This surcharge helps ensure that energy efficiency and renewable power projects don’t compromise UES’ ability to maintain safe, reliable service. Natural gas and electric customers pay separate LFCR charges.

Electric Customers


Q: What is the Lost Fixed Cost Recovery (LFCR) mechanism?

The Lost Fixed Cost Recovery (LFCR) charge partly offsets the revenue UES loses when customers reduce their bills through our conservation and renewable energy programs. Without the charge, UES would be unable to recover the full cost of systems that serve all electric customers, regardless of usage. The surcharge must be reviewed and approved annually by the Arizona Corporation Commission (ACC).

Q: Why does UES need an LFCR charge?

Rooftop solar arrays, compact fluorescent light bulbs and efficient air conditioning systems have helped customers save money on their monthly electric bills. These savings limit UES’ ability to recover our service costs, including many ‘fixed’ costs that aren’t reduced when customers use less power.

Examples of fixed costs include power line repairs, metering expenses and the cost of installing and maintaining the electric grid. UES’ electric system covers more than 320 miles of transmission lines, approximately 3,600 miles of underground and overhead distribution lines, more than three dozen substations and six gas-fired generating turbines.

The LFCR ensures that the success of our energy efficiency and renewable power programs does not compromise our ability to cover our fixed service costs.

Q: Who must pay this charge?

All electric residential, small general service and large general service customers are subject to the charge. Customers on traffic signal, street lighting, lighting service, water pumping, and large light and power rate plans are not subject to the LFCR because their rates already incorporate the recovery of fixed costs.

Q: How is the LFCR calculated?

Under current rates, a residential customer with monthly usage of 850 kilowatt hours (kWh) would pay about $78 in Delivery Service and Power Supply charges.

Estimated Percentage Adjustments
(For Illustrative Purposes)

X

Applicable billing amount

=

Monthly LFCR surcharge amount

0.011042 (Energy Efficiency)

X

$78.41

$0.87

0.003160 (Renewable Energy)

X

$78.41

$0.25

Total LFCR surcharge

 

$1.12

A customer with average usage of 850 kilowatt hours is expected to pay about $1.12 a month, based on current estimates. This represents an average decrease of about two cents a month over the previous LFCR surcharge. The LFCR is listed under “Surcharges” on your monthly bill.

Q: Can the amount of my LFCR charge change?

Yes. For most customers the LFCR amount will vary each month with individual usage. Additionally, the percentage-based rate used to calculate the LFCR will be updated annually to reflect revised estimates of the revenue lost to approved energy efficiency and renewable power programs.


Gas Customers


Q: What is the Lost Fixed Cost Recovery (LFCR) charge?

The Lost Fixed Cost Recovery (LFCR) charge partly offsets the revenue UES loses when customers reduce their bills through our conservation. Without the charge, UES would be  unable to recover the full cost of improvements to our electric distribution system that serves all gas customers, regardless of usage. The new surcharge, which must be reviewed and approved by the ACC, is set at 0.1147 percent of usage and will be effective beginning Sept. 1, 2017 until amended by the ACC . The revision to the charge adds approximately 2 cents per month to the bill of a residential customer with monthly usage of about 70 therms. Businesses and other customers who use more gas will pay a higher LFCR fee.

Q: Why does UES need an LFCR charge?

High-efficiency hot water systems, gas furnaces, boilers and commercial kitchen equipment have helped customers save money on their monthly gas bills. These savings limit UES’  ability to recover our service costs, including many ‘fixed’ costs that aren’t reduced when customers use less natural gas. Examples of fixed costs include repair of natural gas lines, metering expenses and the cost of installing and maintaining other pieces of equipment that deliver natural gas to customers. UES’ natural gas distribution system covers more than 55,000 square miles. The LFCR will help ensure that the success of our energy efficiency programs does not compromise our ability to cover our fixed service costs.

Q: Who must pay this charge?

Gas customers signed up for residential (GRRES), small volume commercial (GGSVS), Customer Assistance Residential Energy Support (GRRESC) and small public authority service  (GPSVS) rate plans are subject to the charge. Gas customers on lighting, irrigation, compressed natural gas and larger customer class rate plans are not subject to the LFCR because those rates already incorporate the recovery of fixed costs.

Q: How is the LFCR calculated?

Two methods can be used.

Method 1: Percent of Applicable Billing Amount

Under current rates, a residential customer with monthly usage of about 70 therms would pay $66.06 in Delivery Service and Gas Supply charges.

Estimated Percentage Adjustments
(For Illustrative Purposes)

X

Applicable billing amount

=

Monthly LFCR surcharge amount

0.001147 (Energy Efficiency)

X

$66.06

$0.08

Total LFCR surcharge

 

$0.08

  • With this method, a customer with average usage of 70 therms is expected to pay about 8 cents a month.
  • By default, customer bills will be calculated using this method.
  • With this method, the LFCR will be listed under Energy Efficiency charges on your monthly bill.

Method 2: Static Fee

  • With this method, residential customers will pay a flat monthly fee of $1.50. This amount will remain unchanged as long as UES’ current base gas rates are in place or as otherwise authorized by the ACC.
  • This amount will be added to the standard Basic Service and Meter Charge under “Delivery Services.”
  • Customers who wish to be billed using this method must contact our Customer Care department at 1-877-837-4968.

Q: Will the LFCR amount change?

Yes. The LFCR will vary each month with individual usage, except for customers who select the fixed option. Additionally, the percentage-based rate used to calculate the LFCR  will be updated annually to reflect revised estimates of the revenue lost to approved energy efficiency programs.