Message From the CEO
Each month, ECI REC includes a line-item charge on members’ electric bills called the Power Cost Adjustment (PCA). The PCA reflects an adjustment for the actual cost of wholesale power during each billing period—above or below ECI REC’s base rate. The Iowa Utilities Board allows ECI REC (and all other electric utilities) to use the PCA component to offset monthly increases or decreases in the cost of wholesale power.
The PCA is a separate line item on your energy bill. When the PCA factor is negative, your bill amount is reduced, and when the PCA is a positive factor, your bill increases.
Why is the PCA necessary? ECI REC’s wholesale power supplier, Central Iowa Power Cooperative (CIPCO), obtains electricity from many sources, including natural gas, wind, solar, hydro, and coal. CIPCO sets its rates each year based on variables that include the cost of fuels, the cost of power to be purchased in the market, and the amounts needed of each.
If CIPCO’s costs are greater than or less than their base rate, they pass on the difference (+/-) to ECI REC and other member-distribution cooperatives via our monthly wholesale power bill. ECI REC in turn can pass on the difference to our member-consumers in the PCA component.
How is ECI REC leveraging the PCA? Your Cooperative has elected to utilize the PCA component rather than include the full 2023 wholesale power cost increase we received from CIPCO in the rate increase that goes into effect on March 1. The rate increase—almost $0.01/kWh—comes after CIPCO was forced to raise wholesale
power rates three times in 2022. The primary reasons for these increases were higher market prices for power, increased fuel costs, and higher peak power demands. ECI REC will rely on the PCA to adjust because it allows us more flexibility should wholesale power rates increase or decrease.
Depending on the wholesale power cost fluctuations, we estimate that members can expect to see an average PCA rate of $0.014/kWh. In the past several years, your PCA has been negative; however, it is highly doubtful that we will see a PCA credit in the future.
How can I calculate my PCA? Members can calculate their own PCA each month by multiplying the PCA amount (listed on their electric bill) by the kilowatt hours (kWh) used during the billing period. This formula charges all ECI REC members equally for the increase or decrease in the cost of generating electricity, based on fluctuating costs.
