Rising fuel costs, especially for natural gas, are driving up summer energy bills for consumers. Natural gas is used during peak energy periods to supplement coal and nuclear when the demand for electricity is high. Additional consumer costs are reflected in the Peak Capacity Charge and Fuel Adjustment Factors on your monthly bill.

From June 1 through Sept. 30, when demand for energy goes up and we bring additional plants on line to manage the load, the Peak Capacity Charge appears as an additional line item on our billing statements. The Peak Capacity Charge is applied monthly to energy use that’s over 600 kilowatt hours for residential customers.  CPS Energy does not profit from the Peak Capacity Charge, but simply makes up for the expenses of operating additional plants.

Our electric bill includes two parts: the base rate (mostly operations costs) and the fuel adjustment (the cost for fuels to run our power plants). Most energy utilities have a fuel adjustment factor to account for the changes in fuel prices as they rise and fall with market demand.

Some utilities update their fuel charges quarterly. Our fuel adjustment is made monthly, so that customers aren’t hit with a large three-month adjustment, after they’ve already used the energy. This has been our practice for many years. It has just been less noticeable, because fuel costs have never been this high.  

With a 60 percent increase in the price of natural gas compared to last year, the need to use natural gas for generation in the summer AND an unusually hot June, the fuel adjustment factor increased significantly this month.  Like the Peak Capacity charge, CPS Energy does not profit from the increase, and as a not-for-profit company, we must pass the costs on to our customers.