Explanation given on power purchase adjustment charge

Following the notice that there was an error on many Red Bud utility bills this month, many utility customers were left wondering what the power purchase adjustment is.

City Superintendent Josh Eckart noted, “The cost the city pays for electricity changes month to month based on the cost from their suppliers. Energy is about half the city’s cost with demand being the other 50 percent. During the summer months, the city typically has a higher overall demand which will lead to higher bills. Also, the city charges customers for operating and capital costs on the first $0.065 per kWh it pays for electric. Any cost the city pays over the $0.065 per kWh for the electric is passed on to the customers at that rate. There is no increase or mark up on that amount and it does not generate extra revenues for the city. This is the ‘PA’ customers see on their bills and it is there to cover the extra costs.” 

If anyone has any further questions about the power purchase adjustment or about utility bills, they are encouraged to call Eckart at the Red Bud Utility Department at 618-282-3339.