|
During
recent months, you have undoubtedly noticed an increase in the prices
of various fuels that are used to meet daily energy needs. From
the gasoline that powers our cars to the natural gas that is used to
heat homes, fuel prices are on the rise. With this in mind, the
Florida Public Service Commission (PSC) urges Florida's consumers to
conserve energy, and to take time to understand how the PSC monitors
the fuel price increases that occur in the marketplace.
Take a
look at your electric bill. You will note an item known as a
"fuel charge" which represents a large portion of your electric
bill. The cost of the fuel (coal, natural gas,
etc.) used to generate electricity is the single largest
expense a utility incurs.
Until 1974, the PSC allowed utilities
to recover fuel expenditures through a line item on the customers' bill
known as the energy charge. When fuel
prices increased rapidly, the utilities requested frequent changes in
these charges. The PSC held extensive
hearings each time a utility experienced large fluctuations in fuel
costs. Such proceedings were
time-consuming and expensive.
In response, the PSC changed
the utilities' cost recovery method by requiring them to collect a
periodically adjusted fuel charge to recover their fuel expenditures,
thereby reducing the energy charge and eliminating much of the
|
|
energy
charge's volatility.
As a
result, the utilities request changes in base rates less frequently
because the non-fuel expenditures currently recovered through energy
charges are less volatile than fuel expenditures. Moreover,
because the fuel charge limits a utility to dollar-for-dollar
recovery of cost-effective, prudent fuel expenditures, fuel price
changes do not increase or decrease a utility's profit.
Generally
speaking, the PSC authorizes each investor-owned electric utility to
recover through the Fuel Clause those costs that may be volatile or
beyond the utility's control, as long as the utility demonstrates that
its expenditures are prudent and cost effective. The
PSC will disallow an expenditure when the record reflects that a
utility acted imprudently based on information that was or should have
been available to the management prior to the occurrence of a given act
or event.
In November,
the
PSC will be establishing the fuel rates that will
be applied to customers' electric bills in 2007. You can view the
filings and schedule of events in this review by clicking on this link
to Docket
No. 060001-EI
|
Kids Pages
