In recent years, the part of your electric bill labeled “PCA” has caused concern and has prompted many questions.
The Power Cost Adjustment (PCA) is a necessary component of the rate structure for Southern Rivers Energy to recoup the expense of purchasing the energy required to provide electric service.
Did you know that SRE has not changed our rates since 2009? Now think of the fluctuation of fuel costs and inflations. Using a PCA allows for monthly changes as wholesale energy costs fluctuate, without having to continually restructure rates.
Just as the price of gasoline, eggs or milk can change, so can the price of fuel used to generate electricity and the price of electricity purchased on the market. The monthly rates of all area utilities are set based on the expected costs at the time the rate was developed. The difference between these costs and the actual costs at the time the electricity is used by members is recovered by the PCA. Without the use of these adjustments, there would be constant rewriting of rates and constant confusion.
Wholesale power cost is Southern Rivers Energy’s largest expense and the PCA is a passthrough from the wholesale power bill to members’ bills. But this is not unique to cooperatives. In fact, all energy suppliers have a monthly adjustment for fluctuating fuel costs related to power production. The terminology may vary. You may hear PCA’s referred to as a “Wholesale Power Cost Adjustment” or “Fuel Cost Adjustment,” or other terms, but all are fundamentally the same.