What is an Energy Cost Adjustment?

The Energy Cost Adjustment line item on your Craighead Electric bill (also sometimes called a Fuel Cost Adjustment) usually does not get much attention, except during times of high energy cost when it impacts your bill the most.

Craighead Electric Cooperative generates no energy on its own. All energy is purchased from our Regional Transmission Authority (or RTO) Arkansas Electric Cooperative Corporation (AECC). When the cost to generate that energy fluctuates an energy cost adjustment is applied to each member’s bill. This adjustment factor (charge or credit) is multiplied by kilowatt-hours used in the current month. The fuel cost adjustment is usually small, and there is no profit added. It is a pass-through cost from wholesale directly to the consumer.

Energy Cost/RTO Adjustment
Energy Cost/RTO Adjustment

What causes it to go up or down?

When the price of the fuel used to generate electricity goes up or down, so does the cost of that electricity. Geopolitical factors or extreme weather events can cause large acute swings in that cost.  As our fuel mix moves from stable but polluting sources of energy like coal to volatile but cleaner natural gas and intermittent renewables these swings in energy cost may become larger.  

What is being done to keep it low?

AECC has a diverse portfolio of different types of generation that fortunately reduces the cost impact of severe weather events and shortages. See AECC’s Balance of Power initiative to learn how their robust mix of energy sources hedges against dramatic changes in generation fuel cost. Learn more about AECC’s Energy Cost Adjustment