ECAM Explained
The Energy Cost Adjustment Mechanism, or ECAM, is a mechanism to manage energy related cost changes. The ECAM provides for an automatic increase (or decrease) to rates each month when energy costs are above (or below) a pre-established, and Regulator-approved, base rate.
Many customers have asked us why their bills have not decreased now that oil prices have gone down.
Fuel Price Volatility & ECAM
Oil price volatility in which the cost of oil fluctuates from $100US/barrel to $147US/barrel to $33US/barrel (all within a 12 month timeframe) would cause a customer's monthly electricity supply charge to fluctuate greatly. This fluctuation in your electricity supply charge would cause severe difficulty for typical household and business budgeting. As the below graph illustrates, the Energy Cost Adjustment Mechanism (ECAM) serves to smooth out this volatility.
Illustrative Comparison of Electricity Supply charge with and without ECAM
ECAM provides a "smoothing" in the collection of electricity costs from customers that have been incurred by Maritime Electric and helps remove month to month price volatility.
ECAM Smoothing Example
As an example let's assume that the base rate that Maritime Electric charges its customers is a base rate of 7.7 cents/kWh, and that this month the average cost to purchase electricity for Maritime Electric is 10.1 cents/kWh. This means that there is a shortfall of 2.4 cents/kWh, on average, for every kilowatt hour bought versus the base rate.
ECAM allows Maritime Electric to smooth out this shortfall and spread the difference out over a longer period in billing customers. In this example — a 2.4 cents/kWh shortfall — Maritime Electric will add 1/12th of that 2.4 cents/kWh, or 0.2 cents/kWh, to each of the next 12 monthly bills.
Similarly, if the base rate is 7.7 cents/kWh, and the average cost to purchase electricity is 6.5 cents/kWh, Maritime Electric will subtract 1/12th of the difference or 0.1 cents/kWh per month, on each bill over the next 12 months.
