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CUC OK’d to adjust LEAC charge every month
The Commonwealth Utilities Corp. has been authorized by the Commonwealth Public Utilities Commission to adjust its levelized energy adjustment clause charge or LEAC on a monthly basis instead of every six months.
CUC will continue adjusting LEAC charges when the “Means of Platts Singapore” or MOPS monthly pricing to CUC equals or exceeds a “4.5 percent differential” in the average per gallon cost of fuel used in calculating the current LEAC charge.
On May 15, 2014, CUC’s consultant, economists.com managing director Robert Young, said the price CUC pays for fuel is based on the average MOPS price for the prior month, plus transportation handling costs, taxes, and other costs invoiced by the supplier. Each month, CUC receives notice that the price of fuel will go up or down based on the prior month’s MOPS.
Since the LEAC is fixed for six months and CUC has minimal financial reserves and can’t borrow funds or get around the fuel price risk, the LEAC includes an unpredictable element of about 5 percent, or about 1.3 cents per kWh, which increases the LEAC to provide extra cash to CUC to cover unexpected increases in the price of fuel.
CUC’s executive director Alan Fletche earlier said that the probability of lowering customers’ power bills may be possible if CUC is able to adjust LEAC rates monthly instead of every six months.
Fletcher noted that CUC is always trying to bring down rates without jeopardizing service and liability.
