Kentucky Administrative Regulations › Title 807 - ENERGY AND ENVIRONMENT CABINET PUBLIC SERVICE COMMISSION › Chapter 5 - Utilities › Section 807 KAR 5:056 - Fuel adjustment clause

Current through Register Vol. 51, No. 1, July 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.