Today’s wholesale power market and how it affects
your cooperative
- Background information
- Do wholesale power prices affect my electric bill?
- What are the marketplace factors that caused an increase in wholesale power costs?
- Where does my co-op's power come from?
- If the wholesale marketplace is so uncertain, why doesn't the co-op just build its own power plant?
- What is my co-op doing to ensure we have the lowest cost power possible?
Although electric utility deregulation has not come to the retail market in North Carolina, it came to the wholesale market nationwide in 1992. Wholesale electricity is the bulk power that generating companies make available to utilities and marketing entities for resale to their customers.
In 1992, Congress restructured the wholesale electricity market with The Energy Policy Act of 1992. opening the industry to competition in the wholesale electric power market. As a result of the 1992 Act, there are more electric power suppliers in today’s market. Competition has created a need for power suppliers to develop expertise in the areas of risk management, generation fuel portfolio management and economic forecasting.
To address these new needs, North Carolina’s electric cooperatives, through their power supply cooperative, North Carolina Electric Membership Corporation (NCEMC), has joined with generation and transmission cooperatives across the nation in the Alliance of Cooperative Energy Suppliers, known as ACES Power Marketing.
Chuck Terrill, CEO of the statewide power supply cooperative NCEMC, said, "Although the wholesale market has changed more in the past few years than at any other time in our history, the basic cooperative principles of joining forces to create market strength has never been more relevant, and enables the cooperatives to deliver the best possible service, prices and energy reliability to our members."
Do wholesale power prices affect my electric bill?
The weather is the biggest determinant of the amount of your power bill. If you've been using your electric heating system a lot because of cold weather, for example, your bill will increase. Also, the cost of wholesale electricity can influence your bill. Recently, a number of marketplace factors have caused an increase in the cost of wholesale power, which your co-op purchases through its power supply cooperative, NCEMC. Your not-for-profit cooperative may recover this cost in the form of a modest adjustment on your bill.
What are the marketplace factors that caused an increase in wholesale power costs?
On the wholesale level, electricity is a commodity much like wheat, natural gas and pork bellies. So it's influenced by market pressures such as supply, demand, weather and the price and availability of fuel and power generation facilities.
Where does my co-op's power come from?
In this state, 26 cooperatives purchase all of their power through its power supply cooperative, NCEMC. NCEMC aggregates the power needs of all 26 cooperatives to obtain the best possible prices for wholesale electricity.
If the wholesale marketplace is so uncertain, why doesn't the co-op just build its own power plant?
North Carolina's electric cooperatives, through NCEMC, own a significant part of a generation facility: Catawba Nuclear Station in York, S.C. However, Catawba meets only a portion of the cooperatives' power needs. For the last several years, it has been more economical to purchase the remainder of our power requirements on the deregulated wholesale market. However, because market conditions do change, the cooperatives continually review future power needs, and balance these projected needs with economic projections to decide whether it makes more financial sense to buy or to build.
What is my co-op doing to ensure we have the lowest cost power possible?
It is your cooperative's mission to provide you safe and reliable electricity at the lowest possible cost. NCEMC aggregates the power needs of 26 electric cooperatives to obtain the best prices possible. Also, NCEMC has joined with seven other cooperative power suppliers across the nation to form the Alliance for Cooperative Energy Suppliers, known as ACES Power Marketing. ACES helps provide the economies of scale needed to manage risks inherent in a competitive wholesale market, and uses the clout brought about by sheer volume and size, to obtain the best possible energy prices for co-op consumers.