Power cost adjustment on electric bill

Question

was on my electric bill this month and I'm trying to figure out what it is exactly so I can explain it to my dad. From what I've read after your electricity consumption exceeds a certain level you are charged a PCA amount because the electric company purchases power from in the market. Does it have anything to do with the cost of natural gas as well? I am I right in what I said already?

Answer 1

When there was a fl;uctation in thier prices they overcharged you a little and they are now reimbursing you..also sometimes quartely they give you a little kick back on your deposit.They are drawing interest from holding your deposit money in thier banks, and by law they have to forward this interest back to you..some do it quarterly and some annually...in Austin Texas years ago they filed a class action suit on the city over this and won, the city of Austin had to reimburse anybodies deposit interest that had came to the city from other peoples money..some have had a depsoit for 30 years... or more..It cost them Billions of dollars ..and all cities/utility companies followed suit...

Answer 2

You are very close!

The PCA is adjusted annually to help compensate for the expense needed in supplying power for the previous year, and for the estimated cost of the next year's power supply expenses.

And yes, it is very dependent on the market! If natural gas is expensive, then the electric company's gas-fired 'peaker' plants (generators that use natural gas) cost more to operate. The fuels for their plants (natural gas, coal, etc.) can be very costly!

In general, if the electric company's generating capacity is exceeded, they must buy from the market to meet demand. As in any market, their are many fluctuations in prices.

Some years PCA will be an increase in your rate, and some years it will decrease. This is not to be confused with a general rate increase, in which the base rate (cents per KWh) is raised permanently.

I hope that helps!