Fuel is the largest item in the cost of production of electricity. Fuel prices rise and fall frequently and unpredictably and a mechanism is needed to adjust the electricity tariff other than frequent rate hearings. The costs of rate hearings are very high and are eventually passed on to the consumer. To avoid this, the Public Utilities Board (forerunner of the Fair Trading Commission) authorised the Company to use a fuel clause adjustment to deal with changes in the cost of fuel.

The fuel clause adjustment is a mechanism designed to recover the cost of fuel oil used in the generation of electricity.

The fuel clause adjustment adjusts the price that customers pay for each kilowatt hour of electricity as the cost of fuel used to generate electricity rises and falls.

The fuel clause adjustment does not contribute to Light & Power's profit. All monies collected through this mechanism are paid to the oil suppliers for fuel used to generate electricity

The Fair Trading Commission is responsible for setting and monitoring the rates Light & Power charges customers. This includes checking the calculation of the fuel clause adjustment. The fuel clause adjustment for each month is published in the daily newspapers early in the month.