Power Cost Adjustment & Billing Optimization

Important Changes Coming May 1

Valley Electric is making some changes to your bill, effective May 1. The first is the utilization of the PCA feature that is already listed on your monthly electric bill. The second will be optimizing the billing process for both electric and broadband accounts.

PCA (Power Cost Adjustment) Utilization

The  PCA is a mechanism to allow electric utilities to recover the additional costs associated with changes in the price of fuel, transmission costs, or other factors that affect the cost of generating and delivering electricity. By adjusting the price of electricity, utilities can ensure that they are able to recover their costs and maintain the financial stability necessary to continue providing reliable service to customers. The re-utilization of the PCA charge that has been on your bills for several years will give the cooperative a way to reflect the actual charges in wholesale power costs.

The PCA is typically calculated on a monthly or quarterly basis, and the adjustment is based on a formula that takes into account the actual cost of purchasing electricity during that period. One of the benefits of the PCA is that it allows utilities to more easily adjust their rates to reflect changes in cost of power in a volatile market, which can help to ensure that they can remain financially stable and continue to provide reliable service to their customers. If the cost of electricity goes up, the PCA will be positive, and customers will see an increase in their electricity bills. If the cost of electricity goes down, the PCA will be negative, and customers will see a decrease in their bills.

Valley Electric does not generate electricity and must purchase it from a wholesale market to meet the needs of our members.  The PCA changes based on the actual cost of wholesale power versus budget, which fluctuates for a variety of reasons. During hot summer months when the demand for electricity is much higher, especially during peak times, power may need to be purchased from more expensive sources at high market prices as opposed to contract power supply agreements at a fixed contract price. Increased costs for fuels like natural gas also impact the price of wholesale power.

Between September and December 2022, Valley paid an addition $8 Million in power costs alone that were not recouped through the energy charge due to volatile market conditions. Extreme temperatures and high demand usage at the end of summer, and the natural gas pipeline going down in December were main contributing factors in these unforeseeable financial events. Valley must pass along these costs to our members to ensure financial stability. To begin recovering this loss, Valley will be implementing the PCA with a base rate of $0.0150. This is a direct pass-through charge to recover the loss experienced in 2022. This portion of the PCA is projected to last for the period of 12-months to spread the costs over a longer period of time, allowing for the lowest impact possible.

In addition, we will be rolling additional losses or gains on a monthly basis, fluctuating depending on the relative power costs and what is budgeted. We will begin with January and February being adjusted for in May. After the initial implementation, the PCA’s amount will be reviewed monthly, and the difference will be collected or credited on a 60-day delay period.

Overall, the power cost adjustment is an important tool for electric utilities to ensure that they can continue to provide reliable service to their customers. While it may be a source of frustration for some customers, the PCA is an essential part of the electricity industry and helps to ensure that utilities can remain financially stable and responsive to changing market conditions.

The implementation of the PCA is necessitated by unprecedented increases in the costs of fuel, and other goods and services (inflation), associated with power generation and transmission of electricity to meet the needs of members. This fluctuating charge is directly related to power costs, as a direct pass-through, not a change in the rates, and does not produce extra revenue for the cooperative.

Billing Optimization

As a valued member, we also wanted to inform you of some upcoming billing changes that will affect your account. We understand that change can be difficult, but we believe that these changes will ultimately benefit you by allowing us to optimize processes in order to provide better service and more accurate billing. To increase efficiency, the billing department will transition billing due dates to accommodate several changes in the way the cooperative currently bills electric and broadband accounts.

The electric billing will transition to four billing dates a month as opposed to the current twenty-eight.   Bills will be moved to the closest billing cycle to a member’s current due date to accommodate our members as best as possible.  During the transition period, the amount of billing days will vary.  Towards the middle of you monthly bill, you can view how many days you are being billed for.

All broadband accounts will transition to one billing date as opposed to the current twenty-eight.  The new billing due date will likely be different than the original one, as all Valley Communications Association (VCA)services will  be billed on a calendar month basis (first through last day of each month) going forward. VCA will also transition members to paying ahead of the service instead of behind, as is currently occurring.  This will potentially increase the amount on your bill to coincide with the number of days you are being billed for on the initial cycle as accounts are trued up during the transition period. In addition, VCA services will be on a separate statement for those members who haven’t already been being billed separately for electric and VCA services. These changes are part of system upgrades being performed to better be able to serve our members.

In preparation for these changes, we encourage the use of SmartHub to make it easier for you to view and manage your account, as well as set up automatic payments or payment reminders. We also offer two forms of budget billing. Under a budget billing plan, your annual energy usage based on previous bills is averaged and then divided by 12 to determine the monthly payment amount. This means that customers pay roughly the same amount each month, regardless of their actual energy usage. If a customer ends up using more energy than estimated, they may owe additional money at the end of the year. On the other hand, if they use less energy than estimated, they may receive a credit or refund.

Budget billing can be helpful for customers who want to avoid large fluctuations in their monthly bills, allowing them to better manage their expenses. However, it’s important to note that budget billing is only an estimate based on past average usage and customers should still monitor their actual energy usage to avoid unexpected charges at the end of their budget billing year.

Please also check with us to see if you qualify for $30 or more off your broadband bill each month to help offset your electric bill or any other increase your are experiencing due to the rising costs we are facing in our economy. In addition, we have partnered with Nevada Outreach to help our members apply for any eligible assistance programs available.

We understand that billing can be a sensitive topic, and we want to assure you that we are here to answer any questions or concerns you may have. Please do not hesitate to reach out to our member service team if you need any assistance, if you are interested in enrolling in budget billing, or to see if you qualify for monthly broadband assistance.

Please visit www.vea.coop for more information or to contact our member service team, please call 775-727-5312.