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Cost to Generate Electric Power Continues to Increase

Wednesday, September 21, 2022 - The City of Sallisaw continues to deal with escalating cost for electricity purchased from the Grand River Dam Authority (GRDA). For many utilities, including GRDA, natural gas remains a primary fuel source for power generations.

Natural gas markets in May 2022 were up 291 percent, compared to May 2021.

The U.S. Energy Information Administration (EIA) expects U.S. natural gas prices to remain high through 2022 due to lower than average natural gas inventories resulting from factors affecting both supply and demand. Unfortunately, for GRDA and GRDA communities, this means the Power Costs Adjustments (PCA) passed to GRDA customers will remain high for the foreseeable future.

City Manager Keith Skelton stated, “According to the U.S. Energy Information Administration (EIA), prices of natural gas continue to be driven by electric demand and decreased inventories. This has a direct effect on GRDA and their electric generation. As we have stated in the past, both GRDA and the City of Sallisaw cannot absorb the increased cost of electric generation and must pass this cost on to the ultimate customers. The EIA is currently predicting the Henry Hub Natural Gas price to show some decrease as we enter 2023. This is based on predicted increases in U.S. natural gas production.”

For September and October of 2022, the Grand River Dam Authority has announced Power Cost Adjustments of $0.04045 and $0.04277 per kilowatt hour respectively. Since February 2021, the month of Winter Storm Uri, these adjustments have increased 126%. To compensate for the increased PCA costs, the City of Sallisaw was forced to implement a Cost of Power Base Adjustment (CPBA). The CPBA charge allows the city to recover the PCA that is over the amount included in the city base electric rates.

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