Wholesale Power Cost Adjustment – What You Need to Know

For many years, there has been a line on your electric bill called Power Cost Adj.  This month you may have noticed that it has changed to say Wholesale Pwr Cost Adj.  Even though everything about this item is the same, we added the word wholesale to give you a better understanding of where this is coming from. 
Wholesale Power Cost Adjustment (WPCA) is usually a charge (although it has been a credit in the past) based on the number of kilowatt hours you purchase. The reason we added the word wholesale is because that is where this expense comes from – our wholesale power supplier. 
The contract that Oconto Electric has with our wholesale power supplier states that they will charge us a base rate per kilowatt hour which was determined to be their cost of power at the time the contract was signed.  In the contract there is a stipulation that says if the generation or transmission of the wholesale power incurs any additional costs above normal, they can pass those additional costs on to Oconto Electric.  For example, if the cost of having coal shipped to the generating plant increases, that cost will be passed on to OEC.
Consequently, Oconto Electric never knows from one month to the next what that additional charge will be. Rather than change the base rate each month, we simply pass that additional cost to our members in the form of the Wholesale Power Cost Adjustment.  OEC does not add anything to this cost. 
During the last few months the WPCA has been higher than ever before.  One reason for the increase is that one of our wholesale power supplier’s generating plants was extensively damaged by lightning.  The plant will not be back in operation until January and is estimated to cost $8.3 million to repair.  It also means that while the plant is down, the wholesale power supplier is purchasing power on the open market.  It would be the same as buying propane in February without a contract.
For those members who are on the Dual Fuel and Thermal Storage rate, you are not paying the WPCA on the kilowatt hours purchased on that rate. This is because the off peak energy cost is much more stable than energy used during peak hours.