Sep. 3—Utility bills are becoming less and less fun to receive lately as the cost of electricity in particular keeps rising.

It's the case in the Rio Grande Valley, across the state of Texas and the nation, and it's primarily due to the extremely high cost of natural gas, which most power plants in Texas and the United States rely on to generate electricity. Before the winter storm that paralyzed Texas in February 2021, the cost of gas was around $2 per MMBtu (Metric Million British Thermal Unit). Today it's more than $9 per MMBtu, the highest it's been since 2008.

Brownsville Public Utilities Board officials warned back in May that customers would see a series of rate increases starting in June, as subsidies that had kept customers' bills artificially low since 2013 was being phased out as the money ran out. The subsidy money was generated in the first place by rate increases BPUB implemented beginning in 2013 to pay for its share of the Tenaska Brownsville Generating Station, which never got built.

Those officials say that in May they didn't foresee the cost of gas soaring to current levels, which has forced additional rate hikes with more on the way.

Mike Perez, chief financial officer for BPUB, said the utility's customers had been charged $0.02952 per kilowatt-hour (kWh) for electricity since April 2013. That rate continued until last November, when it was increased to $0.03228 per kWh. The cost has been adjusted upward each month since and for September stood at $0.08093 per kWh. Perez said BPUB keeps having to bump up rates "to keep up with the price of gas."

But even those rate increases BPUB is still not recovering the full amount the utility is spending on fuel and purchase energy (FPE), which is the natural gas it buys to generate its own electricity, plus the electricity BPUB buys on the open market to sell to customers. FPE charges based on kWh consumption make up a portion of the bills customers receive each month.

"In July the cost of production was around 11 cents a kilowatt-hour and our rate was at 6.4 cents," Perez said. "We under-recovered $6 million."

By the end of August BPUB, despite the rate increases, "under-recovered" to the tune of $16 million, he said, noting that BPUB's FPE committee, which sets the rates each month, has put together a plan to fully recover that money. It involves another 5 percent rate increase in October followed by a 2 percent increase in November, Perez said.

"And then we can maintain that rate, just over 8 cents, all the way up to July," he said. "At that point we can recover our under-recoveries."

Marilyn Gilbert, BPUB assistant general manager and chief operating officer, said that in order to soften the blow on customers the utility has been charging less than the rate required to recover all its FPE expenditures. While there's no doubt local customers are paying a lot more for electricity — Magic Valley Electric Cooperative customers roughly the same as BPUB customers — customers of several other retail electricity providers in South Texas are getting hit substantially harder, as those utilities try to recoup massive losses incurred during the February 2021 storm.

An average BPUB residential customer consuming 1,000 kWh of electricity paid about $145 for that power in August, while MVEC customers paid closer to $135 for the same amount. Residential customers of Ambit Energy, for instance, paid about $215 for the same 1,000 kWh, while Direct Energy (previously Bounce Energy) residential customers paid close to $275.

As for why the price of natural gas has skyrocketed (70 percent just since the end of June), the summer scorcher much of the United States including the Rio Grande Valley has endured is a big factor, as is the fact that natural gas inventories are low and production is lagging behind demand. It's even worse in Europe, where natural gas costs seven times what it does in the United States, thanks to Russia sharply limited gas exports to the European Union in retaliation for Western sanctions punishing Russia for launching a war against Ukraine. All that is helping drive up natural gas prices in the United States.

BPUB General Manager and CEO John Bruciak said there's an abundance of natural gas in the ground in Texas and other parts of the United States but that production fell off sharply once prices hit rock bottom, with the result that now there's not enough of it to meet demand. An obstacle to more production is a shortage of deep-pocketed customers for it, namely power plants, he said.

"I don't see any new power plants in Texas that are being built that are gas fired," Bruciak said. "Those are one of the big users of it. When there's no plants built that use gas, they cap it off and don't drill, don't produce."

Some analysts are predicting that the current sky-high prices eventually will incentivize more production, though CNN Business reports that investors are betting against prices remaining high, and futures markets indicate that prices will fall nearly 50 percent by this point next year. Fitch Ratings predicts natural gas will come down to $4 per MMBtu next year, trend lower in 2024 and stabilize at $2.75 per MMBtu by 2025.

For now, the hope is that nothing else comes along, such as a hurricane in the Gulf, to send gas prices even higher, Bruciak said, adding that he's not certain what a return to "normal" would look like.

"Before (February 2021) we were under $2 for gas," he said. "Now we're at $9. I'm not sure. Is $5 normal now, or $2?"

While electric customers in the Valley will see their bills go down as winter approaches and the extreme heat begins to moderate, demand for natural gas will only ramp up in northern states that depend on it for heat, which will maintain upward pressure on gas prices especially if production fails to catch up.

Meanwhile, there are options for those struggling to pay their bills, Bruciak said.

"We do have several programs available for helping customers with their utility bills," he said. "If people do have a problem paying their bill, we'll work with those customers, and hopefully a lot of them will qualify for some of the programs we have for some relief on that."

For information about utility assistance visit brownsville-pub.com/about/public-outreach-assistance-programs/assistance-programs/.