Working on some Iowa accounts and MidAmerican's fuel adjustment clause numbers don't add up. The tariff shows natural gas costs at $3.42/MMBtu for the calculation period, but when I check the actual market prices for that timeframe, gas was averaging $2.89/MMBtu. That's a 53-cent difference that's flowing through to every kWh. On a 2MW industrial account, that's about $4,200/month in questionable charges. Anyone else seeing inflated fuel costs in their MidAmerican bills?
MidAmerican Energy Fuel Adjustment - Something's Not Right
Dana, that's a significant variance. MidAmerican typically uses a rolling average methodology for their fuel adjustment, but they should be transparent about the calculation period and source pricing. Have you requested the detailed fuel cost breakdown from their customer service department? Sometimes they include transportation and storage costs that inflate the base commodity price, but it should all be documented.
This sounds familiar. Idaho Power had a similar issue in 2022 where their fuel adjustment was using outdated contract prices instead of current market rates. They were locked into some expensive gas contracts from 2021 and passing those costs through even though spot prices had dropped significantly. The PUC made them true-up the difference and refund customers about $12 million. Worth investigating if MidAmerican has similar contract issues.
Warren makes a good point about contract pricing. Cincinnati Gas & Electric does something similar where they blend spot prices with long-term contract costs in their fuel clause. The problem is when utilities don't properly weight the blend or use expired contract terms. Request the fuel procurement records - they're usually available under Iowa's open records law for regulated utilities.
Thanks for the insights. Requested the detailed breakdown and Randy was right about transportation costs being included. MidAmerican is adding $0.34/MMBtu for pipeline capacity charges and another $0.19/MMBtu for storage costs. Still seems high compared to published pipeline tariffs, but at least I can see where the premium is coming from. Going to cross-check their pipeline contracts with current capacity rates.
Dana, also check if they're including any hedging losses in that fuel adjustment. We caught Ameren Missouri trying to recover derivative losses from their natural gas hedging program through the fuel clause last year. Those financial instruments are supposed to reduce fuel cost volatility, not create additional customer charges when the hedges go wrong. Saved our client about $28,000 annually just on that issue.