PCA - Power Cost Adjustment
What is PCA?
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.
Although month-by-month results vary, the overall target is to buy power at or below projected costs for the year.
Thanks to improved operating efficiencies and the power supply team’s success, customers have been paying nearly 10 percent less for the power they consume than they were paying before NOVEC assumed full responsibility for power-supply purchases in 2009.