Fuel Cost Adjustment Explained
What is the fuel cost or power cost adjustment on my bill?
The price of natural gas, oil and coal used to generate electricity has skyrocketed. The market sets the price for these fuels on a state and national basis. Socorro Electric Cooperative (SEC) is a distribution cooperative that does not generate any of the electricity it sells. SEC operates as an energy "wholesaler," buying electricity in bulk to benefit its member-owners. The fuel factor adjustment on your bill is a way for SEC to be reimbursed for the actual cost of the power purchased to meet the needs of its member-owners. As a not-for-profit cooperative, SEC has a responsibility to charge you only what is necessary. SEC's fuel factor adjustment allows this to be accomplished. Other rising costs that affect the adjustment include the cost of meeting environmental regulations related to power plant emissions.
Why is the fuel cost or power cost adjustment different?
SEC uses a levelized monthly fuel factor. The bill for the electricity purchased by SEC for its member-owners is paid as soon as it is received. Then, the difference between what has already been collected from the customer and what SEC has had to pay for electricity is determined. That difference is the fuel factor adjustment on your bill. It is important to remember that this adjustment can be, and has been in the past, a credit to our member-owners. The Public Service Commission of New Mexico has approved SEC's fuel factor adjustment because it believes it is a fair way for SEC to recover the actual cost of electricity from its member-owners. SEC makes no profit from this adjustment.