Article by General Manager, Jerry Williams

Lamar Electric has been purchasing power through another cooperative for a little over 30 years.  Recently Lamar reached an agreement that will allow Lamar to secure wholesale power from the ERCOT market.  Prior to 2000, every utility in Texas either generated their own power or negotiated to buy power from a generating company.  Most rural electric cooperatives banded together with other cooperatives to build or buy electric generating plants or used the combined load to secure a better negotiated purchase of power.  In 2000 the Electric Reliability Council of Texas (ERCOT) was formed and now all electric generators sell their power to ERCOT.  Entities that serve electric loads in Texas then purchase power based on the ERCOT electric market.  Cooperatives that own generating assets, similar to our prior supplier, can use those assets to hedge against market fluctuations, since they are both selling and buying power and can match the buying price to the selling price  they can,  therefore secure power at the actual production cost.  This has been a common practice to give some price stability over a long term.

This change in how wholesale power is purchased will allow Lamar Electric to take advantage of some of the currently lower priced wind and solar power and maintain retail rates much closer to unregulated retail energy providers.”  However, I would  cautioned that; This change will result in lower retail rates at this time, but the trade-off will be rates that fluctuate more as the ERCOT electric market fluctuates.  Due to the continuing low price for natural gas and extensive increase in wind power, most projections indicate the market price for electricity in Texas will remain low for the next several years.  Federal government tax credits for wind and solar are scheduled to phase out over the next few years, but congress has extended the deadline every time for the past 15 years.  Even with the possibility of phasing out the tax credits for wind and solar, investment in these technologies continues to increase.

This reduction is estimated to be about 2 cents per kilowatt hour. This reduction should start appearing on customer’s bills with the first billing cycle in January.” A part of the Lamar Electric rate is a power cost recovery factor which allows changes in the wholesale power cost to be passed directly to the end customer.  Office Manager, Betty Wood, said according to her calculations “this is a reduction of approximately $4 million a year when all Lamar Electric bills are added up.” Katie Morris, our Director of Communications for Lamar Electric, points out “the average residence using about 1000 kilowatt hours a month will see a reduction of about $20 per month.” The effect will be even greater for commercial accounts and those using more electricity.