52 Pa. Code § 69.201 - General

(a) Since 66 Pa.C.S. § 1307 (relating to sliding scale of rates; adjustments) enables a utility to collect certain fuel costs on a dollar-for-dollar basis from its ratepayers, a utility has the highest degree of responsibility to take aggressive action on behalf of its ratepayers to control nuclear fuel costs. A utility should use every means reasonably available to monitor and enforce vendor adherence to all aspects of nuclear fuel procurement agreements. In addition to contract adherence, the Pennsylvania Public Utility Commission (Commission) may exercise its independent right to review each utility's purchasing practices, which may include a review to determine if the utility is actively making every effort to secure competitive sources for every phase of the nuclear fuel cycle and is obtaining its nuclear fuel at the lowest reasonable cost. The Commission defines "lowest reasonable cost," relating to nuclear fuel procurement, as contracting for or purchasing nuclear fuel at the lowest available price without sacrificing dependability or quality of service. The Commission may make constructive suggestions with regard to an individual company's nuclear fuel procurement policies and procedures from time to time. As the process of acquiring nuclear fuel is somewhat more complex than fossil fuel, an explanation has been included to describe in general terms the elements of the nuclear fuel procurement process.

(b) The purpose of § § 69.202-69.206 is to establish guidelines that the Commission recommends an electric utility follow in its nuclear fuel procurement activities. The Commission realizes that nuclear fuel procurement policies of utilities may differ depending on individual circumstances. The Commission believes that there are certain common practices that will result in the lowest rea sonable nuclear fuel costs. Nuclear fuel procurement should be consistent with regulatory requirements, and may or may not result in the lowest priced nuclear fuel.

(c) If a utility believes that a nuclear fuel procurement policy that differs from that described in § § 69.202-69.206 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 nuclear fuel procurement practices which differ from those described in this section and § § 69.202-69.207 have resulted in unreasonable nuclear fuel costs, a utility may be requested by the Commission to demonstrate the reasonableness of the costs.

(e) If the Commission determines after notice and hearing that a utility's nuclear fuel procurement practices which differ from those described in this section and § § 69.202-69.207 have resulted in unreasonable nuclear fuel costs, the utility will be required to apply credits against the applicable energy cost rate or to make refunds to its customers.

(f) Specifications for the procurement of nuclear fuel should not be set at quantity levels which would preclude competitive proposals from reliable and competent suppliers. Investigations should be conducted to insure that potential vendors have adequate owned or contracted supplies to fulfill all contract provisions.

(g) Sections 69.202-69.206 represent the standard by which the Commission intends to assess the reasonableness of a utility's nuclear fuel purchasing policies and practices. Sections 69.202-69.206 serve as notice to electric utilities of the Commission's expectations with regard to nuclear fuel procurement policies and practices. Utilities should apply § § 69.202-69.206 prospectively in planning nuclear fuel purchases. If provisions of existing contracts are in conflict with § § 69.202-69.206, utilities need not seek to immediately amend the contracts, but should move towards the policies in § § 69.202-69.206 as contracts are modified, renegotiated or extended. Prior imprudent activities are not deemed to be exonerated with the promulgation of this section.

Notes

52 Pa. Code § 69.201

The provisions of this § 69.201 adopted March 29, 1991, effective 5/30/1991, 21 Pa.B. 1331.

This section cited in 52 Pa. Code § 69.205 (relating to purchasing procedures); and 52 Pa. Code § 69.206 (relating to inventory management).