, bill stuffers, and other communication channels.

Members can also call our office at 800-794-1989 or email to speak with a  member service representative.