The Power Cost Adjustment (PCA) clause of the electrical rate accounts for variations in the cost of the electrical energy purchased by the city for resale to our customers. When the price of energy goes up above the base amount assumed in the rate structure, a surcharge is added to every bill. When the price is less than the base amount, a credit is made. Unfortunately, in this time of rising energy costs, we have not had a credit to pass on to our customers since this past winter. It is important to remember that the PCA only applies to the costs of the electrical energy coming into our system; all other operational costs and overhead of the utility are covered in the base rate outside of the PCA.
The PCA cost per kilowatt hour is assessed to all customers of the utility regardless of the type of service, residential or commercial, and is based on the metered consumption. It is a pass-through amount, meaning that the increased cost of energy passes through to you, the customer. When those costs decline, the lower prices will pass through as well.
The underlying causes for the increase in our wholesale energy prices have been widely reported, and are nationwide and worldwide in scope. World fuel prices for oil, natural gas, and coal have all substantially increased over the past months and years, and recent heat waves and record electrical usage have sent demand soaring. When the demand for any commodity goes up sharply, prices follow, and energy pricing, in particular, is subject to the economics of the world economic marketplace.
The City of Harrisonville joined a public power pool two years ago in order to increase our bargaining power and flexibility in purchasing wholesale electrical energy. Through the pool, we are able to pursue better pricing options, but we are still at the overall mercy of the market. Since electrical energy cannot be stored in large amounts, it must be generated as it is consumed, and so peak demand leads to peak pricing.
The city will continue to do everything in its power to maintain safe, reliable, and affordable electric energy.