3 AAC 50.770 - Purchases

Current through April 6, 2022

(a) Unless otherwise provided by law, an electric utility shall purchase, in accordance with (c) - (k) of this section, any electric power which is made available from a qualifying facility.
(b) Notwithstanding (a) of this section, an electric utility is not required to purchase electric power from a qualifying facility if
(1) due to operational circumstances, purchases from a qualifying facility result in costs greater than those which the electric utility would have incurred if it had not made such purchases but had instead generated or purchased an equivalent amount of power; if purchases have started, an electric utility seeking to stop purchase under this paragraph shall notify in writing each affected qualifying facility in time for the qualifying facility to stop the delivery of electric power to the electric utility, or the electric utility shall pay the expense it would have incurred had power continued to be purchased from the qualifying facility at established rates during the same period;
(2) during a system emergency, purchases from a qualifying facility would further contribute to the emergency; or
(3) with the agreement of the qualifying facility, the electric utility transmits the electric power to another electric utility which is obligated to purchase that electric power as if it were supplied directly by the qualifying facility.
(c) Rates for purchases of electric power must be just and reasonable and in the public interest must not discriminate against qualifying facilities or adversely affect the consumers of the electric utility.
(d) For purchases from a qualifying facility, rates must be based on the cost of energy and capacity which the electric utility avoids by virtue of its interconnection with the qualifying facility. The following factors must, to the extent practicable, be taken into account:
(1) the data provided under 3 AAC 50.790(e).
(2) the availability of capacity or energy from a qualifying facility during the system daily and seasonal peak periods, including
(A) the ability of the utility to dispatch the qualifying facility;
(B) the expected or demonstrated reliability of the qualifying facility;
(C) the terms of any contract or other legally enforceable obligation, including the duration of the obligation, termination, termination notice requirements, and sanctions for non-compliance;
(D) the extent to which scheduled outages of the qualifying facility can be usefully coordhiated with scheduled outages of the utility's facilities;
(E) the usefulness of energy and capacity supplied from a qualifying facility during system emergencies, including its ability to separate its load from its generation;
(F) the individual and aggregate value of energy and capacity from qualifying facilities on the electric utility's system; and
(G) the smaller capacity increments and the shorter lead times available with additions of capacity from qualifying facilities;
(3) the relationship of the availability of energy or capacity from the qualifying facility as derived in (2) if this subsection, to the ability of the electric utility to avoid costs, including the deferral of capacity additions and the reduction of fossil fuel use; and
(4) the cost or savings resulting from variations in line losses from those that would have existed in the absence of purchases from a qualifying facility, if the purchasing electric utility generated an equivalent amount of energy itself or purchased an equivalent amount of electric energy or capacity.
(e) Repealed 3/11/2016.
(f) Repealed 3/11/2016.
(g) An electric utility which is legally obligated to obtain all of its requirements for electric power from another electric utility shall submit to the commission the requisite avoided cost data of its supplying utility and the rates at which it currently purchases such energy and capacity. The supplying electric utility shall make the necessary information available to the purchasing electric utility at the time its wholesale power rates are approved by the commission.
(h) An electric utility or qualifying facility may agree by special contract, subject to 3 AAC 48.390, to different rates, terms, or conditions for purchases than otherwise required by this section. A contract between an electric utility and a qualifying facility is valid if the commission determines the rates, terms, or conditions for purchases are just and reasonable to the customers of the electric utility and in the public interest. The contract may not be nullified under 3 AAC 50.770(b) (1) without prior commission approval.
(i) For purchases of energy from a qualifying facility with a design capacity of 100 kilowatts or less, the rates must be calculated supported, and filed as follows:
(1) unless otherwise ordered by the commission, the avoided energy costs must be expressed in cents-per-kilowatt-hour and determined from the sum of fuel and variable operation and maintenance expenses and the energy portion of purchased-power expense for the same period used by the utility to project costs and sales in its adjustment clause methodology, approved by the commission, updated by subsequent fuel costs, and divided by the number of kilowatt-hours sold for the same time period expenses and kilowatt-hours sold associated with generation that is not avoided by virtue of purchases from qualifying facilities with a design capacity of 100 kilowatts or less must be specifically excluded from the computation of avoided costs;
(2) an electric utility shall submit to the commission the following information for the same period used in support of the utility's adjustment clause filing, to support rates for purchases of energy:
(A) the data and computation of avoided energy costs specified in (1) of this subsection; and
(B) at its option, in addition to the information required in (A) of this paragraph, the data and computation of avoided energy costs based on any other methodology deemed appropriate and justifiable by the electric utility;
(3) the utility's request to use an alternate methodology in (2)(B) of this subsection is subject to review and advance approval of the commission.
(j) An electric utility shall submit to the commission the information necessary to support the methodology and calculations used in developing rates for purchased power based on avoided energy and capacity costs.
(k) Each qualifying facility shall have the option either
(1) to provide energy as the qualifying facility determines such energy to be available for such purchases, in which case the rates for such purchases shall be based on the purchasing utility's avoided costs calculated at the time of delivery; or
(2) to provide energy or capacity under a legally enforceable obligation for the delivery of energy or capacity over a specified term, in which case the rates for such purchases shall, at the option of the qualifying facility exercised before the beginning of the specified term, be based on either
(A) the avoided costs calculated at the time of delivery; or
(B) the avoided costs calculated at the time the obligation is incurred.


3 AAC 50.770
Eff. 11/20/82, Register 84; am 3/11/2016, Register 217, April 2016

Authority:AS 42.05.141

AS 42.05.151

AS 42.05.291

AS 42.05.301

AS 42.05.361

AS 42.05.381

AS 42.05.391

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