Opinion ID: 553830
Heading Depth: 2
Heading Rank: 2

Heading: The Invoice Price of Fuel

Text: 18 Not every expense that may appear on an invoice rendered by a coal supplier to a utility is included within the invoice price of fuel listed in Account 151. See Southern Calif. Edison Co., 3 F.E.R.C. p 61,075, at 61,210 (1977) (excluding financing costs from fuel clause treatment). The FERC held that an invoiced minimum take payment is part of the invoice price of fuel, however. 19 As we have seen, the FERC reasonably assigns minimum take payments to the cost of fuel consumed, and a minimum take payment is functionally inseparable from the unit cost of fuel. Without the revenue cushion provided by a minimum take clause, a supplier would have to charge more per unit of coal actually taken. Thus, the nominal unit price of the cost of fuel consumed is distorted by the offset for the take-or-pay provision. By including minimum take payments in the invoice price of fuel, the FERC merely avoids importing that distortion into its regulation governing the use of fuel cost adjustment clauses. 20 As the petitioners point out, the Commission recently stated that costs may be recovered through the fuel cost adjustment clause only when [they] are properly classified under Account 151. Kansas City Power & Light Co., 42 F.E.R.C. at 61,809. Yet in the present case, the FERC ruled that a minimum take payment may be passed through the fuel clause even though it is properly recorded in Account 501 rather than Account 151. In context, the FERC's present decision is not arbitrary or capricious, but sensible. First, we note that Kansas City Power does not preclude an expense from being classified under one account and yet properly recorded in another for a different regulatory purpose. Second, we do not think that the Commission should be faulted for following the literal meaning of its fuel clause regulation, which simply requires that an expenditure be for one of the items ... listed in Account 151, without regard to whether it is also recorded in that account. Most important, the Commission's rules specifically link Accounts 151 and 501; items first recorded in Account 151 (Fuel Stock) are cleared through Account 501 when fuel is actually used. 18 C.F.R. Sec. 101, Account 501(B). See 48 F.E.R.C. at 62,044 n. 6. As a minimum take payment is used at the moment the payment is made, the FERC reasonably requires the payment to be booked directly to Account 501 without first making a momentary stopover in Account 151. This accounting treatment does nothing to call into doubt the Commission's judgment that a minimum take payment is part of the invoice price of fuel listed in Account 151.