SCEC rate expert breaks down the Power Cost Adjustment

Many factors can contribute to fluctuations in electric bills. The first, and most obvious, is the weather. We expect our electric bills to be reflective of the different seasons and the changes in routine each one brings. Other events, such as adding members to our household, a leaking water well or the addition of a pool, can cause an increase in costs as well. But what happens when our summer bills are noticeably higher than last summer’s bills when we’ve made no sizable changes? The answer can likely be found in the Cost Adjustment.

What is the Cost Adjustment?

“Rather than generating our own power, SCEC purchases the power at wholesale cost and delivers it safely to members’ homes and businesses.  The Cost Adjustment is a separate line-item on each bill that reflects the increases and decreases of the power we purchase from Kansas Electric Power Cooperative, Inc (KEPCo).

Why does the Cost Adjustment fluctuate?

The fluctuation in the Cost Adjustment is caused by changes in the cost of fuel for electric generation, mainly natural gas. Last summer, natural gas costs were around $3-$4/MMBTU — they currently sit at $7-$8/MMBTU.

A portion of SCEC’s cost of power is already included in the energy charge, or kilowatt hour (kWh) charge. When the cost of power is greater than the amount included in the energy charge, the Cost Adjustment reflects that increase. When the cost of power purchased is less, the Cost Adjustment appears as a credit on electric bills.

Who is affected by the Cost Adjustment?

For about a year now, the electric industry has experienced record highs in the cost of generating electricity. These increases are caused mostly by the record high natural gas prices but are also believed to be results of the international crisis in Ukraine, the COVID-19 pandemic, the 2021 winter storm that caused rolling blackouts, inflation, and government regulations.

Essentially, all electric consumers are affected by these events and are experiencing increases in their costs of power.