Each month FBEMC is billed for the electricity we purchase for distribution to our members from Duke Energy. The base price for this energy along with facility charges are set by a long term contract between FBEMC and Duke Energy. In addition to the base price, there is also a price for the fuel component necessary to generate this energy each month. This fuel price varies each month depending on the actual cost of the fuel used for generation.
Several factors are involved in Duke Energy’s calculation of this charge. Some factors are natural gas and coal costs, rail transportation, weather, Generation stations on line, and monthly demand. For instance, Duke Energy may have to take a nuclear generating unit down for unscheduled maintenance for several days within a month. They must replace this low cost generation with a much higher cost natural gas generating unit for those days to cover the demand for the energy. This situation will increase the fuel charge for all their customers including French Broad EMC. If coal or the transportation of coal goes up, French Broad EMC can also expect to see an increase. Weather can also drive the cost of our fuel component similar to the price of gas at the pump for your automobile. When the Hurricanes hit, it sometimes cripples the manufacturing facilities for gasoline, it also disrupted natural gas supplies, causing the price to increase substantially.
In order for French Broad EMC to cover these costs, it is necessary for us to pass these costs on directly to our customers. These costs vary from month to month because of the factors mentioned above. Keep in mind that it takes us a few months after we are charged to fully recover what Duke Energy charges us. This is because French Broad EMC averages these costs over the three prior months in order to keep the charges from fluctuating up and down so dramatically to our members. French Broad EMC remains committed to keeping our operational costs at a reasonable level. Unfortunately, we cannot control the cost of fuel and as long as fuel costs continue to remain at such high levels across the nation, French Broad EMC along with all energy suppliers will be forced to pass these costs onto their customers.
In an effort to keep our membership informed on the fuel situation, we are listing the fuel charges for the past several months as well as the current month. We hope that this information will be beneficial for our customers to better plan and budget as necessary.