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Section 4 <br /> - 16 - <br />been tied to the wholesale Energy Adjustment Clause (EAC) included on MMPA’s <br />wholesale power bill. Linking the retail PCA and the wholesale EAC only adjusts retail <br />bills for a portion of changes in the wholesale bill. Other wholesale changes, such as <br />wholesale rate changes need to be addressed through published retail rate changes. It <br />is recommended that ERMU move to a retail PCA that adjusts retail bills for all <br />components of the wholesale bill. Shown below is a proposed formula for monthly <br />calculation of a new PCA to include on ERMU retail bills. <br />Proposed formula: <br />PCA = ( 𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊 𝑥𝑥 0.9711 - 0.07896) <br />Where: <br />• PCA is the power cost adjustment per kWh. <br />• WPC is the wholesale power cost in dollars. <br />• WE is the wholesale energy in kWh. <br />• 0.9711 is a loss adjustment <br />• 0.07896 is the new base dollars per kWh. <br />An example calculation for estimated costs in 2026 is as follows: <br />PCA = ( $31,596,071 340,372,265𝑥𝑥 0.9711 - 0.07896) = $.01663/kWh <br />The calculation shown above is shown on an annual basis, but the calculation would <br />actually be done monthly to calculate the appropriate PCA based on monthly wholesale <br />power costs. Based on billing cycles, the PCA charge would lag the monthly wholesale <br />bill by two months. <br />It is important to recognize that the proposed rates in this report are designed to work <br />with this PCA approach. If a different PCA approach is adopted, the rate <br />recommendations would need to change to match the altered PCA. The PCA formula <br />82