FREQUENTLY ASKED QUESTIONS - ELECTRIC

INDEX:

Customer Charge

Energy Charge

Cost of Debt Adjustment

Fuel Adjustment Charge/Energy Cost Recovery Rate

Energy Cost Recovery Charge

Fuel Adjustment Charge

Profit from Fuel Recovery Mechanisms

Read Your Electric Meter

 

What Is A Customer Charge?

Customer charge (also known as: Service charge, Service Availability, Availability charge, Service Availability charge, Base Rate charge, or Basic service) is a flat charge applied each month regardless of the amount of kilowatt hours (kWh) used. The charge covers such items as customer accounting, mailing, billing and metering and therefore is charged even if the customer has had no usage for that month.

What Is An Energy Charge?

Energy charge (also known as: usage charge, charge for electric service, or referred to by rate schedule or rate code name) is the charge for the electricity used by an electric customer during the billing period, measured in kilowatt hours, multiplied by the applicable rate.

What Is A Cost Of Debt adjustment?

At the time that rates are set for an electric cooperative, an amount to recover the estimated debt costs is included in the cooperative’s monthly base rates. Quarterly, the cooperative compares the amount of debt costs collected through its base rates and the actual debt costs incurred in its operations. The difference between the debt costs actually incurred by the utility and the amount recovered through its base rates is either refunded to or collected from customers the following quarter through the cost of debt adjustment. The quarterly cost of debt adjustment may also be called a debt cost adjustment or debt adjustment.

What Is An Electric Utility Fuel Adjustment Charge And An Energy Cost Recovery Rate?

Electric utilities recover the cost of fuel and purchased energy through two basic mechanisms. Investor-owned utilities recover fuel and purchased energy through an energy cost recovery rate and electric distribution cooperatives recover fuel and purchased energy through a fuel adjustment charge. The primary differences between the energy cost recovery mechanism used by the investor-owned utilities and the fuel adjustment mechanism used by the cooperatives are that the energy cost recovery rate recovers all fuel costs through a single rate adjusted annually and the fuel adjustment recovers fuel costs through a base rate and fuel adjustment charge adjusted monthly.

What Is The Energy Cost Recovery Charge?

Investor-owned utilities recover all of their fuel and purchased energy costs through an energy cost recovery rate. The energy cost recovery rate is based on the estimated cost of fuel and purchased energy. Once the cost is determined, it is charged for an entire year. Annually, the company compares the amount of fuel and purchased energy costs collected through the energy cost recovery rate and the actual fuel and purchased energy costs incurred by the utility in its operations. The difference between the amount actually incurred by the utility and the amount recovered through the energy cost recovery rate is either refunded or collected from customers the following year. The energy cost recovery rate is also known as a fuel charge.

What Is The Fuel Adjustment Charge?

At the time that rates are set for an electric cooperative, an amount to recover the estimated fuel costs is included in the cooperative’s monthly base rates. Monthly, the cooperative compares the amount of fuel costs collected through its base rates and the actual fuel costs incurred in its operations. The difference between the fuel costs actually incurred by the utility and the amount recovered through its base rates is either refunded to or collected from customers the following month through the monthly fuel adjustment charge. The monthly fuel adjustment may also be called a cost of energy adjustment or energy cost adjustment.

Do Electric Utilities Profit From The Fuel And Purchased Power Recovery Mechanisms?

No. In Arkansas, electric utilities are not allowed profit from fuel cost recovery in any way. An electric utility’s recovery of fuel costs is limited to the "actual" fuel costs which it incurs. These fuel and purchased energy recovery mechanisms are subject to Commission review and approval.

How Do I Read My Electric Meter?

Meters are highly accurate instruments and register the cumulative amount of energy that has been used in kilowatt-hours. One way to monitor your consumption is to read your meter and check it daily or weekly. If you read your meter at the same time each day, subtract the present reading from the previous day's reading to determine the number of kilowatt-hours used in one day. By reading your meter at the same time each day, you will get an exact total of the electricity you have used. By noting high consumption activities, such as air conditioning in the summer, you will know where you are spending your energy dollars. Reading your meter often, along with careful observation of the weather and appliances being used, can help you manage energy consumption and evaluate the effectiveness of appliances