Fuel and Purchased Power

The Cost of Fuel is a Major Portion of All Consumers’ Electricity Bills

Electric power plants in Florida use a variety of fuels to generate electricity. These fuels include oil, coal, nuclear and, one of today’s most commonly used fuels, natural gas.

Fuel and purchased power costs are the largest single variable expense for electric utilities, and they can vary greatly on the basis of supply and demand and other factors. Under utility regulations, these costs are passed along to customers at cost, through a charge on their bill commonly referred to as a “fuel adjustment fee.” Utilities do not profit from increased fuel and purchased power costs.

The “fuel adjustment” is just one portion of the typical electric bill. A few years ago, the cost of fuel made up a smaller percentage of the average utility customer’s bill. Due to the sharp rise in the price of fuel, especially natural gas, fuel costs have come to represent a much larger portion of consumers’ electricity bills, as compared to utilities’ base rates, which have remained fairly steady.

Municipal utilities are consumer-owned and not-for-profit, so providing affordable, reliable power is our first priority. However, to remain financially sound, it is necessary to recover fuel costs from customers in a timely manner.

 

Fuel and Purchased Power Costs at UCNSB                     

• We buy almost all of our power from others off the national electric transmission grid.

• Many times during the past year we were paying over 16 cents per kilowatt hour but charging 11 cents per kilowatt hour to minimize the stress caused by other energy prices we all face.

• When gasoline price were over $3 per gallon, energy prices were even more expensive, but we did not raise our rates at that time.  The result was that we had paid out more than $4.7 million for fuel and purchased power used to produce our electricity than what we collected.

• Just as all of us looked for less expensive gasoline in our area at different gas stations, our suppliers did not really have any reasonably priced energy when we shopped around.

• Our newest peaking generators installed at Field Street in 2001 cost over 25 cents per kilowatt hour for fuel alone.

• We expect this rate to continue for 12-14 months unless recovery of the $4.7 million is earlier at which time a fuel and purchased power rate reduction will be requested.

• Effective May 1, 2007 you will be paying $41.70 for fuel and purchased power per 1,000 kWh.