Wednesday, January 7, 2015

PPCA: A Positive Change to How We Manage Your Utility

Did we spill alphabet soup on your utility bill?

I attended a meeting recently regarding the electric utility industry in which I was provided a booklet of acronyms to help me decipher the discussion. In case you have forgotten, acronyms are short phrases or letters that are used to abbreviate a much longer phrase or name. An example of an acronym would be FBI, which we all know stands for Federal Bureau of Investigation. Utilities and government agencies seem to be particularly found of making up a string of letters to use instead of calling a something by its given name. If you don’t know the lingo, acronyms can be a real pain.
And now your fair city is introducing a new acronym in the mix, and it is one that it is important that you understand. It’s called PPCA, which stands for Purchase Power Cost Adjustment, and starting this month, you will see it on your utility bill.

Purchase Power Cost Adjustment, or PPCA, is simply a factor applied to your electric utility charges based on what the city pays for electricity. Since we procure electricity from a variety of sources each month, the average cost of single kilowatt hour fluctuates from month to month. The city receives energy from nuclear, hydroelectric, and fossil fuel generating facilities, and each facility costs a different amount to operate and therefore the energy that those facilities sell is priced differently.
In some months, the average cost for the city to purchase electricity is higher than the portion of your bill that covers the cost of purchasing electricity, and in those months the PPCA will adjust each customer’s bill accordingly slightly to cover those costs. In other months, the cost of purchasing electricity is lower than the portion of the bill that covers the cost of purchasing electricity and in those months the PPCA will lower you bill. Yes, I said it will lower your bill. Don’t get too excited, we are talking pennies here and pennies there, but the PPCA creates a much fairer rate structure for you.
Look at it this way. If you went to the gas station to fill up your car and gas costs $3.00 per gallon, you would not expect to only pay $2.75 because that wouldn’t cover the cost the gas station owner had to pay a big oil company to buy the gas to sell to you. Likewise, if it was $2.75 and you were asked to pay $3.00 because that is the annual price, then that wouldn’t be fair either. You would want and rightly deserve the lower price. Furthermore, if you are a part owner in the business, which you are a part owner in your publicly owned utility, then you wouldn’t want to be charged more than what was fair.
PPCA increases fairness in the system. It has also been said that it is the single most important thing a utility can do to stabilize its finances. The majority of public and private utilities are already using PPCA to improve their services to the citizens, and it is time we joined the pack. Stabilizing our financial picture is important because it means we can plan our expenditures better and do a better job of looking for ways to lower our costs of providing service to you. And in my view, that is what you want us to do –find better ways to spend the money you already give us without having to come back to you for more unless it is absolutely necessary.
Unfortunately, the price of energy is expected to rise across the United States over the coming years.  Economic growth around the globe is increasing demand for energy and the cost of buying fuel to run power plants is rising. Proposed government regulations that are outside your city’s control will also have an impact on rates in the future. I wish I could paint a better picture for you in regards to the future of electric rates, but the reality of our current world is that these pressures will cause rates to rise for everyone, City of Clinton customer owners, and customers of other systems.

Our advice to you is be as efficient as possible. Be reasonable with your thermostat temperature, make sure your hot water heater is maintained correctly, repair caulking around windows and doors, look for energy tips in the monthly utility newsletter, and visit our website and select the energy depot link for more information on how to reduce that energy bill.

And please know that you city employees, your city manager, and you Mayor and Council understand the impact that energy costs have on our citizens, businesses, and industries. After all, your Mayor and Council, your City Manager, and many of our employees live in the City of Clinton and just like you, must pay the same monthly bills you do. We want you to know we are in this together. After all, your are owners of the public utility system in Clinton and it is our job to work in your best interests.