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Publication Citation

30 Case Western Reserve Law Review 228 (1980)


Through automatic fuel adjustment clauses, utilities in most states are permitted automatically to pass through to customers any increase in fuel costs, thereby circumventing a general rate hearing before a public utilities commission where the validity of any such rate increase could be publicly examined In this Article the author discusses the benefits and detriments of the automatic fuel adjustment clause, using the clause that existed in Ohio until quite recently as an example. He concludes that such a rate increase without a hearing can no longer be justified on the basis of uncontrollable fuel costs. Instead he advocates adoption of a hearing contingency format, as recently proposed by Ohio's House Bill 21, to ensure that utilities are provided with adequate incentives for efficiency in the procurement and utilization of fuel. He concludes with a discussion of the Ohio provisions as enacted.