After lowering the Power Cost Adjustment in each of the past four years, the Paducah Power System board Monday left the PCA rate unchanged for the fiscal year that begins July 1.

That means the calculations used to determine the average PPS customer's monthly bill will remain the same for the foreseeable future.

However, the board also approved a resolution allowing it to review the PCA on a quarterly, instead of annual, basis going forward.

The PCA is a variable cost added to the base rate to offset the utility's cost of buying wholesale power. Last year, the board lowered it from 1.273 cents per kwh to just under a penny, at .997 cents. The PCA applies to residential and commercial customers.

That means the average residential bill for 1,000 kwh usage remains at $136.25, taking into account the base rate of 11.153 cents/kwh, the .997-cent PCA and the $14.75 charge each customer pays regardless of usage.

"We're projecting no change in the PCA" (for the new fiscal year), Doug Handley, PPS director of finance, power supply and rates, told the board during a presentation on the FY '19 budget, which was also approved.

He noted that over the past four years the PCA "has been coming down dramatically at first, then gradually more recently. For FY '19 we show that (PCA) flat at the same level, and in FY '20, based on current projections, there would be a slight increase."

Current projections indicate in FY '21, there could be a little more dramatic increase in the PCA "but the projections have issues in there that we can - and will - address between now and then to mitigate that increase," Handley said.

Since February 2014, PPS has dropped the PCA 72 percent, which lowered the average residential customer's bill 16 percent.

Hardy Roberts, who was re-elected board chairman Monday, expressed disappointment that the board could not continue to lower the PCA.

"This is my fourth year as chairman here and the first one (PCA) we haven't actually taken down the cost of power to our customers," he said. "The problem we face is we have too much power (capacity) here."

According to PPS General Manager Dave Carroll, "The expiration date for the savings we've been able to achieve to date with short-term solutions is getting closer. We can use available cash to prevent an increase in the PCA next month, but a long-term solution to our power supply issues is necessary to achieve a significant rate reduction.

"We can do that (prevent an increase), and I think it's appropriate to do that, as long as our liquidity measures are adequate ... as long as we can afford to do it." he said.

"Now there will be a period where down the road we may not be able to do that," he said. "Hopefully by that time we'll find some other sources of revenue from our generating assets, or other ways to reduce costs to continue to hold at that level or decrease it (PCA)."

As part of his budget analysis, Handley suggested reviewing the PCA calculation quarterly will allow the utility to keep it more closely in line with actual power costs without having to make a potentially larger adjustment annually.

"What we would want to do (each quarter) is look out probably 24 months and see what the balance in the (PCA) fund is going to be, and if it's going to create a drain over that period," he said.

"If it's going to create a drain over that period, then we should raise it (quarterly) so it's not as dramatic in the future. And if it's going to continue to accumulate a large balance, we can lower it so we give the money back to consumers."

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