Amendment allows city, instead of customers, to keep ‘Power Cost Adjustment’ credits

Reprinted with permission from the Claremore Progress. This article originally appeared on Jun 21, 2016. Support local journalism with a subscription or a day pass for $1.99 :)

The Claremore City Council on Monday approved an amendment that will allow the city to keep negative Power Cost Adjustments (PCAs), but continue to pass along PCA increases to customers.

City Manger Jim Thomas said the purpose of the amendment — to ordinance subsections in Chapter 50 — is to offset costs related to a recent four percent increase implemented by Grand River Dam Authority, which supplies power to the city.

“We started having conversations in November on how we would fund this (the four percent increase). There were a number of options, but one thing that came to my attention was the negative PCA that was showing up each month,” Thomas said.

A negative PCA previously gave a credit back to customers — the adjustment is based on kilowatt hours consumed. Last month the PCA was -.00448, which meant a customer who consumed 1,000 kilowatt-hours received a $4.48 credit on their monthly bill.

The line item on bills related to the PCA adjustment reads “fuel adjustment”.

Larry Hughes, deputy director of Claremore Public Works Authority, said the city would retain about $75,000 a month by not applying the negative adjustments to customer bills.

“Any surplus will go into a restricted account for improvements to the infrastructure in the city,” Thomas said.

Hughes said the four percent increase by GRDA means the city pays about $58,000 more a month compared to last year. The increase was not applied to the city’s kilowatt-per-hour charge to customers, and instead the city has absorbed the increase, he said.

The PCA changes monthly based on a rate provided by GRDA. Previously the rate was directly passed through to the customer, whether the adjustment meant a decrease or an increase.

The amendment to the ordinance states, “Any decrease in the monthly bill to the City for power and energy from the Grand River Dam Authority as a result of a power cost adjustment shall not be ‘passed thru’ to consumers, but instead will be retained by the city.”

Thomas said, short term, this is one way the city is trying to prevent increasing electric rates. The amendment applies to both commercial and residential customers.

Thomas said a negative PCA is an anomaly and is the result of low gas prices. The city does not know when the PCA will be a positive number again.

“There will come a time when a negative PCA will not happen, and we will be faced with another dilemma, but this is money the average consumer was not expecting to get. They were benefiting from low gas prices,” Thomas said.

The amendment approved Monday made no changes to PCA increases passed on to consumers.