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Understanding Your Power Costs and Credits

  • Posted: 05.31.2022

As a non-profit cooperative, Harrison County REC’s (HCREC) mission is to safely provide reliable electric power and related services at the best possible value for our members. HCREC’s meter is read monthly just like yours. For every dollar we spend, $0.66 goes toward paying for the price of power. The price per kilowatt hour that HCREC pays for the electricity that we purchase from our power provider can change based on a variety of factors, such as the price of coal and natural gas, water supply, railroad transportation costs, periods of energy usage during peak times and more. Our rate of $0.13 per kilowatt hour is our estimate of what it will cost us to deliver that power. Depending on the variables, the cost to purchase power alone can be above or below our estimated cost.

Understanding the Power Cost Adjustment

When rates are set for the cooperative, they are set to cover the costs of the current price of generating electricity. These costs are tentative, and it is imperative that the cooperative has the ability to remain flexible as the markets fluctuate. To help keep our power rates steady for our membership, HCREC uses the “Power Cost Adjustment” or PCA. This is a mechanism that allows the co-op to be fair and responsive to the costs and needs of our membership. What this means for our members is that they can count on their cooperative to keep our power expense as a “Pass Through Cost” with no markup. The PCA formula allows the co-op to recover costs of power purchased without resorting to a permanent rate increase. This also means that when HCREC’s power costs are lowered either due to our members avoiding power usage during our peak usage times, or other factors such as power bill credits, everyone benefits. These benefits are seen through a credit in the PCA. A positive PCA amount means dollars added to the bill, and a negative PCA means dollars subtracted from the bill.

In 2021 our power supplier, Northwest Iowa Power Cooperative (NIPCO), provided two power bill credits totaling approximately $593,000. In June 2021, the first power bill credit was $340,000, and in August 2021, the second credit was $253,000. Members may have noticed a lower PCA on their summer electric bills due to these power bill credits. As we move into the summer season and the weather warms up, members may feel that their bills are higher than they were in 2021. These power bill credits will be a primary factor in that price increase.

The cooperative also received a power bill credit in December 2021 of $498,153 that will be distributed to our members through our patronage allocation of margins and paid through patronage retirements. Recently, our members should have received a 2021 Notice of Patronage Allocation in their mailbox that explained their portion of the 2021 margins that will be paid to them in the future as determined by the HCREC board of directors. The grand total of margins provided by NIPCO to HCREC in 2021 was $1,092,088.

Delivering the best possible value

HCREC is always looking for ways to help our members with energy conservation and efficiency. We have a wide range programs and tools to help monitor energy use, including our Kill a Watt monitor, the Switch Make Cents load control program and energy efficiency rebates for both your home and business. Because we are owned by you, we are a cost-based power provider. It’s important that we continue to provide service that is reliable, affordable, and fair for every member on our line.