U.S. utility customers will be repaying the extraordinary costs of energy providers’ repair bills after extreme weather events for decades
U.S. energy providers have incurred extraordinary costs following several extreme weather events.
After extreme weather events, such as the Winter Storm Uri in February 2021, utilities recover part of the extra costs by issuing low-interest debt which is being repaid by customers through a line item fee reflected in their bills. This way of recovering costs is cheaper for utilities than the usual financing mechanism, while spreading the charge to customers over years, or even decades, spares consumers from one large hike in their energy bill.
Over the past year, U.S. utilities have issued some $12.4 billion of low-interest debt to recover storm-related costs, per data from advisory firm Saber Partners cited by the Journal. That’s much more than the $7 billion in cost-recovery bonds that states and utilities issued between 2007 and 2021. Bloomberg
The charges to customers as a share of an average residential bill range from 2.5% for Duke Energy Florida to as high as 12.6% for customers of Long Island Power Authority, according to data from Moody’s Investors Service compiled by the Journal.
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