One of the bigger numbers on your electric or gas bill each month will be a charge for the fuel you’ve consumed. Today’s post focuses on that charge, fuel cost recovery.
In theory, the fuel cost on your bill is a direct pass through to you of the cost of the fuel component of the energy delivered to your facility. This is easiest to understand with natural gas, because the natural gas your utility purchases is the same natural gas that is delivered for your use. It gets a little more complicated when we think about electricity, but the same concept is at play. Your electric provider uses fuel of some type to generate the electricity it delivers to you. The fuel component on your electric bill represents the cost of the fuel(s) used to generate the electricity delivered to you.
Imagine you have a gas can in your garage full of gasoline you purchased for $3 per gallon. Your neighbor runs out of gas mowing her lawn and asks if you have a gallon she can purchase from you. You provide her with the gallon of gas and she reimburses you the $3 you spent originally for the gallon. The volumes of fuel are much larger when considering utility bills, but the concept of reimbursement for the actual cost of fuel is exactly the same.
You should be able to find the fuel charge on your monthly utility bill without too much difficulty. If you don’t see the word “fuel”, look for “cost recovery” or even an acronym like "GCR" or "FCR". The fuel recovery component on your natural gas bill will probably change monthly based on the current market price of natural gas. Because of the use of multiple fuels and the complexity of the power generation process, fuel components typically take longer to change on the electric side and you may see the same rate on your bill for months at a time.
Because the fuel component on your bill is tied to what your utility provider is paying for fuel in the open marketplace, when market prices for natural gas, coal or oil start rising your bill’s fuel component will start rising as well. This was the case throughout 2021 when the price of all three fuels increased dramatically. With many forecasters projecting these prices to continue rising, a focused look at utilities expenses should be part of your budgeting process for 2022.
Having trouble finding the fuel component on your bill or have other questions we can answer? Give us a call at (813) 917-8952 or email me.
Hello, I'm Kent Hobart and I'm different. I've been blessed with a knowledge of utility billing and rate structures that is rare and yes, a little weird.
I started Utility Refund Specialists as a way to use my unique skills in serving organizations like yours. We audit our client's utility bills and identify errors in the billing that earn them refunds from their utility providers. I know, it sounds crazy but 3 in every 4 clients we work with have errors in their bills.
The incidence of errors is so frequent, and the refund amounts are large enough, it is worth our time to perform the audits for free. We only get paid after we secure you a refund!