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Fuel Adjustment Charges on Electricity Bills explained

By on November 14, 2019 with 95 Comments  

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) or Regulatory Adjustment is the amount that utilities apply on bills based on the varying price of fuel or Coal. The price of coal or fuel changes every month based on demand and supply of coal and thus the cost of producing electricity changes accordingly. The electricity generation companies pass on this cost to distribution companies who thereby 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 a 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 the FAC amount. We are in the 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 the 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.

About the Author:
Abhishek Jain is an Alumnus of IIT Bombay with almost 10 years of experience in corporate before starting Bijli Bachao in 2012. His passion for solving problems moved him towards Energy Sector and he is keen to learn about customer behavior towards Energy and find ways to influence the same towards Sustainability. .

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