Purchased Power and Fuel Adjustment Charge
What is the Purchased Power and Fuel Adjustment Charge (PPFAC)?
The PPFAC is a usage-based credit or charge that reflects changes in energy-related costs, including fuel for our power plants and the price of power we purchase for customers. It includes only costs that are not already incorporated in summer or winter base power supply rates.
The PPFAC is usually reset each year by the Arizona Corporation Commission (ACC) to pass along recent energy costs and charges. It is designed to mitigate the impact of sudden changes in market prices while avoiding the accumulation of large, unrecovered balances between rate cases.
TEP passes these costs along without any markup and earns no profit from this charge.
What is the current PPFAC charge or credit?
In May 2023, the PPFAC rate increased from a year-round rate of $0.008137 per kilowatt hour (kWh) to $0.0150706 – about one and a half cents – per kWh during summer months and $0.0283760 per kWh – about three cents – per kWh during winter months. That change is expected to add $9.87 to the average monthly bills of residential customers with typical usage of about 800 kWh. Customers who use more energy will pay a higher charge.
The increase will help recover higher energy costs from previous years, including some that were deferred to support customers during the coronavirus pandemic. The increase also will help cover higher costs due to extreme weather, supply chain disruptions, resource constraints and other factors.
Who sets the price that TEP pays for fuel and energy?
Those prices are subject to market pressures, which are affected by weather, energy system capacity, economic factors and worldwide events, among other forces. The price of natural gas has increased significantly in recent years, increasing the cost of operating TEP's power plants as well as the price for power purchased on the wholesale energy market. TEP works hard to mitigate the costs that are passed along to customers.
How does the PPFAC appear on my monthly bill?
The PPFAC appears on your bill under the heading “Power Supply Charges” along with your summer or winter base power supply rate.
Do other utilities have charges like this?
Yes. Similar components are included in the electric rates of TEP’s sister company, UniSource Energy Services, as well as in those charged by Arizona Public Service and electric utilities in all 50 states.
Does TEP provide support to customers having trouble paying their bills?
We understand many customers may be struggling financially. TEP offers extended payment arrangements, payment extensions and other forms of assistance. Bill payment assistance also is available through community organizations and state agencies. For more information, click here or call (520) 623-7711.
Does the PPFAC apply to all of the energy I purchase from TEP?
What can I do to reduce energy costs?
Explore ways to save energy: Improving energy efficiency not only lowers your energy bills, it improves the comfort and quality of life for you and your family. Simple lifestyle modifications can make a big difference, especially if you an conserve energy during times of peak usage. Cooling your home in the summer, for example, can be one of your largest energy expenses. The Department of Energy recommends setting your thermostat at 78 degrees in the summer and using fans to help you feel cooler.
Find out if you qualify for payment assistance: We offer monthly low-income discounts. We can also help you determine if you’re eligible for federal rental assistance and can assist with payment plans if you’re falling behind.
Consider some of our pricing plans and programs: Budget Billing helps level out your payments across the year, so your bills are more predictable, without those summer spikes.
You also might explore one of our pricing plans, which are designed to help you save energy and reduce your bill. Two of the plans include time-of-use rates that offer discounts for usage during off-peak hours. The other two plans pair reduced energy charges with a “demand” charge that rewards customers who can limit their concurrent use of large appliances during on-peak hours. Customers with flexibility regarding when they use energy could find opportunities to lower their monthly energy bills. See which plan might be right for you with our Pricing Planner tool, which assumes identical usage with your past 12 months of energy usage.