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What is the Power Cost Adjustment item on my electric bill?

posted on 2018-02-15 , updated on 2018-02-15

  • A Basic Explanation

The Power Cost Adjustment is a separate line item on each Choctaw Electric bill statement which reflects the increases/decreases in the co-op's cost of power purchased wholesale from Western Farmers Electric Cooperative. The fluctuation in the Power Cost Adjustment is largely caused by changes in the cost of fuel for generation.

The co-op's cost of wholesale power is approximately 61 percent of Choctaw’s total expenses (per 2016 audited end-of-year figures), so it's critical that the co-op makes sure that it recovers all its wholesale power costs in its retail sales. The cost is collected from the co-op's members through the energy charge and the Power Cost Adjustment.

  • A portion of the co-op's cost of power is already included in the energy rate (commonly referred to as the base rate)

Presently 4.6 cents per kWh is included in the base rate for the cost of wholesale power. When the cost of power is greater than the amount included in the base rate, the Power Cost Adjustment is a charge. When the cost is less, the Power Cost Adjustment is a credit.

Each cooperative’s base rate is different which is determined by the cooperative’s cost of service study, so if the base rate is different the power cost adjustment will be different. Some cooperatives levelize their power cost adjustment based off the previous year. This Power Cost Adjustment application procedure is determined by each cooperative individually.

All WFEC cooperatives have the same rate, however each cooperative’s cost of wholesale power is different. This cost is determined by the cooperatives load characteristics: residential, commercial, cooperative load during peak times, etc.

  • Computing the Power Cost Adjustment

Each month's Power Cost Adjustment is established on the first billing day after management's review of WFEC’s latest billing and projected power costs for the month. This new Power Cost Adjustment will then take effect on billing cycles 3 & 4 in the same month and cycles 1 & 2 in the following month.

The Power Cost Adjustment on an electric bill statement is computed by multiplying the amount charged or credited by the number of kilowatt hours used. For example, if the amount charged is .02420, and 1,000 kWh was used during the billing period, the Power Cost Adjustment would be a charge of $24.20.

Without Power Cost Adjustments, a utility's base rates would be constantly changing to reflect increases and decreases in the cost of power. Choctaw Electric retains zero percent of the Power Cost Adjustment charge.

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posted on 2018-02-10 , updated on 2018-02-10

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