Recent Power Cost Adjustment Clause (PCAC) Increase

Waunakee Utilities has experienced a significant increase in purchased power costs in the past month. These costs are then passed on to customers on a per kWh basis.

Two things happened this month to make the situation more visible than normal.

First, power costs normally increase over the summer months due to increased cooling loads from industrial and residential customers. This can be attributed to the general principle of supply and demand. When demands increase (air conditioner loads) then we must supply more electricity and the costs generally increase.

During the month of June, we had three really hot days in a row. These were in the last week of June. The heat spurred customers to use more air conditioning, spiking demand. However, this spike did not continue very long, limiting the total number of kWh’s over which to spread the increase in the purchased power costs.

Second, the economy has slowed commercial and industrial electricity loads. This means some power plants are no longer running at full capacity or at all. However, there are still overhead costs and depreciation associated with these plants. Like any business, we still have to recoup these costs. However, we have fewer kWh’s to spread these fixed costs across.

So what does the future hold? We anticipate a moderation in the PCAC next month, unless the last week of July is extremely hot again. However, over time, the costs of energy are expected to continue increasing between 5 to 10 percent every year.

What can I do? The best way to minimize the impact of increasing electric rates is to reduce your electricity usage. Check out our home energy suite for appliance use information and energy saving tips.