1996 AGN OCT 01 I16 - Laserfiche WebLink

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CITY OF COLTON INTEROFFICE MEMORANDUM TO: Council Member Bennett FROM: Thomas K. Clarke, Electric Utility Director / Interim Water & Wastewater Director SUBJECT: Electric Utility Power Cost Adjustment (PCA) DATE: September 26, 1996 The Electric Utility is currently charging a Power Cost Adjustment (PCA) at the rate of .858 cents per kilowatt hour. This rate has been in effect since April, 1995, and remains in effect to cover the costs of power delivered to the City of Colton. The PCA is being watched and monitored by the Electric Utility to make sure that it produces sufficient revenues to meet all of the costs of procurement and delivery of capacity and energy to the City of Colton. As has been previously explained, the PCA has a floor and a ceiling amount which needs to be maintained at all times. Staff has been evaluating the PCA and the balancing account over the summer months to make sure that sufficient revenues are available and that we are not over- or under -collecting. /1 This summer has produced higher than normal sales because of the temperatures during the months of July and August. The summer months tend to create a situation of under -collection due to higher consumption. The opposite tends to be true during the winter months. It appears that the balancing account minimums may be exceeded and that a minor rate adjustment may be warranted. This rate adjustment, if appropriate, would be applied to future billings in an amount to bring the balancing account above the designated minimum. Staff is looking at whether or not an adjustment is appropriate and determining the timing of that change. Since this would be an increase in the PCA, we want to be sure that it is truly necessary. Our forecast of sales between the various classes can significantly affect any increase in the base or PCA rates. Even though the PCA revenues are deficient because of increased power costs, higher than normal sales, and a change in the anticipated distribution of sales between the various classes, has produced higher base rate revenues. Combined, the total balances revenues and expenses for the year. We are hesitant to raise the PCA solely to cover the costs of power when it may create a situation where excess revenues are collected to meet operating expenses in the short-term. The Electric Utility is continually monitoring revenues and expenses to make sure that our rates and the PCA are at the proper levels. Because of the timing and the nature of our bills and the reconciliation of the revenues and expenses, it is impossible to initiate any PCA change until we have full verification of the bills and the revenues. This takes, in some cases, a couple of months to verify this. We're now looking at the closings for FY 95-96 and the summer months of July and August in order to determine whether or not the PCA change that may be proposed is appropriate. Once that reconciliation is completed, a report will come before the Utilities Commission and the City Council so that we can proceed with an administrative change of the rates and begin with the billing adjustments. cc: Mayor and City Council Interim City Manager Freeman Assistant City Manager Parrish ITEM 16