Indiana Administrative Code › Title 170 - INDIANA UTILITY REGULATORY COMMISSION › Article 4 - ELECTRIC UTILITIES › Rule 4.1 - Cogeneration and Alternate Energy Production Facilities › Section 4.1-9 - Rates for capacity purchase

Current through July 10, 2024
Authority: IC 8-1-1; IC 8-1-2; IC 8-1-2.4
Affected: IC 8-1-2; IC 8-1-2.4
Sec. 9.
(a) A basic,
				unadjusted monthly avoided cost of capacity for a generating utility shall be
				calculated as follows:
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Where: C = Unadjusted monthly capacity payment per kilowatt
				  of contracted capacity year of completion of unit.
D = Present value of carrying charges for one dollar ($1) of
				  investment over n years with carrying charges assumed to be paid at the end of
				  each year.
V = Investment amount in year of completion, including
				  allowance for funds used during construction, of the avoidable or deferrable
				  unit, stated on a per kilowatt basis and including rated share of common
				  costs.
n = Expected life of the avoidable or deferrable unit.
ip = Annual escalation rate associated
				  with the avoidable or deferrable unit.
io = Annual escalation rate associated
				  with the operation and maintenance expenses, less fuel and fuel-related
				  expenses, of the avoidable or deferrable unit.
r = Purchasing utility's after tax cost of capital.
O = Expected total fixed and variable yearly operating and
				  maintenance expenses, less fuel and fuel-related expenses, in expected first
				  year of avoidable or deferrable unit's operation stated on a per kilowatt
				  basis.
l = Line losses, expressed as a percentage, for the previous
				  year.
t = Contract term in years, with t = 1 to t.
(b) Capacity payments which will begin before
				the avoidable or deferrable unit is expected to become used and useful, shall
				be calculated as follows:
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Where: Ca = Adjusted monthly capacity
				  payment.
[DELTA] t = In-service date of avoidable or deferrable unit
				  less in-service date of qualifying facility.
C, ip, r as previously defined in
				  equation of subsection (a).
(c) Except as permitted by subsection (g),
				the unadjusted rate per kilowatt for purchase of capacity shall not be lower in
				any year than the levelized annual economic carrying charge per kilowatt on a
				new combustion turbine, which shall be calculated by application of subsection
				(a) wherein the variable V shall be for a combustion turbine completed in the
				first year of any contract for purchase of capacity.
(d) Monthly payments for capacity calculated
				in subsections (a) through (b) shall be adjusted by the following factor:
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Where: F = Capacity payment adjustment factor.
Ep = Kilowatt-hours delivered to the
				  electric utility during the peak period by the qualifying facility.
K = Kilowatts of capacity the qualifying facility contracts
				  to provide.
Tp = Number of hours in peak
				  period.
(e) A basic,
				unadjusted monthly rate per kilowatt for purchase of capacity by a
				nongenerating utility from a qualifying facility shall be the utility's current
				weighted average cost per kilowatt paid to the utility's other
				suppliers.
(f) Monthly payments for
				capacity calculated in subsection (e) shall be adjusted by application of a
				factor developed from subsection (d).
(g) An electric utility and a qualifying
				facility may negotiate a rate for capacity which differs from the results of
				subsections (a) through (f).