PCA - Power Cost Adjustment

In Virginia, NOVEC and other electric utilities regulated by the State Corporation Commission are only allowed to earn a margin or profit on infrastructure, and not on the electricity produced or delivered through the infrastructure. Simply stated, that means for NOVEC’s expense associated with the wholesale power the Co-op purchases or generates, there is no mark-up allowed.

NOVEC sets a month-by-month power-cost budget in advance of the calendar year, based on the best available pricing information and the anticipated energy consumption of its customers. NOVEC contracts to purchase most of its projected energy needs in advance. Despite advanced computer modeling and fixed-price contracts, temperature extremes and the response of customers to such conditions make power-demand estimating a challenge. For example, a sustained heat wave or cold snap cause an increase in electricity demand, which may cause actual power purchases to exceed the budget.