(A) The Power Cost Adjustment (PCA) shall be calculated as follows:
(1) Enter the Electric Fund Operating Revenues and Operating Expenses for the prior month into the Operating Revenue and Operating Expense columns of the PCA spreadsheet;
(2) Enter the Target Operating Revenue Margin in percent for the prior month;
(3) Enter the total KWH sales for the prior month into the PCA spreadsheet; and
(4) The PCA for the current billing month shall be calculated as follows:
(a) Net Operating Gain or (Loss) = Operating Revenues less Operating Expenses;
(b) Target Operating Revenue = Operating Expenses multiplied by [one plus the percent Target Operating Revenue Margin];
(c) Target Operating Revenue Excess or (Shortfall) = Target Operating Revenue less Actual Operating Revenue; and
(d) PCA = - [Four Month Rolling Average of Target Operating Revenue Excess or (Shortfall) divided by the Four Month Rolling Average of Total KWH Sales].
(B) The estimated PCA shall equal $0.0256/ KWH for the first, $0.02200/KWH for the second, and $0.0200/KWH for the third billing month after passage of this section. Thereafter, the PCA shall be calculated based on the methodology in division (A) above.
(C) (1) The initial Target Operating Revenue Margin shall be 15%.
(2) The Target Operating Revenue Margin shall be adjusted from time to time to:
(a) Achieve and maintain a minimum six-month cash reserve in the Electric Fund for contingencies;
(b) Meet the village’s bond debt coverage requirements; and
(c) Provide sufficient cash flows to pay electric system non-operating expenses (system capital improvements and debt service).
(Ord. 24-2007, passed 10-1-2007; Ord. 24-2009, passed 8-31-2009)