What is the Power Cost Adjustment item on my utility bill?
The Power Cost Adjustment is a tool that has been implemented to protect both the customer and the city from fluctuating power supply cost. If power supply costs increase or decrease, the customers bill will be adjusted accordingly. This adjustment is listed as a seperate line item on each City of Santa Clara utility bill. The adjustment will be based on a rolling six-month average and implemented monthly.
Why do we need the Power Cost Adjustment?
In the recent years, power supply costs have fluctuated very rapidly and unpredictably. Because of this, it is critical that the City makes sure costs are recovered. The City does not make any revenue from the Power Cost Adjustment, it is a pass-through cost. It is important to realize that the Power Cost Adjustment changes from month to month, and this is not due to a change in our electric rates, but due to the changing costs of the power supply. Without implementation of the Power Cost Adjustment, rates would need to be changed constantly to reflect the actual cost of power. If an unusual occurrence happens resulting in abnormally high costs, the management and City Council will determine whether that cost should be recovered over a longer period.
How is the Power Cost Adjustment calculated?
The Power Cost Adjustment is calculated using the most recent six months of actual power costs, and applied to each customers following monthly billed energy (kWh) or a two month delay from when the cost occurred to when billed. The Power Cost Adjustment will apply to all Santa Clara electric rate schedules, except non-metered and special contract rates.
The Power Cost Adjustment shall be calculated according to the following formula:
PCA = ((P/S) + L) – B
P = Wholesale Power Supply Cost (most recent six months of actual power supply costs)
S = Number of kilowatt-hours sold during the same time period as factor “P”.
L = System annual average losses (5.9%)
B = The average cost of power per kilowatt-hour sold and recovered through base retail rates ($0.0656)