Austin Energy Rates (buy, costs, grocer)

[Maxson]

Can anyone explain the additional $0.03653/kWh rate due to the "Fuel Adjustment Clause"?

We are charged a base rate up to 500KwH, and a secondary rate/kWh over 500. Then we are charged again, the third multiplier on your statement breakdown, on the total consumption for the "Fuel Adjustment Clause".

From what I have gathered from a little reading is that this charge is to cover the cost of purchasing energy being generated outside of Austin Energy.

So we are paying for our individual consumption of the gross available energy, and we are paying additional premium to cover the cost of the energy we have already paid for?

If I buy an apple for the market rate of $0.25, I assume the market purchased the apple for $0.125 at wholesale rates, and the difference is chalked up to capitalism and supply/demand. But this seems to me like the grocer is selling me an apple for $0.375 - a quarter for the market rate of the apple and an additional fee to cover his initial overhead.

Doesn't seem right to me in this light. I have to be missing something critical here...

[CptnRn]

It doesn't have to be "right" it just is. From all I have heard Austin's electricity rates are lower then any other power company in the area.

[Trainwreck20]

There is the base rate (unchanged since 1994, according to AE) and the Fuel Adjustment Clause (FAC). The base rate appears to cover fixed costs (the cost of the power plants and infrastructure) and the FAC varies depending on the cost of fuel and fees that are outside of AE control.

The FAC also covers purchasing energy from the larger grid (for which we did not pay for fuel or infrastructure) and is lowered if we sell to users outside of the AE members.

It all pretty much makes sense from my brief reading, not sure where the "premium to cover the cost of the energy we have already paid for" is coming from. The FAC does cover a lot more than fuel (which I had assumed it was), but it is the variable cost of the energy equation, it appears.