Current through Register Vol. 50, No. 9, March 1, 2024
RELATES TO:
KRS
61.870 - 61.884, 143.020, Chapter 278
NECESSITY, FUNCTION, AND CONFORMITY:
KRS
278.040(3) authorizes the
Public Service Commission to promulgate administrative regulations to implement
the provisions of KRS Chapter 278.
KRS
278.030(1) authorizes
utilities to demand, collect, and receive fair, just, and reasonable rates.
KRS
278.030(2) requires every
utility to furnish adequate, efficient, and reasonable service. This
administrative regulation establishes the requirements with respect to the
implementation of automatic fuel adjustment clauses by which electric utilities
may immediately recover increases in fuel costs subjected to later scrutiny by
the Public Service Commission.
Section
1. Fuel Adjustment Clause. Fuel adjustment clauses that are not in
conformity with the requirements established in subsections (1) through (6) of
this section are not in the public interest and may result in suspension of
those parts of the rate schedules based on severity of the nonconformity and
any history of nonconformity.
(1) The fuel
adjustment clause shall provide for periodic adjustment per Kilowatt Hour (KWH)
of sales equal to the difference between the fuel costs per KWH sale in the
base period and in the current period according to the following formula:
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Where F(b) is the cost of fuel in the base period, F(m) is the
cost of fuel in the current period, S(b) is sales in the base period, and S(m)
is sales in the current period, all as established in subsections (2) through
(6) of this section.
(2)
F(b)/S(b) shall be determined so that on the effective date of the commission's
approval of the utility's application of the formula, the resultant adjustment
shall be equal to zero.
(3) Fuel
costs (F) shall be the most recent actual monthly cost, based on weighted
average inventory costing, of:
(a) Fossil fuel
consumed in the utility's own plants, and the utility's share of fossil and
nuclear fuel consumed in jointly owned or leased plants, plus the cost of fuel
that would have been used in plants suffering forced generation or transmission
outages, but less the cost of fuel related to substitute generation;
plus
(b) The actual identifiable
fossil and nuclear fuel costs associated with energy purchased for reasons
other than as established in paragraph (c) of this subsection, but excluding
the cost of fuel related to purchases to substitute for the forced outages;
plus
(c) The net energy cost of
energy purchases, exclusive of capacity or demand charges irrespective of the
designation assigned to the transaction, if the energy is purchased on an
economic dispatch basis. Costs, such as the charges for economy energy
purchases, the charges as a result of scheduled outage, and other charges for
energy being purchased by the buyer to substitute for the buyer's own higher
cost energy, may be included; and less
(d) The cost of fossil fuel recovered through
intersystem sales, including the fuel costs related to economy energy sales and
other energy sold on an economic dispatch basis.
(4) Forced outages are all nonscheduled
losses of generation or transmission that require substitute power for a
continuous period in excess of six (6) hours. If forced outages are not the
result of faulty equipment, faulty manufacture, faulty design, faulty
installations, faulty operation, or faulty maintenance, but are Acts of God,
riot, insurrection, or acts of the public enemy, then the utility may, upon
proper showing, with the approval of the commission, include the fuel cost of
substitute energy in the adjustment. In making the calculations of fuel cost
(F) in subsection (3)(a) and (b) of this section, the forced outage costs to be
subtracted shall be no less than the fuel cost related to the lost generation
until approval is obtained.
(5)
Sales (S) shall be all KWH's sold, excluding intersystem sales. Utility used
energy shall not be excluded in the determination of sales (S). If, for any
reason, billed system sales cannot be coordinated with fuel costs for the
billing period, sales may be equated to:
(a)
Generation; plus
(b) Purchases;
plus
(c) Interchange-in;
less
(d) Energy associated with
pumped storage operations; less
(e)
Intersystem sales referred to in subsection (3)(d) of this section;
less
(f) Total system
losses.
(6) The cost of
fossil fuel shall only include the cost of the fuel itself and necessary
charges for transportation of the fuel from the point of acquisition to the
unloading point, as listed in Account 151 of FERC Uniform System of Accounts
for Public Utilities and Licensees, less any cash or other discounts.
Section 2. Filing Requirements.
(1) If a utility initially proposes a fuel
adjustment clause, the utility shall submit copies of each fossil fuel purchase
contract not otherwise on file with the commission and all other agreements,
options, amendments, modifications, and similar documents related to the
procurement of fuel supply or purchased power.
(2) Any changes in the contracts or other
documents filed pursuant to subsection (1) of this section, including price
escalations, and any new agreements entered into after the initial submission,
shall be submitted at the time they are entered into.
(3) If fuel is purchased from utility-owned
or controlled sources, or the contract contains a price escalation clause,
those facts shall be noted, and the utility shall explain and justify them in
writing.
(4) The monthly fuel
adjustment shall be filed with the commission no later than ten (10) days
before it is scheduled to go into effect, along with all the necessary
supporting data to justify the amount of the adjustment.
(5) Copies of all documents required to be
filed with the commission under this administrative regulation shall be open
and made available for public inspection at the office of the Public Service
Commission pursuant to the provisions of
KRS
61.870 through
61.884.
Section 3. Review of Fuel
Adjustment Clauses.
(1) Fuel charges that are
unreasonable shall be disallowed and may result in the suspension of the fuel
adjustment clause based on the severity of the utility's unreasonable fuel
charges and any history of unreasonable fuel charges.
(2) The commission on its own motion may
investigate any aspect of fuel purchasing activities covered by this
administrative regulation.
(3)
(a) At six (6) month intervals, the
commission shall conduct a formal review and may conduct public hearings on a
utility's past fuel adjustments.
(b) The commission shall order a utility to
charge off and amortize, by means of a temporary decrease of rates, any
adjustments the commission finds unjustified due to improper calculation or
application of the charge or improper fuel procurement practices.
(4)
(a) Every two (2) years following the initial
effective date of each utility's fuel clause, the commission shall conduct a
formal review and evaluate past operations of the clause, disallow improper
expenses and, to the extent appropriate, reestablish the fuel clause charge in
accordance with Section 1(2) of this administrative regulation.
(b) The commission may conduct a public
hearing if the commission finds that a hearing is necessary for the protection
of a substantial interest or is in the public interest.
STATUTORY AUTHORITY:
KRS
278.030(1), (2),
278.040(3)