The run-up in fuel prices following Hurricane Katrina pressured utilities to pass along to ratepayers the high costs they incurred to provide power and natural gas during the winter. If your utility does not presently have that option, it may seek it in the near future. Such fuel-adjustment charges (FACs) bumped up monthly rates in some areas by 25% to 70%.
A 1995 study by the DOE found that 39 states allowed utilities to raise energy rates to cover those costs. Not all utilities that have this ability exercise it, but many have done so recently. Others, such as TVA, have had the ability since the 1970s but have held off such increases. Now, however, even TVA announced (in February) that it may need to initiate FACs for the 158 co-operative utilities that distribute TVA power in the Appalachian states, potentially affecting over 8 million customers. A dozen utilities surrounding TVA already have, or are implementing, FACs.