Cleco Power is committed to providing affordable energy. Recently, Cleco Power customers began seeing changes to their bills. These changes include an interim storm restoration charge, new rates and fuel costs. Below are questions and answers on the three factors impacting customer bills.
Interim Storm Restoration Charge
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What does the Interim Storm Restoration Charge cover?
When large storms or other disasters damage our electric system, Cleco Power launches massive, round-the-clock efforts to restore power as quickly and safely as possible. In addition to deploying Cleco crews, we call upon contractor crews from across the country to help, which entails paying for wages, equipment rental, transportation, lodging and more. Added to that are equipment costs, wire, poles, transformers, cross arms and fuses.
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When will customers begin seeing the Interim Storm Restoration Charge on bills?
The Interim Storm Restoration Charge was approved by the LPSC on May 19, 2021 and will be on customer bills as a line item titled “Storm Restoration Charge” beginning June 1, 2021.
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How much will customers’ bills increase?
For the average residential customer using 1,000 kilowatt-hours, approximately $2.23 per month.
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How long will the Interim Storm Restoration Charge remain on bills?
The LPSC has authorized interim storm relief while Cleco Power works on securitization to recover the approved storm costs. Securitization is a financing mechanism electric utilities use to recover storm expenses that usually takes 10-12 months. Thus, customers will see an Interim Storm Restoration Charge on their bills until securitization process is complete. Once the approved storm costs are securitized, the interim charge will be adjusted to reflect the new securitized rate, and the word “Interim” will be removed from the line item on the bill.
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What does it mean to securitize storm costs and how does it work?
Securitization allows companies like Cleco Power to recover its storm costs by borrowing the money spent at low-interest bond rates which benefits customers. The bond or loan is used to repay the company, and customers pay off the bond through a dedicated line item on their bill. Customers will pay a lower amount over a longer period of time until the balance is paid. Cleco Power earns no profit on securitized funds.
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How long will the Securitized Storm Restoration Charge remain on bills?
The Securitized Storm Restoration Charge will be on customer bills until the approved storm costs are collected, and the debt is paid in full which will take several years. Paying a lower amount over a longer period of time minimizes the impact to customers. As with Hurricanes Katrina and Rita, the LPSC will track Cleco Power’s recovery of the approved expenses to ensure customers pay no more than the approved amount. -
Since there were multiple hurricanes, will there be multiple storm restoration charges on our bills?
No. The expenses from the 2020 hurricanes are being combined into one Storm Restoration Charge. This includes the recovery of approved expenses from Hurricanes Laura, Delta and Zeta.
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Why do I have to pay for hurricanes that did not affect me?
The costs of providing reliable power are spread across the system and shared by all customers who are served by Cleco Power. All customers are vulnerable to unexpected weather events, such as hurricanes, tornadoes and ice storms. Spreading the costs across all customers helps keep the impact of storm recovery on individuals as low as possible.
Even if a customer wasn’t directly affected by the hurricanes, Cleco Power’s transmission and distribution systems were severely damaged from these storms. Electrical systems are interconnected, and it takes all of the systems, including generation, to deliver reliable electricity to all customers. A stronger grid in one section benefits customers in other sections of the grid.
These costs are reviewed and approved by the Louisiana Public Service Commission (LPSC).
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Why doesn’t your insurance pay for storm damage and restoration?
After Hurricane Andrew in 1992, insurance companies stopped insuring utility poles, wires and other structures.
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Don’t you get federal money to restore your system after storms?
As it pertains to the 2020 hurricane season, the company is pursuing opportunities, such as federal aid, to help offset costs. However, to date, Cleco Power has not received any federal funding to cover the costs of rebuilding the electrical grid following the 2020 hurricanes, nor did the company receive any federal funds after Hurricanes Katrina or Rita.
New Rates
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What costs / expenses go into “rates”?
Infrastructure plus the cost to run the infrastructure determine Cleco Power’s rate.
This includes, but is not limited to: wires, poles, transformers, power plants, trucks, offices, employee benefits and payroll.
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What all goes into a customer’s bill? What other factors impact a customer’s bill besides rates?
The rate is one factor in a customer’s bill. Other factors include charges and any returns to customers. For a complete explanation of all the factors impacting your bill, review "How to Read your Cleco Bill." -
When will the new rates go into effect?
The new rates were approved by the LPSC on June 16, 2021 and will be reflected on customer bills beginning July 1, 2021. -
Why am I seeing “prorated” on my bill? What does that mean?
Customer bills will be prorated for the month of July in order to bill customer usage for the month of June at the “old” rate which would be included in their July bill. Customers will be billed using the “old” rate for electricity usage through June 30, 2021. Customers will be billed using the “new” rate for electricity usage beginning July 1, 2021. Because the company reads meters on different days, some customers might be billed for usage at the old rate, some at the new rate and others with a combination of the old and new rates. For example: If you have a 30-day meter reading cycle, and your meter is read on July 2, 2021, then 28 days will be based on the old rate and two days will be based on the new rate. So, Cleco Power prorated the usage according to the date of usage to the different rates. -
Is the rate change because of the hurricanes?
No. Base rates are separate from the storm charge. -
Is the rate different than the Interim Storm Restoration Charge on customer bills?
Yes. -
Why is Cleco Power changing its rates?
Cleco Power went seven years before filing its most recent rate case – a lengthy, rigorous process that lasted two years. A rate case is required by the LPSC and intended to ensure that utilities are reasonable in their charges and prudent in their spending. Cleco Power continuously strives to keep rates as affordable as possible. At the same time, changes to rates are necessary periodically to help recover expenses, including, but not limited to, increases or decreases in operating costs and reliability investments in the company’s power generation facilities, transmission and distribution equipment. -
How much will customer bills increase?
Effective, July 1, 2021, the bill for a typical residential customer who uses 1,000 kWh per month during the summer months will increase approximately $5 per month and during the winter months, customer bills will increase approximately $10 per month. The newly approved rate structure consists of a summer rate and a winter rate. The summer rate, billed May through October, will include three tiers based on increased electricity usage. The winter rate will be a flat rate billed November through April. This increase can be attributed, in part, to Cleco Power’s investment in replacing and modernizing its equipment and infrastructure. -
What is Cleco Power’s residential rate structure?
There is a “summer rate” and a “winter rate.”
Summer Rate: May - October
< 1,000 kWh
$0.06977 per kWh
1,001 – 1,500 kWh
$0.08372 per kWh
> 1,500 kWh
$0.10047 per kWh
Winter Rate: November - April
All kWh
$0.06977 per kWh
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Does Cleco Power have any programs to help customers better manage bills and reduce energy usage?
Yes. Cleco Power has multiple programs to help customers better manage their bills and reduce their energy usage.
- TOUCH Program
The TOUCH (Time-Of-Use-Choice) program allows customers to pay different electricity rates during the summer, depending on what time of day it is. The way the program works is during the months of May through September, customers are charged different rates during off-peak and on-peak hours. On-peak hours, as defined by TOUCH, are during the summer from 1 p.m. to 7 p.m., the time of day when Cleco Power is producing the most electricity. Off-peak hours are all hours in the other months of the year and those after 7 p.m. and before 1 p.m. most days during the summer. The rate is lower for off-peak usage. The TOUCH program is for weekdays only. Summer holidays (Memorial Day, Independence Day and Labor Day) are billed off peak. The base rates won’t change in 2021 for TOUCH customers but will be impacted by the new rates in 2022 when participating customers are offered new contracts.
- Power Wise Energy Efficiency Program
Energy efficiency programs are available to all Cleco customers – government organizations, residential customers, commercial and industrial customers, small businesses and schools – to help lower energy usage and reduce energy costs. The programs offer assistance and financial incentives to customers for energy efficient improvements and mail-in rebates for energy efficient appliances. Launched in 2015, Power Wise has awarded more than $11 million in incentives and reduced Cleco customers’ energy consumption by over 110 million kilowatt hours. To learn more, visit the Power Wise page.
- Cleco Alternative Rate for Electricity (CARE) Program
Cleco Power created the CARE program to assist low-income customers by providing a 25 percent discount on the fuel portion of their bills in July, August and September. To be eligible for the discount, customers must meet the income levels for the Low Income Home Energy Assistance Program (LIHEAP), a federally funded program that helps households with their energy bills. To receive the discount, customers must enroll through their local community action agency between Oct. 1 and May 30 each year. The agencies send the list of qualified customers to Cleco Power, and Customer Systems applies the correct code to the customer account to ensure customers receive the discount. Customers do have to re-apply each year for the CARE discount.
- Levelized Billing Program
Cleco Power created this program to help customers balance their payments. Changes in temperature and other life events can cause energy bills to fluctuate. Levelized Billing spreads the billing for energy usage over a 12-month period, so a customer can pay approximately the same amount each month. Knowing what to expect each month also helps with other expenses. The amount paid on Levelized Billing is based on a 12-month average of actual energy bills for the previous 12 months. Each month the average is calculated. This average is always rounded to the next whole dollar amount. An adjustment is made to the average bill amount each month to avoid overpayment or underpayment on your account.
- TOUCH Program
Fuel Costs
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Why did the fuel charge on my August/September/October/November bill go up so much?
Mostly because the cost of fuel at Dolet Hills has increased substantially. Residential customers using 1,000 kwh per month experienced an increase of approximately $9.50 in the fuel charge of their August bill because of the increased price of coal, the fuel used to produce electricity at Dolet Hills. -
Why did the cost of fuel at Dolet Hills increase?
Challenging geological conditions at the mine supplying Dolet Hills have significantly increased the cost of extracting coal, resulting in significantly higher fuel cost for the plant. -
How long will we experience the fuel price increase from Dolet Hills?
It should cease by early next year at the latest. -
What is Cleco Power doing about the high cost of fuel at Dolet Hills?
Cleco Power intends to retire Dolet Hills Power Station at the end of the year (2021). -
Why didn’t Cleco Power address this matter sooner?
When it became apparent in November 2018 that the plant was becoming uneconomical, Cleco Power and SWEPCO, co-owner of the plant, decided to generate electricity only during periods of the year when load is typically higher, generally from June through September, or when requested by regional transmission organizations. This step saved Cleco Power and SWEPCO customers approximately $70 million in 2019 and 2020. When conditions at the mine failed to improve, SWEPCO and Cleco Power, also co-owners of the mine, made a formal application with the LPSC to close the mine. Cleco Power intends to do the same for the plant by the end of the year (2021). -
How much will the closing of Dolet Hills save customers?
The average residential customer using 1,000 kWh/month will see an approximately $9 to $15 reduction in monthly fuel costs in 2022 when compared with the final month of 2021 seasonal operations. -
Will the closing of Dolet Hills compromise reliability?
No. -
Did anything else contribute to the increased fuel charge in the August bill?
Yes. There are two additional contributors to the higher fuel charges on customer bills -- an increase in the price of natural gas and the ice storms that occurred in February 2021.
Natural gas prices have doubled since last summer. The market determines the price of natural gas.
In February, there was a significant spike in the cost of fuel and purchased power primarily due to the back-to-back ice storms, extremely low temperatures and higher usage. To assist customers with the higher fuel costs from February and minimize the impact, Cleco Power worked with LPSC on a plan to spread the increase in fuel costs over 12 months. Customers’ April bill would have reflected an increase in fuel costs of approximately $65 for an average residential customer using 1,000 kWh, but instead customer bills will be approximately $5 higher each month for the next 12 months (May 2021 through April 2022). After April 2022, customer bills will no longer reflect the fuel costs related to the February winter storms.