Fuel Cost Adjustment

Only the government could come up with a way to charge extra for a service they already charge for. Talking about the TVA fuel cost adjustment. And to be honest, I thought only government education could come up with calculated formulas that are so complicated nobody could possibly understand it. Maybe TVA has been getting lessons from education.

This month my electric bill was $98 and my fuel cost adjustment fee was $36. That means I paid an additional 37% on top of my electric bill for electricity. So what did the $98 pay for?

Any way you slice it, the working stiff just keeps getting the shaft or in this case the adjustment.

Gas, electric, food, everything going sky high. Something's gotta give.

Below is a little info on the TVA "stick it to me" fee.

Frequently Asked Questions

About TVA’s Fuel Cost Adjustment

What is the TVA fuel cost adjustment?

The Tennessee Valley Authority (TVA) makes the electricity used by nearly 9 million consumers

across the seven-state Tennessee Valley. TVA sells its power to local distributors that in turn sell

the power to the homes and businesses of the Valley. The Fuel Cost Adjustment (FCA) is the

mechanism TVA uses to help recover largely uncontrollable fuel and purchased power costs. A

variety of factors affect these costs, including weather and global supply and demand issues.

Why does TVA need a fuel cost adjustment?

TVA began its Fuel Cost Adjustment mechanism in October 2006

after experiencing the spike in fuel costs caused by Hurricanes

Katrina and Rita the previous year. The FCA ensures TVA

recovers costs as they occur, helping TVA better match its

revenues to expenses. Many utilities use similar mechanisms to

adjust their rates.

Why do consumers pay for fuel?

TVA’s FCA is not based on the same fuel consumers use to fill

up tanks at the gas pump. The FCA recovers costs for fuels used

in TVA power plants to make electricity. About 60% of TVA’s

power supply comes from fossil fuels– coal, oil and natural gas –

the majority of which is coal. When costs for these fuels change,

TVA’s costs to make electricity also change. The FCA is the

mechanism TVA uses to pass along quarterly increases and

decreases in fuel costs to our customers.

How is the FCA calculated?

The FCA is calculated every three months as generation fuel costs and the cost of power TVA

purchases from other suppliers rise and fall. The FCA calculation works by capturing the

difference between the amount that TVA forecasts to pay for fuel during a given quarter and the

amount that is collected through rates. This formula has two main components: the first is a

forecast of anticipated fuel and purchased power costs; the second is a reconciliation of any fuel

costs TVA under or over collected. The FCA is part of consumer power bills as a per kilowatt-hour

adjustment and can go up or down depending on quarterly increases or decreases in fuel costs.