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Thursday, January 1st 2026
Understanding the Power Cost Adjustment (PCA)
Lake Region Electric Cooperative (LREC) members may have noticed a line item on their bills called the Power Cost Adjustment (PCA).
The PCA helps reflect changes in the cost of producing electricity from our wholesale power suppliers. These costs vary mainly because the fuels used to generate electricity—such as natural gas and coal—can rise or fall in price. LREC does not generate power; we purchase power, which comes from a variety of sources. Some is produced at hydroelectric dams, which depend on rainfall levels, but most comes from steam-generation plants that use natural gas and coal. Because fuel prices fluctuate, the cost to produce electricity changes as well.
Many electric cooperatives and utilities use a PCA to help manage these changing costs. It allows rates to adjust up or down so they accurately match the real cost of supplying power to members.
Each January, LREC sets its PCA based on pricing information received from our wholesale power provider. This adjustment simply passes through the difference between the actual cost of wholesale power and the base cost built into our rate structure. It’s important to know that the PCA is not an increase in your electric rates. Instead, it reflects the changing cost of the fuel needed to generate the electricity you use. As a not-for-profit, member-owned cooperative, LREC must cover its operating costs, and wholesale power is our largest expense.
Members who read their electric bill each month will notice the PCA factor to be very minimal. This is a common utility practice that prevents the over or under collection of funds from our members. You can calculate your monthly PCA by multiplying the PCA “factor” listed on your bill by the number of kilowatt-hours (kWh) you used during that billing period. This factor adjusts—typically once a year—based on the average price we pay for wholesale power.
To Summarize the PCA:
- Is not a change in rates.
- Does not make extra revenues for your co-op.
- Covers the annual change in the cost of fuel that is used to generate your electricity.
