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Section 2 <br /> - 4 - <br />Power Cost Adjustment (PCA) <br />ERMU includes a Power Cost Adjustment (PCA) on its retail bills to customers. In the <br />current projections under existing rates, the assumed PCA is based on the Energy <br />Adjustment Clause (EAC) that MMPA includes as part of its wholesale bill to ERMU. The <br />wholesale PCA changes every month. The average assumed MMPA EAC and assumed <br />ERMU PCA for each year are shown in Table 2-2 below. As currently assumed, ERMU <br />will increase its retail PCA to match the wholesale EAC by 2027. Further discussion and <br />recommendations regarding the retail PCA are included in Section 4 of this report. <br />Table 2-2 <br />Assumed Wholesale EAC and Retail PCA <br />($/kWh) <br />Item 2025 2026 2027 2028 2029 <br />Wholesale EAC 0.02365 0.02263 0.02263 0.02263 0.02263 <br />Retail PCA 0.01640 0.01927 0.02263 0.02263 0.02263 <br /> <br />Other Operating Expenses <br />ERMU incurs other operating expenses associated with local electric system operations. <br />Transmission and distribution operating and maintenance expenses are related to the <br />substations, overhead and underground lines and customer facilities located in ERMU. <br />Operating expenses also include production related expenses for the local peaking power <br />plant. ERMU also has customer account expenses related to serving retail electric <br />customers. Administrative and general expenses are required for utility management, <br />employee benefits, training and other administrative costs. Non-wholesale power related <br />expenses are based on 2024 values, the 2025 and 2026 budgets and are generally <br />estimated to increase by 3% per year after 2026.