what is fac charges in electricity bill

The Fuel Adjustment Clause (FAC) is a charge that appears on some electricity bills and is used to account for fluctuations in the cost of energy without having to change the base rates. The FAC is calculated monthly based on the actual cost of fuel and is applied as a rate per kilowatt-hour (kWh) . Every customer pays the same rate per kWh, and the total amount of the charge on the bill depends on how much consumption the customer has during the billing period. The FAC reflects the actual cost of energy, and these costs are passed on directly to the customer, but the electricity provider does not profit from them. The FAC can either be a credit if the cost of fuel is below the base rate kWh charge or a charge if the cost is above the base rate kWh charge.