What is the PCRF?
The Power Cost Recovery Factor (PCRF) allows WCEC to pass the actual cost of power purchased on to members. WCEC does not mark up the cost of power or make a profit from the sale of power to its members.
In addition to the PCRF, your electric bill is made up of two other components, the base rate and the customer charge.
The base rate is made up of two pieces, power costs and distribution costs. Distribution costs are those costs required to deliver power to consumers and includes: personnel, right-of-way management, fleet, equipment, building, engineering, etcetera, which is required to operate and maintain the wires to deliver power to your home or business. The remaining portion of the base rate is for fixed power cost. For Rate A, WCEC base rates were set in February 2000 at 6.667 cents per kWh, of which 4.5 cents is for power cost. The PCRF allows WCEC to recover the remaining cost of power purchased from those that consumed it.
The customer charge is the other component that makes up the electric bill and is for metering and billing.
Why Does the Power Cost Change?
As a nonprofit distribution cooperative, WCEC purchases wholesale power from other entities and then distributes it to members as they use it. To secure members the best price for their power, WCEC is a member of two generation and transmission cooperatives, Northeast Texas Electric Cooperative and Tex-La Electric Cooperative, formed to allow distribution cooperatives to plan power supply in larger quantities and take advantage of economies of scale.
The power WCEC buys is generated from coal, natural gas, biofuel, and hydro-generation. This diversified fuel mix helps WCEC to manage power costs fluctuations due to market fluctuations. Differences in actual power costs compared to historical power costs included in base rates are passed on to members through the PCRF. This is not a rate change on the price of electricity, but members pay more per kWh with an increased PCRF and less per kWh when it is lowered.
How is My Bill Calculated with the PCRF?
WCEC’s PCRF, is currently .028 per kWh. At WCEC, a member’s bill is calculated using three components.
- The fixed member or meter charge.
- The per kWh charge in our tariff.
- The flexible PCRF charge.
When does the PCRF Change?
WCEC can modify the PCRF whenever the need arises based on the fluctuating cost of generation, but we work hard to protect members from price volatility. Using natural gas as an example, changes in market conditions over short time frames can result in very large price changes up or down. Most consumers don’t like to see price fluctuations month to month. Continuously changing costs (an actual reflection of the market) makes budgeting difficult. So at WCEC we levelize actual power costs over at least a 12 month period to smooth out the price fluctuations.
In the end, WCEC is non-profit. We do not want to make a profit, nor by law can we.
Can Someone Help Me Understand My Bill?
At WCEC we are always delighted to help our members better understand their bills. If you’d like to review yours or need help calculating it, just give us a call us at (903) 763-2203 or email firstname.lastname@example.org.