The gas and electric charges found on your CPS Energy bill are made up of two main parts: the base rate and a fuel adjustment.

CPS Energy’s base rate for electricity is derived from a formula that combines the Service Availability Charge, the Energy Charge and the Peak Capacity Charge (listed on the back of a customer's bill). For the natural gas rate, it includes the Service Availability Charge and the Energy Charge.

A fuel adjustment charge is set each month to recover variances in fuel costs. The adjustment also includes a component to recover regulatory-related charges that were not contemplated when the base rates were set. Adjustments to the fuel portion of the adjustment may be positive or negative, depending on whether fuel costs for the period are above or below the amount that is built into the base rate. So customers may see a charge, or a credit, on their monthly bills.

The regulatory-related charges that CPS Energy pays can be separated into two types: transmission-related charges and charges related to the Electric Reliability Council of Texas (ERCOT). ERCOT is an independent, non-profit corporation that administers the statewide electric transmission system to ensure non-discriminatory access to the statewide transmission grid.

ERCOT is needed to support competition in both wholesale and retail electricity. The Transmission charge is set by the Public Utility Commission of Texas (PUCT) and is payable to all utilities for the use of high voltage lines throughout the state. The amount that CPS Energy recovers in the regulatory adjustment portion of the Fuel/Reg Factor is the difference between what it costs CPS Energy to own, operate and maintain its own wires, and CPS Energy's share of the charges that are paid by all utilities for access and use of the statewide grid.

The ERCOT-related charges include a fee instituted to fund the operations of the ERCOT and charges and/or credits related to activities in the wholesale energy market that are administered by ERCOT. CPS Energy passes on these charges and/or credits to ratepayers at varying rates depending on the customer's rate class and electric usage.