Power Cost Adjustment and Purchased Gas Cost Adjustment

What is a PCA?

The Power Cost Adjustment (PCA) is a mechanism that permits utilities to regularly adjust the price of electricity to reflect fluctuations in the cost of fuel, or purchased power used to supply electricity. The cost to make electricity is affected by the many factors including wind, solar, and the price of coal and fuel. The City of Falls City has an established rate per kilowatt-hour to provide electricity to its customers, and this rate does not fluctuate. The PCA is a fuel adjustment charge caused by an increased cost in the costs of purchased power and energy. It is shown on the customer’s bill as a surcharge to the price per kilowatt-hour. The City of Falls City does not make a profit from the PCA but passes it on to the customer at the actual price charged.

What impacts a PCA?

The PCA changes based on the cost of wholesale power, which fluctuates for a variety of reasons. During hot summer months, when the demand for electricity is much higher, power may need to be purchased from more expensive sources at market price, which includes additional generation costs. Increased costs for fuels like natural gas also impact the price of wholesale power.

How is the PCA calculated?

The PCA is calculated each month by multiplying the amount charged or credited by the number of kilowatt hours used by the customer. For example, if the PCA amount charged is .01520, and 1000 kWh was used by the customer during the billing period, the PCA would be a charge of $15.20. The PCA adjustment shall be calculated according to the following formula: PCA = (P/S) - B

Where:

P = Wholesale power supplier cost + local generation cost of power during current month period calculated using the actual power cost.

S = Number of kilowatt-hours consumed during the current month period calculated using the actual kilowatts consumed by customers

What is a PGA?

The Purchased Gas Cost Adjustment (PGA) is a mechanism that permits natural gas distribution utilities to periodically adjust the price of natural gas supplied to consumers to reflect the utility’s cost of purchasing that gas and transporting it via pipeline to their system. It is shown on the customer’s bill as a surcharge to the price per one-thousand cubic feet. The City of Falls City does not make a profit from the PGA but passes it on to the customer at the actual price charged.

Why is a PGA necessary?

The wholesale price of natural gas is unregulated and fluctuates with market conditions. The PGA enables utilities to adjust on an as-needed basis the amount they charge their customers to reflect the actual cost of the gas used by those customers. Without the PGA, natural gas distribution companies would have to adjust their base rates much more frequently and those adjustments would be much greater. The PGA is looked at monthly to avoid potentially more significant changes that could come from adjusting less frequently. 

How is the PGA calculated?

Adjustment History

Example Utility Bill