Residents across our community may have noticed an increase in their electricity bills. Part of this increase may be a result of increased electricity usage due to high temperatures, which can be determined by reading the usage on your bill and comparing to previous months.
Another factor affecting costs, stems from PJM Interconnection’s 2024 capacity auction, which went into effect June of 2025. PJM is the organization that controls the electric grid in this part of the country. The auction is part of PJM’s process to ensures sufficient power supply to meet regional demand. During that forecast, it was projected that energy demand would increase by 3,000 megawatts, while available generation capacity would fall by 6,600 megawatts, creating an imbalance that has since driven up costs.
Compounding the issue, new market rules now evaluate power plants based on their seasonal performance, reducing the value of some resources during summer and winter peaks. Transmission constraints in parts of the PJM region also contributed to higher costs. Ultimately, these factors led to substantial increases in installed capacity prices. While the City has not raised any of our electricity costs, the installed capacity charges factor into the power cost adjustment section of the utility bill. The power cost adjustment is passed through the city and fluctuates based on the several factors that determine how much the city pays for the electricity it receives.
On the next page is the ordinance explaining how the power cost adjustment is determined.
1046.05 PURCHASED POWER COST ADJUSTMENT APPLICABLE TO CITY'S ELECTRIC RATE SCHEDULES.
(a) Applicability. The purchased power cost adjustment set forth in this section shall apply to the City's electric rate schedules that are subject to this section. The applicable adjustment shall be applied to the total kWh billed to the consumer for the meter reading period that the City determines to be most nearly corresponding to the meter reading periods set forth in the City's purchased power billings from its suppliers.
(b) Base Purchased Power Cost. The rates and charges set forth in the City's rate schedules are based on the cost of the City's power requirements as furnished through American Municipal Power Inc. (AMP). The base purchased power cost included in the City's rate schedules is $0.073000 per kWh.
(c) Monthly Determination of Purchased Power Cost Adjustment.
(1) Each month the City's purchased power cost adjustment shall be determined as follows:
A. The City's rolling three-month average purchased power cost per kWh shall be determined to six decimal places by dividing the sum of the two-prior month’s and the current month's total purchased power billings from all power suppliers, including transmission related costs and development costs associated with future power supply resources, by the total energy delivered to the City during the two prior months and the current month.
B. The base purchased power cost of $0.073000 per kWh shall then be subtracted from the monthly purchased power cost determined in paragraph (c)(1)A. hereof.
C. The purchased power cost adjustment per kWh shall be determined by multiplying the differential derived in paragraph (c)(1)B. hereof by 1.10 to compensate for the City's distribution system losses. The result should then be rounded out to the nearest 0.10 mill ($0.0001) per kWh.
(2) The adjustment described in this subsection (c) shall also be applicable to the security light charges, as set forth in Sections 1046.54 through 1046.61.
(Ord. 98-61. Passed 11-18-98; Ord. 2006-44-R. Passed 9-4-06; Ord. 2017-01R. Passed 2-6-17; Ord. 2018-05. Passed 2-19-18.)
View more updates from AMP: https://www.amppartners.org/extranet/weekly-update/