Submitted By: Marie Brooks
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Presentation By: Doug Peebles
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Department: Electric Utility
STAFF RECOMMENDATION (Motion Ready):
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Adopt Resolution 2022-36 amending the Electric Power Cost Adjustment Rate for monthly electric energy billing effective June 1, 2022
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OCALA'S RELEVANT STRATEGIC GOALS:
Fiscally Sustainable
PROOF OF PUBLICATION:
N/A
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BACKGROUND:
The Power Cost Adjustment (PCA) rate is the mechanism by which the positive and negative fluctuations in the cost of power are passed to the customer. Power costs and sales are reviewed monthly to project over or under collections for the year. While the PCA can be adjusted as often as monthly, the recent practice has been to make few adjustments in an effort to maintain stable rates to customers.
Energy prices have risen considerably over the last year causing nationwide pricing pressures on utilities and consumers. The City's most recent increase to the PCA rate went into effect February 1, 2022. At that time, FMPA's average gas price was $5.65 per mmBtu. As of May 2nd, natural gas prices have increased to $8.75 mmBtu and prices are predicted to continue increasing in the short term. According to FMPA's projections, energy prices could remain high for the foreseeable future.
Prior to the February 2022 PCA rate increase, the last increase was August 1, 2017. Since July 2018, the PCA rate has experienced numerous reductions. The last reduction went into effect October 1, 2019 and those levels have been maintained with the exception of a two-month suspension in fiscal year 2020 due to the pandemic and declining economic conditions.
Typically, the major factors contributing to fuel costs are natural gas prices and weather. Today, there are many economic factors driving market fuel costs and creating volatile rates. While fuel costs steadily increased, the City's PCA rate has remained relatively low by utilizing the Rate Stabilization Reserves (RSR) to absorb price incre...
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