At NVEC, we know you don’t like surprises in your electric bill. We apologize for not giving you more warning about the new SCRF charge.
We addressed the details during the public NVEC February board meeting.
In this letter we will provide a detailed breakdown of the new charges on your bill listed as the SCRF - The Securitization Cost Recovery Factor.
The SCRF is adding .01774 cents per KWH (Kilo Watt Hours) or about $17 to your bill for every 1,000 KWH of electricity you use.
The SCRF is a fee allowed by the passing of SB1580, which allows the sell of bonds to pay for extraordinary costs for electric cooperatives. Essentially, it pays for the outrageously high natural gas fees charged to Brazos Electric during the ERCOT failure in February 2021. During Winter Storm Uri, the price of Natural Gas went from $2 - $3 per MMBtu (Million British Thermal Units) to $224.56 MMBtu.
The natural gas bill for Brazos, our power supplier, forced them to file bankruptcy. If Brazos had not filed bankruptcy, your immediate bill after Uri would have been in the thousands or tens of thousands of dollars. This happened to many people who were buying their electricity from a deregulated power company.
Although the Brazos bankruptcy was a tool to protect you, it only went so far. Essentially it pushed your bill pain back two years. Our share of the Brazos debt is $51million, which will be paid back over the next 28 years through the SCRF.
For those who wish to go deep into the finances of the SCRF and the Brazos bankruptcy debt, in our next section we will provide you with specific details about the bonds that were sold to repay the Brazos debt. Because NVEC is part owner of Brazos, we must pay our portion of the debt.
Many have asked how you can owe this money, when so many were in the dark and not using electricity? The technical answer is that even if you didn’t have lights, Brazos was still generating electricity and purchasing natural gas, and putting electricity into the grid for the portions of ERCOT that continued to function.
This is a non-bypassable charge assigned to NVEC’s service area created by the legislature through SB1580.
During our February board meeting, some members of the cooperative asked us for specifics on the financing, the loan amounts, and the interest payments. Here are the details for those who want to know more:
The total amount of the NVEC Bond responsibility is $51,828.502.15.
With interest, at the end of 28 years, NVEC will have paid $55,213,304.30.
In the first year, the NVEC Principal & Interest obligation is $3,210.075.83. In the first year, we are required to build a reserve amount to offset any future collectability issues.
Each year after the first year, our annual Principal & Interest obligation is $1,926,045.50.
Every six months, you may see a slight adjustment to the SCRF on your bill. We are required to make these adjustments to ensure that we are collecting the correct amount of funds to pay our debt. Over time, if the population of the area grows, the cost will be spread out over more members, reducing the cost for each member.
Financially, the bonds were sold to investors in three Tranches. (Tranche is a French word meaning slice.)
Tranche 1 sold $125 million in bonds, at an interest rate of 5.014 % with the final payment March 1, 2032.
Tranche 2 sold $200 million in bonds, at an interest rate of 5.243 % with the final payment March 1, 2041.
Tranche 3 sold $388 million in bonds, at an interest rate of 5.413 % with the final payment March 1, 2050.
The total amount owed by all members of the Brazos Cooperative is $713 million dollars.
If you need to know more, please call me at (979) 828-3232 and I will share any further details with you.
NVEC General Manager