Pennsylvania Code › Title 52 - PUBLIC UTILITIES › Part I - Public Utility Commission › Subpart C - Fixed Service Utilities › Chapter 69 - GENERAL ORDERS, POLICY STATEMENTS AND GUIDELINES ON FIXED UTILITIES › FUEL PROCUREMENT POLICIES AND PROCEDURES › Section 69.1 - General

Current through Register Vol. 54, No. 28, July 13, 2024
(a) Since
					 66 Pa.C.S. §
												1307
					 (relating to sliding scale of rates; adjustments), enables a utility to pass
					 fuel costs directly to the ratepayers, a utility has the highest degree of
					 responsibility to take aggressive action on behalf of its ratepayers to control
					 fuel costs. A utility should use every means reasonably available to monitor
					 and enforce vendor adherence to all aspects of fuel procurement agreements. In
					 addition to contract adherence, the Commission may exercise its independent
					 right to review whether each utility purchases the lowest cost fuel that meets
					 the necessary standards and specifications, which may include a review to
					 determine if the utility is continually, thoroughly and aggressively searching
					 the fuel market for reasonably priced fuel. The Commission may make
					 constructive suggestions with regard to an individual company's fuel
					 procurement policies and procedures from time to time.
(b) The purpose of §
											§
											69.1-69.2,
					 69.4 and
					 69.5 (relating to fuel procurement
					 policies and procedures) is to establish guidelines that the Commission
					 recommends an electric utility follow in its fuel procurement activities. The
					 Commission realizes that fuel procurement practices of utilities may differ
					 depending on individual circumstances. However, the Commission believes that
					 there are certain common procedures that will result in the lowest reasonable
					 fuel costs. The Commission defines lowest reasonable cost to be fuel purchases
					 that result in the lowest generating costs. This fuel should be consistent with
					 contracted quality, regulatory requirements and prevailing wage rates, and may
					 or may not be the lowest priced fuel.
(c) If a utility believes that an otherwise
					 nonconforming fuel procurement policy will, in the long term, result in lower
					 costs, the utility should submit the details of the policy for review by the
					 Commission prior to implementation.
(d) If it appears, through Commission review,
					 that nonconforming fuel procurement practices have resulted in excessive fuel
					 costs, a utility may be required to demonstrate the reasonableness of the
					 costs.
(e) If the Commission
					 determines after notice and hearing that a utility's nonconforming fuel
					 procurement policy has resulted in unreasonable fuel costs, the utility shall
					 be required to apply credits against the applicable energy cost rate or to make
					 refunds to its customers.
(f) In
					 order for the Commission to monitor fuel costs properly, a utility should
					 record fuel prices FOB supplier with transportation costs reported separately.
					 For contracts which state only delivered costs, the company should impute
					 transportation costs and report those costs separately.
(g) Sections
					 69.1-69.2,
					 69.4 and
					 69.5 represent the standard by
					 which the Commission intends to assess a utility's fuel purchasing policies and
					 procedures. Sections
					 69.1-69.2,
					 69.4 and
					 69.5 serve as notice to electric
					 utilities of the Commission's expectations with regard to fuel procurement
					 policies and procedures. Utilities should apply §
											§
											69.1-69.2,
					 69.4 and
					 69.5 prospectively in planning
					 fuel purchases. Where provisions of existing contracts are in conflict with
					 §
											§
											69.1-69.2,
					 69.4 and
					 69.5, utilities need not seek to
					 immediately amend the contracts, but should move towards the policies set forth
					 in §
											§
											69.1-69.2,
					 69.4 and
					 69.5 as contracts are modified,
					 renegotiated or extended.
The provisions of this §
													69.1 issued under Public Utility
						  Code, the Public Utility Code,
						  66 Pa.C.S. §
														§
														501,
						  1301 and
						  1307.