PCA - Power Cost Adjustment

PCA FAQs

What is the Power Cost Adjustment (PCA)?

As a not-for-profit cooperative, state law prevents NOVEC from earning a margin (profit) on electricity it purchases for delivery to customers. Instead, the actual cost of purchased power is passed through to customers without any mark-up.

Each fall the Co-op forecasts its energy costs and the amount of energy all of its customers will use the next year. While those forecasts are thoroughly researched, it is not surprising they differ from the actual purchased power costs.

NOVEC is required to reconcile the difference, and the reconciliation occurs through the PCA line item on customers’ monthly bills. The PCA can be a credit or a charge. 

Why is the PCA changing mid-year?

Some years, when market changes suggest more drastic fluctuations, NOVEC may evaluate the PCA mid-year to make sure charges are consistent with projections. Periodic changes to NOVEC’s PCA ensure the actual cost of purchased power is recovered without any margin (profit).

Where does NOVEC get its electricity from?

NOVEC is a “poles and wires” distribution company, bringing affordable and reliable electric energy from the regional transmission system to customers through our electric lines. The monthly service and distribution charges on your electric bill pay for this infrastructure.

NOVEC takes service from the Dominion Energy transmission system, which includes 230kV and 500kV high-voltage lines across the state; they interconnect with transmission systems in other states. While Dominion Energy owns and maintains these transmission assets, the interstate transmission system is operated by PJM Interconnection. Located in Valley Forge, Pennsylvania, it coordinates the movement of electricity in all or parts of 13 states and the District of Columbia.

Generation of electric energy comes from nuclear, natural gas, coal, wind, and solar plants throughout PJM’s territory.  PJM manages this marketplace daily, but it also keeps an eye on future generation.

On peak load days in summer and winter, Virginia generally has a shortage of power generation, so PJM uses the transmission system to bring electric energy into the commonwealth from neighboring states. Supply charges and the power cost adjustment on your electric bill pay for transmission and generation.

How does NOVEC control its purchased power costs?

To protect against rising power costs, NOVEC locks in fixed prices and quantities for a substantial portion of the electricity customers are forecast to use. Because customers’ energy needs change daily, NOVEC cannot lock-in prices on all of the power it purchases.

 

2025 Customer Notice

Effective July 1, 2025, NOVEC is implementing an updated Power Cost Adjustment (PCA).

NOVEC does not earn a margin (profit) on wholesale power it purchases on behalf of its customers. Instead, changes in wholesale purchased power costs are passed through at cost to customers using the PCA line item on the monthly bill.

The PCA charge is now $0.002 per kilowatt hour (kWh). For customers who use 1,000 kilowatt hours (kWh) a month, their bills will increase by $10. The average NOVEC customer uses 1,400 kWh per month, so they will see their bills go up by $14 a month.

The July adjustment is driven by cost increases for generation capacity and transmission service that are outside of NOVEC’s control. PJM Interconnection is the regional transmission organization that coordinates wholesale electricity in Virginia, 12 other states, and the District of Columbia. PJM is facing challenges with electric generation as demand continues to increase, so the cost of purchased power is rising as demand outweighs supply. 

Insufficient electric generation resources in the Virginia area of PJM’s territory require power to be brought in from areas with excess generation. That’s driving up capacity market costs. Delivery of this energy to large regional electric loads also is increasing transmission expenses.

While NOVEC works hard to keep costs as low as possible for members of the Cooperative, the challenges of insufficient power generation in the face of increasing demand affects electric utilities all over Virginia. As a not-for-profit electric cooperative, NOVEC’s rates and terms of service are regulated by Virginia’s State Corporation Commission.

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