If you’ve ever looked closely at your electric bill, you may have seen a line labeled “Purchased Power Adj.” While that’s how it appears on your bill, internally we refer to it as the Power Cost Adjustment, or PCA. It’s a small line item — but it plays a big role in how your cooperative handles the changing cost of power.

A member recently called and asked why her bill seemed slightly higher than the month before, even though her usage was about the same. These fluctuations often occur due to shifts in the PCA. It’s a perfect example of how wholesale power costs — driven by factors outside our control — can affect your bill, even when your habits or our local operations haven’t changed.

The PCA is a tool that allows Lorain-Medina Rural Electric to recover the difference between the actual cost we pay for wholesale power each month and the base cost we’ve built into our rates. LMRE calculates base costs annually through our cost-of-service study, which helps us determine a stable, long-term average for wholesale power expenses.

However, due to things like fluctuating fuel prices and seasonal electric demand, the market cost of power changes monthly. The PCA helps account for those ups and downs. Rather than changing base rates every time power
prices shift; we apply the PCA to pass along those cost differences in a more measured way.

Here’s how it works: Each month, we compare our actual cost of power per kilowatt-hour to the base amount. We then adjust for system line loss and calculate a per-kWh adjustment, either a charge or a credit, that’s applied to members’ bills. You won’t see the PCA listed as a separate charge; instead, it’s included in the On-Peak and Off-Peak Generation & Transmission charges under the “Purchased Power Charges” section of your bill.

It’s important to understand that the PCA is strictly a pass-through of wholesale power costs. It has nothing to do with local operations, maintenance, or expenses here at Lorain-Medina Rural Electric. Every penny collected through the PCA goes directly to covering the changing cost of power from our wholesale provider.

At the end of the day, you just want your lights to come on when you flip the switch — and to know you’re paying a fair price for that power. The PCA helps make that possible. It’s how we handle the ups and downs of the energy market without constantly changing rates, so you can count on both reliability and fairness, month after month.