§ 62-133.2. Fuel and fuel-related charge adjustments for electric utilities. - North Carolina Statutes

§ 62‑133.2.  Fuel andfuel‑related charge adjustments for electric utilities.

(a)        The Commissionshall permit an electric public utility that generates electric power by fossilfuel or nuclear fuel to charge an increment or decrement as a rider to its ratesfor changes in the cost of fuel and fuel‑related costs used in providingits North Carolina customers with electricity from the cost of fuel and fuel‑relatedcosts established in the electric public utility's previous general rate caseon the basis of cost per kilowatt hour.

(a1)      As used in thissection, "cost of fuel and fuel‑related costs" means all of thefollowing:

(1)        The cost of fuelburned.

(2)        The cost of fueltransportation.

(3)        The cost of ammonia,lime, limestone, urea, dibasic acid, sorbents, and catalysts consumed inreducing or treating emissions.

(4)        The total deliverednoncapacity related costs, including all related transmission charges, of allpurchases of electric power by the electric public utility, that are subject toeconomic dispatch or economic curtailment.

(5)        The capacity costsassociated with all purchases of electric power from qualifying cogenerationfacilities and qualifying small power production facilities, as defined in 16U.S.C. § 796, that are subject to economic dispatch by the electric publicutility.

(6)        Except for thosecosts recovered pursuant to G.S. 62‑133.8(h), the total delivered costsof all purchases of power from renewable energy facilities and new renewableenergy facilities pursuant to G.S. 62‑133.8 or to comply with any federalmandate that is similar to the requirements of subsections (b), (c), (d), (e),and (f) of G.S. 62‑133.8.

(7)        The fuel costcomponent of other purchased power.

(8)        Cost of fuel andfuel‑related costs shall be adjusted for any net gains or lossesresulting from any sales by the electric public utility of fuel and other fuel‑relatedcosts components.

(9)        Cost of fuel andfuel‑related costs shall be adjusted for any net gains or lossesresulting from any sales by the electric public utility of by‑productsproduced in the generation process to the extent the costs of the inputsleading to that by‑product are costs of fuel or fuel‑related costs.

(a2)      For those costsidentified in subdivisions (4), (5), and (6) of subsection (a1) of this section,the annual increase in the aggregate amount of these costs that are recoverableby an electric public utility pursuant to this section shall not exceed twopercent (2%) of the electric public utility's total North Carolina retailjurisdictional gross revenues for the preceding calendar year. The costsdescribed in subdivisions (4), (5), and (6) of subsection (a1) of this sectionshall be recoverable from each class of customers as a separate component ofthe rider as follows:

(1)        For the costsdescribed in subdivision (4) of subsection (a1) of this section, the specificcomponent for each class of customers shall be determined by allocating thesecosts among customer classes based on the electric public utility's NorthCarolina energy usage for the prior year, as determined by the Commission,until the Commission determines how these costs shall be allocated in a generalrate case for the electric public utility commenced on or after January 1,2008.

(2)        For the costsdescribed in subdivisions (5) and (6) of subsection (a1) of this section, thespecific component for each class of customers shall be determined byallocating these costs among customer classes based on the electric publicutility's North Carolina peak demand for the prior year, as determined by theCommission, until the Commission determines how these costs shall be allocatedin a general rate case for the electric public utility commenced on or afterJanuary 1, 2008.

(a3)      Notwithstandingsubsections (a1) and (a2) of this section, for an electric public utility thathas fewer than 150,000 North Carolina retail jurisdictional customers as ofDecember 31, 2006, the costs identified in subdivisions (1), (2), (6), and (7)of subsection (a1) of this section and the fuel cost component, as may be modifiedby the Commission, of electric power purchases identified in subdivision (4) ofsubsection (a1) of this section shall be recovered through the increment ordecrement rider approved by the Commission pursuant to this section. For thecosts identified in subdivision (6) of subsection (a1) of this section that areincurred on or after  January 1, 2008, the annual increase in the amount ofthese costs shall not exceed one percent (1%) of the electric public utility'stotal North Carolina retail jurisdictional gross revenues for the precedingcalendar year. These costs described in subdivision (6) of subsection (a1) ofthis section shall be recoverable from each class of customers as a separatecomponent of the rider. For the costs described in subdivision (6) ofsubsection (a1) of this section, the specific component for each class ofcustomers shall be determined by allocating these costs among customer classesbased on the electric public utility's North Carolina peak demand for the prioryear, as determined by the Commission, until the Commission determines howthese costs shall be allocated in a general rate case for the electric publicutility commenced on or after January 1, 2008.

(b)        The Commissionshall conduct a hearing within 12 months of each electric public utility's lastgeneral rate case order to determine whether an increment or decrement rider isrequired to reflect actual changes in the cost of fuel and fuel‑relatedcosts over or under the cost of fuel and fuel‑related costs on a kilowatt‑hourbasis in base rates established in the electric public utility's last precedinggeneral rate case. Additional hearings shall be held on an annual basis butonly one hearing for each electric public utility may be held within 12 monthsof the last general rate case.

(c)        Each electricpublic utility shall submit to the Commission for the hearing verifiedannualized information and data in such form and detail as the Commission mayrequire, for an historic 12‑month test period, relating to:

(1)        Cost of fuel andfuel‑related costs used in each generating facility owned in whole or inpart by the utility.

(2)        Fuel procurementpractices and fuel inventories for each facility.

(3)        Burned cost of fuelused in each generating facility.

(4)        Plant capacityfactor for each generating facility.

(5)        Plant availabilityfactor for each generating plant.

(6)        Generation mix bytypes of fuel used.

(7)        Sources and fuelcost component of purchased power used.

(8)        Recipients of andrevenues received for power sales and times of power sales.

(9)        Test period kilowatt‑hoursales for the utility's total system and on the total system separated forNorth Carolina jurisdictional sales.

(10)      Procurement practicesand inventories for: fuel burned and for ammonia, lime, limestone, urea, dibasicacid, sorbents, and catalysts consumed in reducing or treating emissions.

(11)      The cost incurred ateach generating facility of fuel burned and of ammonia, lime, limestone, urea,dibasic acid, sorbents, and catalysts consumed in reducing or treatingemissions.

(12)      Any net gains orlosses resulting from any sales by the electric public utility of fuel or otherfuel‑related costs components.

(13)      Any net gains orlosses resulting from any sales by the electric public utility of by‑productsproduced in the generation process to the extent the costs of the inputsleading to that by‑product are costs of fuel or fuel‑related costs.

(d)        The Commissionshall provide for notice of a public hearing with reasonable and adequate timefor investigation and for all intervenors to prepare for hearing. At thehearing the Commission shall receive evidence from the utility, the PublicStaff, and any intervenor desiring to submit evidence, and from the publicgenerally. In reaching its decision, the Commission shall consider all evidencerequired under subsection (c) of this section as well as any and all othercompetent evidence that may assist the Commission in reaching its decisionincluding changes in the cost of fuel consumed and fuel‑related coststhat occur within a reasonable time, as determined by the Commission, after thetest period is closed. The Commission shall incorporate in its cost of fuel andfuel‑related costs determination under this subsection the experiencedover‑recovery or under‑recovery of reasonable costs of fuel andfuel‑related costs prudently incurred during the test period, based uponthe prudent standards set pursuant to subsection (d1) of this section, infixing an increment or decrement rider. Upon request of the electric publicutility, the Commission shall also incorporate in this determination theexperienced over‑recovery or under‑recovery of costs of fuel andfuel‑related costs through the date that is 30 calendar days prior to thedate of the hearing, provided that the reasonableness and prudence of thesecosts shall be subject to review in the utility's next annual hearing pursuantto this section. The Commission shall use deferral accounting, and consecutivetest periods, in complying with this subsection, and the over‑recovery orunder‑recovery portion of the increment or decrement shall be reflectedin rates for 12 months, notwithstanding any changes in the base fuel cost in ageneral rate case. The burden of proof as to the correctness and reasonablenessof the charge and as to whether the cost of fuel and fuel‑related costswere reasonably and prudently incurred shall be on the utility. The Commissionshall allow only that portion, if any, of a requested cost of fuel and fuel‑relatedcosts adjustment that is based on adjusted and reasonable cost of fuel and fuel‑relatedcosts prudently incurred under efficient management and economic operations. Inevaluating whether cost of fuel and fuel‑related costs were reasonableand prudently incurred, the Commission shall apply the rule adopted pursuant tosubsection (d1) of this section. To the extent that the Commission determinesthat an increment or decrement to the rates of the utility due to changes inthe cost of fuel and fuel‑related costs over or under base fuel costsestablished in the preceding general rate case is just and reasonable, theCommission shall order that the increment or decrement become effective for allsales of electricity and remain in effect until changed in a subsequent generalrate case or annual proceeding under this section.

(d1)      Within one yearafter ratification of this act, for the purposes of setting cost of fuel andfuel‑related costs rates, the Commission shall adopt a rule thatestablishes prudent standards and procedures with which it can appropriatelymeasure management efficiency in minimizing cost of fuel and fuel‑relatedcosts.

(e)        If the Commissionhas not issued an order pursuant to this section within 180 days of a utility'ssubmission of annual data under subsection (c) of this section, the utility mayplace the requested cost of fuel and fuel‑related costs adjustment intoeffect. If the change in rate is finally determined to be excessive, theutility shall make refund of any excess plus interest to its customers in amanner ordered by the Commission.

(f)         Nothing in thissection shall relieve the Commission from its duty to consider thereasonableness of the cost of fuel and fuel‑related costs in a generalrate case and to set rates reflecting reasonable cost of fuel and fuel‑relatedcosts pursuant to G.S. 62‑133. Nothing in this section shall invalidateor preempt any condition adopted by the Commission and accepted by the utilityin any proceeding that would limit the recovery of costs by any electric publicutility under this section.

(g)        On July 1 of everyodd‑numbered year, the Utilities Commission shall provide a report to theJoint Legislative Utility Review Committee summarizing the proceedingsconducted pursuant to this section during the preceding two years. (1981 (Reg. Sess., 1982), c.1197, s. 1; 1987, c. 677, ss. 1, 5; 1989, c. 15, s. 1; 1991, c. 129, s. 1;1995, c. 15, ss. 1, 2; 2007‑397, s. 5.)