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.
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
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Copyright © 2007 - 2013 Arkansas Public Service Commission. All
rights reserved.
Revised: Wednesday, May 22, 2013
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