GREENWELL SPRINGS, La. (BRPROUD) — The DEMCO Board of Directors announced a dispute with their wholesale power supplier, Cleco Power, over fuel cost charges.
DEMCO said in a message to members Wednesday that the dispute is based on an audit performed to check fuel charges in 2019, 2020, and 2021. The power plant that Cleco Power operated, the Dolet Hills Power Station in Mansfield, closed at end of 2021, according to DEMCO.
The Louisiana Public Service Commission found the plant’s operations forced it to run at costs above the cost of other wholesale power options and estimate a disallowance of $217 million, DEMCO’s message added.
“Our audit finds that Cleco Power ran the Dolet Hills plant during 2019, 2020 and 2021 when the costs charged to DEMCO were imprudent and significantly higher than power that was available on the market during the same period of time,” said Randy Pierce, CEO and general manager of DEMCO. “The Public Service Commission staff has investigated these very issues on behalf of Cleco Power’s retail customers in central Louisiana and found the same result.”
According to Pierce, DEMCO is still working to discover the exact amount of overcharges and will request a refund from Cleco Power for the full amount, which DEMCO claims could be over $30 million. Pierce added if an agreement cannot be reached, then DEMCO will file a lawsuit to recover costs on behalf of its members.
Pierce said DEMCO members will be updated.
Cleco Power shared a statement regarding the dispute:
The contract in place between Cleco Power and DEMCO is a market-based contract, meaning it’s subject to the ups and downs of market prices. In this case, the primary power being purchased per the contract is coming from natural gas.
Fuel costs are a direct pass-through to customers, including DEMCO, and Cleco Power does not profit from increased natural gas or other fuel costs.
Across the country, natural gas price increases have placed a burden on all utility customers.
The cost of natural gas has skyrocketed. Natural gas prices for June 2022 compared to June 2021 have increased approximately 162 percent based on the Henry Hub index.
Since 2014, Cleco Power has prudently served DEMCO with safe, reliable power. And we’ll continue to do so through the life of our contract ending in 2024.Cleco Power