Biloxi office tenant is getting charged for Entergy Mississippi's "Power Cost Adjustment" through their lease pass-through. The PCA is running about $0.031/kWh this month. Landlord says it's been as high as $0.045/kWh earlier this year. Is this normal for Entergy? Seems like a huge variable cost.
Entergy Mississippi power cost adjustment in Gulf Coast lease
Leah - Entergy's power cost adjustments can swing wildly based on fuel prices and purchased power costs. During the Texas freeze in 2021, some months hit $0.08/kWh. It's designed to pass through actual generation costs to customers. Very volatile but legitimate.
Same in my area with Entergy Mississippi. The PCA reflects real-time energy market costs. Natural gas prices, outage costs, everything flows through. I always warn lease clients that Entergy's PCA can be a budget killer during extreme weather events.
Thanks for the context. Tenant is now asking if they can get some kind of budget billing or cap on the PCA pass-through. That would be a lease negotiation issue, not a billing audit issue. The charges themselves appear accurate.
Mobile tenant had similar concerns about Entergy's PCA volatility. We suggested they negotiate a "utility cost cap" clause for any lease renewal. Protects them from extreme spikes but still passes through normal fluctuations.
Power cost adjustments reflect the reality of competitive electricity markets. While volatile, they ensure customers pay actual generation costs rather than averaged rates. For lease pass-throughs, the key is transparency - tenants should receive detailed backup showing how PCA charges are calculated and allocated.