04 N.C. Admin. Code 11 R08-55 - ANNUAL HEARINGS TO REVIEW CHANGES IN THE COST OF FUEL AND FUEL-RELATED COSTS
(a) As used in this rule, "cost of fuel and
fuel-related costs" means all of the following:
(1) The cost of fuel burned.
(2) The cost of fuel
transportation.
(3) The cost of
ammonia, lime, limestone, urea, dibasic acid, sorbents, and catalysts consumed
in reducing or treating emissions.
(4) The total delivered noncapacity related
costs, including all related transmission charges, of all purchases of electric
power by the electric public utility that are subject to economic dispatch or
economic curtailment.
(5) The
capacity costs associated with all purchases of electric power from qualifying
cogeneration facilities and qualifying small power production facilities, as
defined in 16 U.S.C.
796, that are subject to economic dispatch by
the electric public utility.
(6)
Except for those costs recovered pursuant to
G.S.
62-133.8(h), the total
delivered costs of all purchases of power from renewable energy facilities and
new renewable energy facilities pursuant to
G.S.
62-133.8 or to comply with any federal
mandate that is similar to the requirements of subsections (b), (d), (e) and
(f) of G.S. 62-133.8.
(7) All costs incurred to comply with the
Swine Farm Methane Capture Pilot Program established in Section 4 of S.L.
2007-523.
(8) The fuel cost
component of other purchased power.
Cost of fuel and fuel-related costs shall be adjusted for (a) any net gains or losses resulting from any sales by the electric public utility of fuel and other fuel-related costs components and (b) any net gains or losses resulting from any sales by the electric public utility of by-products produced in the generation process to the extent the costs of the inputs leading to that by-product are costs of fuel or fuel-related costs.
(b) For
each electric public utility generating electric power by means of fossil
and/or nuclear fuel for the purpose of furnishing North Carolina retail
electric service, the Commission shall schedule an annual public hearing
pursuant to
G.S.
62-133.2(b) in order to
review changes in the electric public utility's cost of fuel and fuel-related
costs. The annual cost of fuel and fuel-related cost adjustment hearing for
Duke Energy Carolinas, LLC, will be scheduled for the first Tuesday of June
each year; for Duke Energy Progress, LLC., the annual hearing will be scheduled
for the third Tuesday of September each year; and for Virginia Electric and
Power Company, d/b/a Dominion Energy North Carolina, the annual hearing will be
scheduled for the third Tuesday of November each year.
(c) The test periods for the hearings to be
held pursuant to paragraph (b) above will be uniform over time. The test period
for Duke Energy Carolinas, LLC will be the calendar year; for Duke Energy
Progress, Inc., the test period will be the 12-month period ending March 31;
and for Dominion North Carolina Power, the test period will be the 12-month
period ending June 30.
(d) The
Commission shall permit each electric public utility to charge an increment or
decrement as a rider to its rates for changes in the cost of fuel and
fuel-related costs used in providing its North Carolina customers with
electricity from the cost of fuel and fuel-related costs established in the
electric public utility's previous general rate case on the basis of cost per
kilowatt-hour. The increment or decrement may be different among customer
classes. The general methodology and procedures to be used in establishing the
cost of fuel and fuel-related costs shall be as follows:
(1) Cost of fuel and fuel-related costs will
be preliminarily established utilizing the methods and procedures approved in
the utility's last general rate case, except that capacity factors for nuclear
production facilities will be normalized based generally on the national
average for nuclear production facilities as reflected in the most recent North
American Electric Reliability Corporation's Generating Availability Report,
adjusted to reflect unique, inherent characteristics of the utility, including,
but not limited to, plants 2 years or less in age and unusual events. The
national average capacity factor for nuclear production facilities shall be
based on the most recent 5-year period available and shall be weighted, if
appropriate, for both pressurized water reactors and boiling water reactors.
The costs shall be allocated among customer classes in accordance with
G.S.
62-133.2(a2), as applicable.
A cost of fuel and fuel-related cost rider will then be determined based upon
the difference between the cost of fuel and fuel-related costs thus established
and the base cost of fuel and fuel-related cost component of the rates
established in the utility's most recent general rate case. The foregoing
normalization requirement assumes that the Commission finds that an abnormality
having a probable impact on the utility's revenues and expenses existed during
the test period.
(2) Cost of fuel
and fuel-related costs will be modified as provided in
G.S.
62-133.2(a3).
(3) The cost of fuel and fuel-related costs
as described above will be further modified through use of an experience
modification factor (EMF) rider, which may be different among customer classes.
The EMF rider will reflect the difference between reasonable and prudently
incurred cost of fuel and fuel-related costs and the fuel-related revenues that
were actually realized during the test period under the cost of fuel and
fuel-related cost components of rates then in effect. Upon request of the
electric public utility, the Commission shall also incorporate in this
determination the experienced over-recovery or under-recovery of the cost of
fuel and fuel-related costs up to thirty (30) days prior to the date of the
hearing, provided that the reasonableness and prudence of these costs shall be
subject to review in the utility's next annual fuel and fuel-related costs
adjustment hearing.
(4) The cost of
fuel and fuel-related cost rider and the EMF rider as described hereinabove
will be charged as an increment or decrement to the base fuel cost component of
rates established in the electric public utility's previous general rate
case.
(5) The EMF rider will remain
in effect for a fixed 12-month period following establishment and will carry
through as a rider to rates established in any intervening general rate case
proceedings; provided, however, that such carry-through provision will not
relieve the Commission of its responsibility to determine the reasonableness of
the cost of fuel and fuel-related costs, other than that being collected
through operation of the EMF rider, in any intervening general rate case
proceeding.
(6) Pursuant to
G.S.
62-130(e), any
over-collection of reasonable and prudently incurred cost of fuel and
fuel-related costs to be refunded to a utility's customers through operation of
the EMF rider shall include an amount of interest, at such rate as the
Commission determines to be just and reasonable, not to exceed the maximum
statutory rate.
(e) Each
electric public utility, at a minimum, shall submit to the Commission for
purposes of investigation and hearing the information and data in the form and
detail as set forth below:
(1) Actual test
period kWh sales, peak demand by customer class, fuel-related revenues, and
fuel-related expenses for the utility's total system and for its North Carolina
retail operations.
(2) Test period
kWh sales normalized for weather, customer growth and usage. Said normalized
kWh sales shall be for the utility's total system and for its North Carolina
retail operations. The methodology used for such normalization shall be the
same methodology adopted by the Commission, if any, in the utility's last
general rate case.
(3) Adjusted
test period kWh generation corresponding to normalized test period kWh usage.
The methodology for such adjustment shall be the same methodology adopted by
the Commission in the utility's last general rate case, including adjustment by
type of generation; i.e., nuclear, fossil, hydro, pumped storage, purchased
power, etc. In the event that said methodology is inconsistent with the
normalization methodology set forth in paragraph (d)(1) above, additional pro
forma calculations shall be presented incorporating the normalization
methodology reflected in paragraph (d)(1).
(4) Cost of fuel and applicable fuel-related
costs corresponding to the adjusted test period kWh generation, including a
detailed explanation showing how such cost of fuel and fuel-related costs were
derived. The cost of fuel shall be based on end-of-period unit fuel prices
incurred during the test period, although the Commission may consider other
fuel prices if test period fuel prices are demonstrated to be nonrepresentative
on an on-going basis. Unit fuel prices shall include delivered fuel prices and
burned fuel expense rates as appropriate.
(5) Procurement practices and inventories for
fuel burned and for ammonia, lime, limestone, urea, dibasic acid, sorbents, and
catalysts consumed in reducing or treating emissions.
(6) The cost of fuel burned and of ammonia,
lime, limestone, urea, dibasic acid, sorbents, and catalysts consumed in
reducing or treating emissions at each generating facility.
(7) Any net gains or losses resulting from
any sales by the electric public utility of fuel or other fuel-related costs
components.
(8) Any net gains or
losses resulting from any sales by the electric public utility of by-products
produced in the generation process to the extent the costs of the inputs
leading to that by-product are costs of fuel or fuel-related costs.
(9) All costs incurred to comply with the
Swine Farm Methane Capture Pilot Program established in Section 4 of S.L.
2007-523.
(10) The monthly fuel
report and the monthly base load power plant performance report for the last
month in the test period and any information required by Rules R8-52 and R8-53
for the test period which has not already been filed with the Commission.
Further, such information for the complete 12-month test period shall be
provided by the electric public utility to any intervenor upon
request.
(11) All workpapers
supporting the calculations, adjustments and normalizations described
above.
(12) The nuclear capacity
rating(s) in the last rate case and the rating(s) proposed in this proceeding.
If they differ, supporting justification for the change in nuclear capacity
rating(s) since the last rate case.
(13) The proposed rate design to recover the
electric public utility's cost of fuel and fuel-related costs.
An electric public utility that is subject to G.S. 62-133.2(a3) is required to provide only the applicable information prescribed by subdivisions (5), (6) and (8) of this subsection.
(f) The electric public utility shall file
the information required under this rule, accompanied by workpapers and direct
testimony and exhibits of expert witnesses supporting the information filed
herein, and any changes in rates proposed by the electric public utility (if
any), not less than 98 days prior to the hearing; . Nothing in this rule shall
be construed to require the electric public utility to propose a change in
rates or to utilize any particular methodology to calculate any change in rates
proposed by the utility in this proceeding.
(g) The electric public utility shall publish
a notice for two (2) successive weeks in a newspaper or newspapers having
general circulation in its service area, normally beginning at least 30 days
prior to the hearing, notifying the public of the hearing before the Commission
pursuant to
G.S.
62-133.2(b) and setting
forth the time and place of the hearing.
(h) Persons having an interest in said
hearing may file a petition to intervene setting forth such interest at least
21 days prior to the date of the hearing. Petitions to intervene filed less
than 21 days prior to the date of the hearing may be allowed in the discretion
of the Commission for good cause shown.
(i) The Public Staff and other intervenors
shall file direct testimony and exhibits of expert witnesses at least 21 days
prior to the hearing date. If a petition to intervene is filed less than 21
days prior to the hearing date, it shall be accompanied by any direct testimony
and exhibits of expert witnesses the intervenor intends to offer at the
hearing.
(j) The electric public
utility may file rebuttal testimony and exhibits of expert witnesses no later
than 12 days prior to the hearing date.
(k) The burden of proof as to the correctness
and reasonableness of any charge and as to whether the test year cost of fuel
and fuel-related costs were reasonable and prudently incurred shall be on the
utility. For purposes of determining the EMF rider, a utility must achieve
either (a) an actual system-wide nuclear capacity factor in the test year that
is at least equal to the national average capacity factor for nuclear
production facilities based on the most recent 5-year period available as
reflected in the most recent North American Electric Reliability Corporation's
Generating Availability Report, appropriately weighted for size and type of
plant or (b) an average system-wide nuclear capacity factor, based upon a
two-year simple average of the system-wide capacity factors actually
experienced in the test year and the preceding year, that is at least equal to
the national average capacity factor for nuclear production facilities based on
the most recent 5-year period available as reflected in the most recent North
American Electric Reliability Corporation's Generating Availability Report,
appropriately weighted for size and type of plant, or a presumption will be
created that the utility incurred the increased cost of fuel and fuel-related
costs resulting therefrom imprudently and that disallowance thereof is
appropriate. The utility shall have the opportunity to rebut this presumption
at the hearing and to prove that its test year cost of fuel and fuel-related
costs were reasonable and prudently incurred. To the extent that the utility
rebuts the presumption by the preponderance of the evidence, no disallowance
will result.
(l) The hearing will
generally be held in the Hearing Room of the Commission at its offices in
Raleigh, North Carolina.
(m) Each
electric public utility shall follow deferred accounting with respect to the
difference between actual reasonable and prudently incurred cost of fuel and
fuel-related costs and cost of fuel and fuel-related costs recovered under
rates in effect.
(n) If the
Commission has not issued an order pursuant to
G.S.
62-133.2 within 180 days after the date the
electric public utility has filed any proposed changes in its rates and charges
in this proceeding based solely on the cost of fuel and fuel-related costs,
then the utility may place such proposed changes into effect. If such changes
in the rates and charges are finally determined to be excessive, the electric
public utility shall refund any excess plus interest to its customers in a
manner directed by the Commission.
Notes
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