56-249.6 - Recovery of fuel and purchased power costs.
§ 56-249.6. Recovery of fuel and purchased power costs.
A. 1. Each electric utility that purchases fuel for the generation ofelectricity or purchases power and that was not, as of July 1, 1999, bound bya rate case settlement adopted by the Commission that extended in itsapplication beyond January 1, 2002, shall submit to the Commission itsestimate of fuel costs, including the cost of purchased power, for the12-month period beginning on the date prescribed by the Commission. Uponinvestigation of such estimates and hearings in accordance with law, theCommission shall direct each company to place in effect tariff provisionsdesigned to recover the fuel costs determined by the Commission to beappropriate for that period, adjusted for any over-recovery or under-recoveryof fuel costs previously incurred.
2. The Commission shall continuously review fuel costs and if it finds thatany utility described in subdivision A 1 is in an over-recovery position bymore than five percent, or likely to be so, it may reduce the fuel costtariffs to correct the over-recovery.
3. Beginning July 1, 2009, for all utilities described in subdivision A 1 andsubsection B, if the Commission approves any increase in fuel factor chargespursuant to this section that would increase the total rates of theresidential class of customers of any such utility by more than 20 percent,the Commission, within six months following the effective date of suchincrease, shall review fuel costs, and if the Commission finds that theutility is, or is likely to be, in an over-recovery position with respect tofuel costs for the 12-month period for which the increase in fuel factorcharges was approved by more than five percent, it may reduce the utility'sfuel cost tariffs to correct the over-recovery.
B. All fuel costs recovery tariff provisions in effect on January 1, 2004,for any electric utility that purchases fuel for the generation ofelectricity and that was, as of July 1, 1999, bound by a rate case settlementadopted by the Commission that extended in its application beyond January 1,2002, shall remain in effect until the later of (i) July 1, 2007 or (ii) theestablishment of tariff provisions under subsection C. Any such utility shallcontinue to report to the Commission annually its actual fuel costs,including the cost of purchased power.
C. Each electric utility described in subsection B shall submit annually tothe Commission its estimate of fuel costs, including the cost of purchasedpower, for successive 12-month periods beginning on July 1, 2007, and eachJuly 1 thereafter. Upon investigation of such estimates and hearings inaccordance with law, the Commission shall direct each such utility to placein effect tariff provisions designed to recover the fuel costs determined bythe Commission to be appropriate for such periods, adjusted for anyover-recovery or under-recovery of fuel costs previously incurred; however,(i) no such adjustment for any over-recovery or under-recovery of fuel costspreviously incurred shall be made for any period prior to July 1, 2007, and(ii) the Commission shall order that the deferral portion, if any, of thetotal increase in fuel tariffs for all classes as determined by theCommission to be appropriate for the 12-month period beginning July 1, 2007,above the fuel tariffs previously existing, shall be deferred withoutinterest and recovered from all classes of customers as follows: (i) in the12-month period beginning July 1, 2008, that part of the deferral portion ofthe increase in fuel tariffs that the Commission determines would increasethe total rates of the residential class of customers of the utility by fourpercent over the level of such total rates in existence on June 30, 2008,shall be recovered; (ii) in the 12-month period beginning July 1, 2009, thatpart of the balance of the deferral portion of the increase in fuel tariffs,if any, that the Commission determines would increase the total rates of theresidential class of customers of the utility by four percent over the levelof such total rates in existence on June 30, 2009, shall be recovered; and(iii) in the 12-month period beginning July 1, 2010, the entire balance ofthe deferral portion of the increase in fuel tariffs, if any, shall berecovered. The "deferral portion of the increase in fuel tariffs" means theportion of such increase in fuel tariffs that exceeds the amount of suchincrease in fuel tariffs that the Commission determines would increase thetotal rates of the residential class of customers of the utility by more thanfour percent over the level of such total rates in existence on June 30, 2007.
D. In proceedings under subsections A and C:
1. Energy revenues associated with off-system sales of power shall becredited against fuel factor expenses in an amount equal to the totalincremental fuel factor costs incurred in the production and delivery of suchsales. In addition, 75 percent of the total annual margins from off-systemsales shall be credited against fuel factor expenses; however, theCommission, upon application and after notice and opportunity for hearing,may require that a smaller percentage of such margins be so credited if itfinds by clear and convincing evidence that such requirement is in the publicinterest. The remaining margins from off-system sales shall not be consideredin the biennial reviews of electric utilities conducted pursuant to §56-585.1. In the event such margins result in a net loss to the electricutility, (i) no charges shall be applied to fuel factor expenses and (ii) anysuch net losses shall not be considered in the biennial reviews of electricutilities conducted pursuant to § 56-585.1. For purposes of this subsection,"margins from off-system sales" shall mean the total revenues received fromoff-system sales transactions less the total incremental costs incurred; and
2. The Commission shall disallow recovery of any fuel costs that it findswithout just cause to be the result of failure of the utility to make everyreasonable effort to minimize fuel costs or any decision of the utilityresulting in unreasonable fuel costs, giving due regard to reliability ofservice and the need to maintain reliable sources of supply, economicalgeneration mix, generating experience of comparable facilities, andminimization of the total cost of providing service.
E. The Commission is authorized to promulgate, in accordance with theprovisions of this section, all rules and regulations necessary to allow therecovery by electric utilities of all of their prudently incurred fuel costsunder subsections A and C, including the cost of purchased power, asprecisely and promptly as possible, with no over-recovery or under-recovery,except as provided in subsection C, in a manner that will tend to assurepublic confidence and minimize abrupt changes in charges to consumers.
(1978, c. 636; 1979, c. 492; 1980, c. 384; 1982, c. 584; 1984, cc. 716, 725;1989, c. 666; 2004, c. 827; 2006, c. 939; 2007, cc. 888, 933; 2009, c. 244.)