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BLP to Consider Reimplementing PCA in FY2023 to Recover Higher Power Supply Costs

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Grand Haven Board of Light & Power to Consider reimplementING pca in fy2023 to recover HIGHER power supply costs

Tuesday, March 22, 2022 | Grand Haven, MI — Grand Haven Board of Light & Power approved contracting with Utility Financial Solutions LLC (UFS) to update a 2021 rate analysis and cost of service study as a reaction to higher energy market costs at its March 17, 2022 meeting.

David Walters, BLP General Manager stated, “As the Board has discussed for several months now, at least a portion of the increased costs of power supply the Board did not pass on to our customers in FY2022 need to be included in our rates effective July 1, 2022, by reimplementing the Power Cost Adjustment (PCA) beginning July 1, 2022.”

Utility Financial Solutions, who performed the BLP’s Cost of Service Study during FY2022 budget review, will be updating that analysis with the most recent information to determine the appropriate level of the PCA base to ensure minimum cash reserves are maintained over the next five years and adequate operating margins are produced to cover additional debt service payments, fund significant anticipated non-operating expenses, and pay for planned capital improvements over the period.

UFS’s recommendations will likely be used by the Board in determining the required operating revenues contained in the BLP’s FY2023 budget.  The name of the PCA will also be changed to “Power Supply Cost Adjustment,” or PSCA, to includes all power supply costs, which includes transmission, MISO and MPPA overheads, and renewable energy credits (RECs).

The PSCA calculation contained in each rate class will utilize a 12-month rolling average of actual total power supply costs per retail kWh, less a designated base amount (to be recommended by UFS), the difference of which is multiplied by 105% (the calculation of which is already included in each approved rate).

David Walters stated, “The BLP zeroed out its PCA on July 1, 2021 to ensure customer rates remained level in Fiscal Year 2022 due to the impact on the PCA calculation associated with our transition from generating most of our power to buying all our power supply. Had we not zeroed the PCA, costs would have fluctuated significantly throughout the year. As has been discussed, we are now preparing to reimplement the PCA/PSCA to recover higher power supply costs as other electric and natural gas utilities have been doing during this energy crisis.”

The Grand Haven Board of Light & Power’s Electric Service Rules, Standards and Rates may be viewed at ghblp.org.

 

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