Lodi energy costs fall slightly this month

Lodi Electric Utility customers could be less vulnerable to spikes in energy costs in the near future, with the latest Energy Cost Adjustment being less than expected.

The ECA for the month of February is 2.79 cents a kilowatt, and the city anticipated it to be in the 4-cent range into spring.

The utility will have to take another look at its annual power budget to make new projections for the rest of the months heading into spring.

The ECA is applied to your bill as part of the city's per-kilowatt-hour rate for electricity.

The utility uses the variable rate to recapture the actual costs of providing electricity. The electric market can be volatile, and the ECA allows the utility to adjust for any increases or decreases in wholesale power on the market

According to Lodi Rates and Resources Manager Melissa Price, the city takes a look at the annual power budget and makes allocations for each month based on Northern California Power Agency projections. At the beginning of the year, Price said the utility had projected a higher bill but received some credits from previous months.

“ECA is function of two variables. It’s the amount of power we sell and our power cost. If we sell less and our power costs go up, the ECA goes up. If sell more and the power costs go down, the ECA goes down,” Price said.

According to Lodi Electric Utility Director Liz Kirkley, the energy cost adjustments give the city the ability to credit customers when energy prices are lower than expected. Sometimes the adjustment actually goes negative and customers can get a credit in their bill. As energy prices go higher, the utility is able to make sufficient revenue to meet the cost of energy.

Price said in the cooler months when energy usage is lower, the ECA is typically a charge while in the warmer, summer months when energy usage is higher, the ECA is typically a credit.

There are instances however, when power charges (or credits) can also influence the direction of the ECA, Price said. With the increasing requirements to purchase renewable energy to meet state mandates, Price said the city will likely see an upward trend in its power costs.

Kirkley said the rating agencies like cost adjustments because they know that the city will have sufficient revenue to pay for the electricity it purchases. With the ECA, the city also does not have to have as of high of a reserve that would be required without an ECA. Kirkley said that without an ECA the city would need to have significantly higher reserves to pay for unexpected price increases in energy.

According to city spokesperson Jeff Hood, while the ECA is lower than anticipated, he wouldn’t necessarily call it a savings for customers.

“It’s about one and half cents below what was expected. It’s still a charge. It’s still an addition to the bill so I really don’t want to say people are saving,” Hood said.