What is PCAC and why is it on my utility bill?
If you’re a customer of Lake Mills Light & Water, your monthly bill most likely includes a line item labeled, “Power Cost Adjustment Clause (PCAC).” We use the PCAC to pass through to you the actual costs for purchasing your wholesale power.
The PCAC can increase or decrease monthly depending on variations in weather, customer usage, fuel costs and many other factors. The PCAC may also be referred to as the fuel cost adjustment or a purchased power adjustment.
The PCAC helps to keep rates as low as possible by ensuring that the utility collects no more and no less than its actual cost for your wholesale power, which typically represents approximately 75 percent of the local utility’s annual operating expense. The PCAC provides financial stability to the nonprofit utility by making sure it collects revenue sufficient to cover its largest operating expense. Without the PCAC, local rates would likely need to increase.
The PCAC is one of several factors that impact the customer’s total bill. Others include:
For a comprehensive understanding, look at your entire bill and familiarize yourself with how energy is being used.