Electricity Saving Tips For Homes And Offices

Fuel Adjustment Charges on Electricity Bills explained

By on January 22, 2014

Coal Have you ever wondered why your electricity bill amount is not the same even when you have the same number of units consumed on the bill? Why is it that the electricity bill is different even when you have not changed your electricity consumption? If you look at your bills you will just find that there is an amount mentioned as FAC or FCA or FPPCA, which is either positive or negative and is creating the difference.

What is FAC/FCA or FPPCA?

FAC (Fuel Adjustment Charge) or FCA (Fuel Cost Adjustment) or FPPCA (Fuel and Power Purchase Cost Adjustment) is amount that utilities apply on bills based on varying price of fuel or Coal. The price of coal or fuel changes every month based on demand and supply of coal and thus cost of producing electricity changes accordingly. The electricity generation companies pass on this cost to distribution companies who there by pass it on to consumers.

Why is FAC not included in the tariff slabs?

Electricity regulatory commissions of various states fix tariffs for electricity in India periodically. The revision happens every few years (every year in some cases) and a new tariff is set based on the cost of production and distribution of electricity. But the prices of fuel or coal changes throughout the year and the utilities have to manage these changing costs by passing it to the consumer.

How frequently does FAC change?

It varies from state to state. In some places like Mumbai, FAC is calculated every month. In most of the states it is Quarterly. In Madhya Pradesh it is Half Yearly and in West Bengal it is yearly. In some states like Chhattisgarh and Tripura it is revised on need basis from time to time. In case new tariffs are not defined frequently, the FAC component in electricity bill can be as much as the electricity tariff amount.

How is FAC calculated?

Every state has a different formula to calculate FAC amount. We are in process of collecting this information. We will update the readers of Bijli Bachao as soon as we get this information handy.

How does FAC impact my electricity bill?

It is a charge that is applicable per unit of electricity consumed. Unlike fixed charges it is a variable component on the electricity bill and changes as per your consumption of electricity every month. At times it is negative as well but mostly it is positive. Any reduction in monthly consumption of electricity will surely help in bringing down the amount in this component. So keep reading Bijli Bachao and reduce your electricity consumption.

Have question, doubt or comment? Leave a message

There Are 6 Comments

  1. Jigar Mistry says:

    Dear Mr. Abhishek,

    Would like to know what is Total Adjustment Amount which is mentioned in the electricity bill and in details it is just mentioned a three digit no. Kindly explain?

    Regards,
    Jigar Mistry

  2. Nilesh says:

    dear sir/ma’am

    Which elements are used while generating electricity?
    &
    On which bases they decide cost for Below poverty line consumer?

    • abhishekjain203 says:

      Hello,

      It’s a mix of sources that are used to generate electricity. Mostly it is coal that is used. These days lot of renewables sources are also being used. Some states have hydro or geothermal energy generation. So it is a mix in every state in the country. As far as definition of BPL is concerned, it is mostly the standard definition provided by the government. For the basis I think someone from state’s electricity regulatory commission can provide the best answer, because they are the ones who give final approval for tariffs.

      Regards,
      Abhishek

  3. anitha says:

    Dear team

    my electricity bill shows fac of nil for july and aug 2012… Does this mean there were no changes in fuel prices??? It shud hv atleast been negative if not positive… Am i being cheated?

    • abhishekjain203 says:

      HI Anitha,

      Most state tariffs got revised in July and August timeframe. Many states had accounted for latest fuel prices in their new tariffs and thus nil FAC sounds reasonable. It is not always necessary that FAC is negative or positive. If the tariffs are at parity with generation cost, then FAC is not used. So I do not think there is any problem with nil FAC.

      Regards,
      Abhishek

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