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.
