THE PURCHASE POWER ADJUSTMENT

In addition to the base electric rates, each utility billing shall be adjusted for the cost of purchased power. The Purchase Power Adjustment (PPA) is shown on the utility bill as an "O" purchase power adjustment. The charge is solely related to the cost of electricity.

The formula for determining the PPA is as follows

In addition to the base electric rates as established by Ordinance #52-89, passed October 16, 1989, each electric billing shall be adjusted for the cost of purchased power. The actual purchased power adjustment (ACPPA) shall be computed by the following revised formula:

ACPPA(current month) = (Purchased Power Bill) + (Adjusted Operating Expenses) - (Electric System Income)
Total Kilowatt Hours (kWhr) Billed for Electrical Services

The terms above are defined as follows:

1. ACPPA(current month): Means the purchased power adjustment for the current electric billing month.
2. Purchase Power Bill: Means the most recent bill paid and/or payable when due
3. Adjusted Operating Expense: Means monthly electric utility margin established through councilmatic action from budgetary hearings establishing annual appropriations which are divided by twelve (12) excluding the budgeted amounts for 1) purchase power (705-5010-5-2365); 2) debt retirement for principal and interest relating to the City of Hubbard ownership interest in the OMEGA JV5 project (705-8010-5-2601 & 705-8020-5-2602); 3) Billable Projects budget (705-5010-5-2523) to be used for emergency repairs to electric system resulting from accidents or other insurance/reimbursable projects; Kilowatt Hour Tax [i.e. payments to the State of Ohio for tax collected from outside users] (705-5010-5-2380); and the amounts appropriated in a specific budgetary line item relating to the payment of KWH tax to the general fund as per the appropriate Auditor of State bulletin. Adjusted Operating Expense shall be determined as follows:

   Adjusted Operating Expense =

   (Total Annual Light Fund #705 Budget) - (Purchased Power Annual Budget) - (Principal & Interest related to OMEGA JV5 Annual Budget)-(Billable Project Budget)-(KWH Tax Budget [outside users]) -(KWH Tax Budget [inside users])

4. Electric System Income: Means net 100% metered total billing for the most recent metered readings
5. Total Kilowatt Hours (kWhr) Billed for Electrical Services: Means the total kWhr billed for electric services used in establishing electric system income.

In addition, the ACPPA as defined above shall be further adjusted by the following formula to in order to smooth seasonal variations in the purchase power adjustment as determined by the following formula:

PPA(current month) = Average PPA (AVPPA) - Monthly Adjustment (MA)

The terms above are defined as follows:

1. AVPPA: Means the average of the ACPPA for the preceding four (4) years. The ACPPA average shall be a rolling average.
2. MA: Means the sum of the preceding months average monthly PPA revenue divided by the remaining months in the current year.
   Monthly Average (MA) = Sum of preceding months average monthly PPA revenue Remaining Months in the Current Year

Where:

Average Monthly PPA Revenue = ACPPA Revenue - AVPPA Revenue

1. ACPPA Revenue = ACPPA * kWhr
2. AVPPA Revenue = AVPPA *kWhr

A final annual adjustment in the December billing shall be made in order to increase or decrease the December PPA for any overcharges or undercharges during the current year's PPA according to the following formula: