Electric Bill Components Fuel Cost Adjustment/Fuel Charge

A fuel cost adjustment can be found on most bills from electric utilities. Since most utilities must file the rates they are going to charge with regulatory agencies, they have to project the amount and cost of fuel they'll use to produce electricity and the amount and cost of any purchased power they project they'll need to buy. In performing these projections, the estimates may be higher or lower than the actual costs. So the actual cost of fuel and purchased power incurred is compared to the projected costs the rates were based on. The difference - "or adjustment charge" is then multiplied by the kilowatt-hours of energy used to account for any changes in fuel and purchased power prices.