Electric Consumers Encouraged to Conserve Energy

On Monday, July 18, Southern Pioneer Electric was notified that Southwest Power Pool’s (SPP) grid conditions had evolved to a “Conservative Operations Advisory.” The advisory, issued as a response to persistent high temperatures and reduced wind generation across the SPP’s 14-state region, is expected to last until 10 p.m. on Thursday, July 21.

Southern Pioneer Electric encourages consumers to consider energy conservation methods as grid conditions continue to evolve.

“Conserving energy, regardless of weather conditions, is always a good idea,” said Anita Wendt, Southern Pioneer Electric’s vice president of energy services. “Taking small steps towards conservation may help reduce your summer energy bill. During these hot days, we would encourage consumers to look around their homes – unplug electronics and cords that are not being used, remember to turn off lights and consider saving chores that require large appliances, like laundry and dishes, for times outside of the peak energy use hours between 12 p.m. and 8 p.m.”

Consumers are not currently being asked to conserve to preserve regional grid operations. Load shed events may occur at an Energy Emergency Alert (EEA) Level 3, when curtailment is required by the SPP. In the event of a load shed event or rolling outage, Southern Pioneer Electric does not determine location or duration of the outage.

Consumers with questions may contact Southern Pioneer Electric’s office during regular business hours (Monday – Friday, 8 a.m. – 5 p.m.) by calling 1 (800) 670-4381. Additional information regarding grid conditions and energy conservation can be found on Southern Pioneer’s website and Facebook pages.

Sunflower Prepares For Summer Peak Conditions

Summer will not officially arrive until June 21, but we all know that Mother Nature doesn’t adhere to the calendar in Kansas. We have already seen a wide range of temperatures, with some areas of the state reaching at or near 100 degrees as early as May.

High temperatures increase electric demand when electric consumers crank air conditioners to stay cool. In recent reports, the North American Electric Reliability Corp. (NERC) and the Federal Energy Regulatory Commission (FERC) said these high temperatures, combined with other conditions, could lead to an unstable electric supply during peak summer conditions. Other conditions include widespread droughts, which increase electricity demand for irrigation; the growing possibilities of extreme weather events; naturally diminished wind energy output during hot days; and rail shipping interruptions and export issues for coal deliveries to power plants.

The reports by NERC and FERC indicate that the Southwest Power Pool (SPP), the regional grid operator that manages the transmission grid in 14 states including Kansas, is included in the areas of elevated risk for summer reliability issues.

While the recent reports by NERC and FERC were not optimistic news for electric utilities—like Pioneer Electric and Sunflower Electric Power Corp., which provides us with wholesale transmission and generation—meeting electricity demand is always at the forefront of operational and financial strategies. Sunflower continually evaluates anticipated electric demand and takes strategic steps to meet not only the typical energy demand of electricity consumers served by its seven member distribution utilities but also the energy demand in energy-peaking situations, such as very hot summer days.

The recent reports underscore the importance of Sunflower’s balanced generation resource portfolio and calculated operating strategies. Sunflower’s fuel-diverse generation fleet—which includes coal and natural gas units, as well as energy contracts for wind, solar and hydro—serves as a hedge against rising prices of a particular fuel resource. For example, the price of coal is very stable compared to the volatility of natural gas pricing and is an effective hedge against the price of market energy, which is usually correlated to the price of natural gas. Coal-based Holcomb Station was certainly a shining star during the Winter Strom Uri event in 2021.

As previously mentioned, however, current coal deliveries have been impacted by railroad staffing issues. Therefore, Sunflower is re-evaluating how to deploy the unit to capitalize on its benefits during summer peak conditions. Sunflower has also proactively purchased more market energy products to guard against possible exceptionally high prices this summer and continue its mission of providing reliable energy to its member-owners at the lowest possible price.

“There are a lot of variables intrinsic to supplying reliable energy as economically as possible,” said Corey Linville, Sunflower’s vice president of power supply and delivery, “but we are analyzing future scenarios to best prepare for possible unusual summer conditions. We believe we have a strong operating and financial hedging plan in place to help guard against electric interruptions and high cost spikes.”

SPP is also modifying its strategies to fortify the electric grid during extreme conditions. The SPP requires its member utilities to have fuel resources that equate to 12 percent more than their annual peak load requirements, but Winter Storm Uri revealed potential issues with available capacity during such events. Some of these issues are associated with forced outages, as well as electric generating resources that have fuel supply issues, such as natural gas, during these times. The lack of availability of energy from renewable resources is also an issue. Last summer there were several periods when the reliability margin (difference between available capacity and load + contingency reserve requirements) in SPP dropped below 20 percent.

It will take several years to fully implement SPP’s new supply adequacy rules and for load serving entities to firm up existing capacity and procure any needed new capacity to comply with the new rules. In the meantime, SPP will, at times, continue to operate with a relatively low reliability margin at times.

“The electric industry is ever evolving,” said Stuart Lowry, Sunflower’s president and CEO. “The regional energy market brings many benefits but also many new challenges, including the risk of generation resource and operational decisions made by other utilities. Our members and those they serve can have confidence that we will analyze and respond to these risks with their best interests in mind.”


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ECA Policy Review

Current outlooks suggest that Energy/Power Cost Adjustment (“ECA”) charges could be higher than historical average throughout 2022 due to the projected rising cost of electricity in the wholesale market.  This projected increase comes from rising fuel prices for generation resources, primarily natural gas, and could result in higher-than-average bills throughout 2022 for our consumers.

We want to ensure that our consumers are aware of this potential increase and draw attention to Southern Pioneer’s ECA procedure. The ECA is not a new charge; Southern Pioneer implemented its use in 2009 to avoid general rate increases due to wholesale power fluctuations. This notice is to provide consumers with a review of the ECA policies practiced by Southern Pioneer. Consumers may direct billing questions to our customer service team at 800.670.4381.


What is the ECA?

The ECA charge is separate from base electric rates and is associated with the fluctuating costs of procuring wholesale power for Southern Pioneer consumers. Using an ECA helps Southern Pioneer avoid a general base rate increase with every change in wholesale power costs.

Southern Pioneer is a not-for-profit distribution utility and does NOT generate its own power; it purchases wholesale power directly from Sunflower Electric Power Corporation (“Sunflower”), a generation and transmission cooperative. Wholesale power costs fluctuate daily depending on Sunflower’s own generation resource fuel costs, operation costs, and the prices at which Sunflower buys and sells electric energy in the regional market. Southern pays Sunflower directly for the actual cost to procure wholesale power for its consumers. When the actual cost of wholesale power exceeds the amount built into base rates, there will be a positive ECA (or a charge) on your billing statement. When the actual cost of wholesale power is less than the amount built into base rates, the ECA will be negative and reflected as a credit on your billing statement. This ensures that Southern Pioneer collects no more and no less than the actual cost of wholesale power it pays to Sunflower every month.