Strategies for Encouraging Good Fuel Cost Management

This report by RMI examines the financial burden of high fuel costs on families in the United States and critiques the current utility practice of using fuel adjustment clauses to pass 100 percent of fuel costs to customers. The document proposes six regulatory strategies to incentivize utilities to manage fuel costs more efficiently and reduce the risk of price volatility for consumers.

• Current utility fuel adjustment clauses create a system where 100 percent of fuel costs are passed to customers, removing any financial incentive for utilities to be frugal or efficient with fuel use and limiting regulatory visibility into operational efficiency.
• RMI identifies six specific regulatory strategies to alleviate fuel-cost burdens: fuel-cost sharing, fuel-cost true-up removal, fuel-risk reduction tariffs, planning and procurement changes (such as all-source solicitation), increasing access to information (via audits and prudence reviews), and the implementation of an efficiency ratio to reward power generation efficiency.

APA

RMI (2023). Strategies for Encouraging Good Fuel Cost Management. https://rmi.org/resources/strategies-for-encouraging-good-fuel-cost-management/

Chicago

RMI. Strategies for Encouraging Good Fuel Cost Management. 2023. https://rmi.org/resources/strategies-for-encouraging-good-fuel-cost-management/.

Wikipedia

{{cite report |author=RMI |title=Strategies for Encouraging Good Fuel Cost Management |date=11 July 2023 |url=https://rmi.org/resources/strategies-for-encouraging-good-fuel-cost-management/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2023strategies, author = {{RMI}}, title = {{Strategies for Encouraging Good Fuel Cost Management}}, institution = {RMI}, year = {2023}, month = jul, url = {https://rmi.org/resources/strategies-for-encouraging-good-fuel-cost-management/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }