Definition
What makes up the Fuel Cost Recovery Factor?
The fuel cost recovery factor has two components:
- The estimated fuel costs (typically calculated on a 12 month basis)
- The true-up (Based on prior period fuel related revenues vs. fuel expenses)
“No profit is made on the fuel costs you pay.”
The city does not add any costs or profits to the fuel cost. The fuel cost recovery factor is a direct pass through of fuel costs charged by the city’s wholesale power supplier(s), which are currently Covanta Energy Marketing, Florida Municipal Power Agency and the Orlando Utilities Commission.
“The fuel cost recovery factor is a direct pass through…”
Fuel adjustment calculations
Fuel adjustments are typically calculated annually, but fuel cost recovery is monitored monthly. As a result of actual fuel cost recovery, fuel cost recovery rates may be adjusted more frequently.
Estimates are just that ~ ESTIMATES
Because the fuel cost recovery factor is based on estimates made in advance, a variation in how much the city collects can be over or under actual fuel expenses, thus the need for the true-up component. Over collections are returned to customers and under collections are added to future fuel adjustments as a “true-up” factor.