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| PCRF - Power Cost Recovery Factor |
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The electric utility industry (like most industries) is incredibly overstocked with its own set of acronyms. PCRF is another one in that long list. PCRF is an acronym for Power Cost Recovery Factor and it is something United Cooperative Services deals with on a monthly and sometimes daily basis. The PCRF is the rate component, on all electric bills, that is a direct reflection of the fluctuating cost of natural gas required to run an electric generation plant.
Since United is a distribution cooperative, our wholesale power is purchased from a generation company, Brazos Electric Cooperative. Approximately 84 percent of the wholesale power United gets from Brazos is generated using natural gas as the fuel.
When natural gas prices rise, it costs Brazos more to produce electricity and this is passed through to United and its members by an increase in the PCRF. So while United’s rate for the price of electricity has not changed, members will pay more with an increased PCRF.
One way to think about PCRF is to compare it to the cost of gasoline for your car. Even though your monthly car payment (the rate) hasn’t gone up, the car you drive is costing more to operate now because just as natural gas prices have risen, so have gasoline prices at the pump (the PCRF).
Natural gas prices do not just affect United or Brazos — nearly every electric utility in the nation is facing this same issue. With the growing use of natural gas as a fuel for electric generation, demand for natural gas grows annually. As we all know, with demand high and supplies lower, the price is going to rise.
To minimize the impact of this charge on our members, every attempt is made to “level” the PCRF monthly, rather than to pass on the sometime extreme monthly fluctuations from our wholesale supplier. However, significant changes in fuel charges may make it necessary to adjust the PCRF more dramatically.
The main advantage of monthly changes in the PCRF is that it is more responsive to changes in fuel costs. If fuel costs go down, our members are not stuck with a higher cost indefinitely. Investor owned utilities, such as TXU, can only make rate adjustments for changes in fuels costs twice annually and must gain approval from the Public Utility Commission of Texas to do so. This means their fuel cost adjustments may remain higher for their customers for an indefinite period of time and no one knows for certain when or if natural gas prices will decrease from their current levels.
To help curb the effects of high natural gas prices, United encourages all members to conserve energy. For more tips on ways to efficiently use less electricity, visit the Energy Conservation section of this Web site.
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Page Last Modified: 07/26/2007 ©2000-2004 All rights reserved |
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