Town Talk: What is the utility’s Energy Acquisition Adjustment on my bill?

Town Talk

Editor’s Note: The City of New Ulm presents a weekly column highlighting activities in different departments in the city government. Once a month the city will answer questions from readers. Questions on New Ulm city issues can be sent to comments@ci.new-ulm.mn.us.

There is a lot of information on the utility bill that you receive in the mail. Some of it is pretty straight forward, as in, the number of kilowatt hours (kWhrs) of electricity or ccf of gas used during the month. The cost per unit times the units used gives you the total amount due.

A line item that you may not be familiar with is the Energy Acquisition Adjustment (EAA) under the Electric section. The purpose of the EAA is to allow the Utility to collect costs when the power supply and fuel expenses increase or decrease. An average (base) rate is calculated and is part of the published utility rates for electricity. This average rate is included in all the utility rate classes i.e. residential, commercial and industrial.

That average is then compared to the actual or budgeted power and fuel supply costs for either the month or year. If the actual rate is higher than the rate included in the published rates there will be a positive adjustment on the bill. If the actual energy rate is lower than the rate included in the published rates there will be a negative adjustment on the bill.

With the EAA factor, the Utility can collect enough revenue to pay the supplier of the energy and fuel received. Currently, the PUC is calculating the EAA annually and the adjustment is applied to the monthly utility bill.

A similar concept is used for natural gas bills in the form of a purchased gas adjustment (PGA) and for steam bills in the form of a fuel cost adjustment (FCA). The market price of gas is compared to the average (base) rate in the published natural gas or steam rates to achieve either a negative or positive adjustment. These adjustments for natural gas and steam are adjusted monthly rather than annually and are included on your bill monthly.

If you ever have a question as to what an item on your bill means, contact staff in the Finance department at 507-359-8259. They will provide any information you need to understand your bill.

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