When Bill Increases While Rate Remains the Same

If my rate has not increased, then why is my electric bill increasing?
The amount Freeport Electric is allowed to charge for your electricity is determined by a lengthy and complicated rate case that is presented to the New York State Department of Public Service (PSC) for approval. The electric rate is comprised of the basic service charge, demand charge, energy charge, and fuel cost adjustment charge. At the time the rate case is filed, a base rate is set for the cost of electricity and the cost of moving the electricity from where it is made to where it is distributed. When the PSC approves a rate, the basic service charge, the demand charge and the energy charge remain constant until another rate is applied for. This increase on your bill is a result of the fuel cost adjustment charge. The fuel cost adjustment fluctuates monthly and is adjusted up or down based upon market costs the utility cannot control.

The fuel cost adjustment is a mechanism to account for the fluctuations in fuel cost and spent fuel disposal, fluctuations in power supply contracts, and fluctuations in the changes of the costs to move electricity from where it is produced to where it is distributed. The fuel cost adjustment charge is an essential part of our rate case process. If there were no mechanism for recovering these fluctuating, uncontrollable charges, Freeport Electric would be forced to file annual rate cases, dramatically increasing the cost of electricity to all customers as the cost of preparing and presenting a rate case is very expensive.

Over the last 10 months, Freeport Electric customers have seen their costs rise about 17%. This rise has been due to an increase in the fuel cost adjustment portion of their bills. The dramatic increase in the fuel cost adjustment charge is being caused by the following three events:
  1. Additional NYISO charge for operation of the ISO - described above.
  2. Freeport Electric experienced increased fuel costs due to the dramatic increase in oil prices. The cost of diesel fuel is 36% higher than 1999.
  3. Due to the drought of the last few years, the Great Lakes water levels have diminished, causing reduced river flows and reduced hydropower from the Niagara Falls project. Freeport Electric replaced the reduction of its low-cost hydropower allotment with market cost energy or Freeport Electric's own diesel powered generation, depending on market prices. Freeport Electric has also been advised to expect the decreased generation capacity to continue. Projections for 2001 ranged from 6% to 25% reduction depending on the time of year.
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