52 Pa. Code § 69.294 - Ratemaking treatment of emission allowances
(a)
Valuation. Emission
allowances will be valued at original costs for ratemaking purposes. Allowances
allocated by the Environment Protection Agency have a "zero" cost; while
purchased allowances will be valued at their full purchase price inclusive of
broker fees or at fair market value if purchased as part of equipment, fuel or
power-purchase transactions.
(b)
Ratemaking treatment. Emissions allowances will be treated as
fuel inventory for ratemaking purposes and will be included in the rate base
consistent with the Commission's practice for operating inventory items.
Allowances in inventory will earn a return in the same way as other rate base
investments.
(c)
Energy
cost rate treatment. Emission allowances are energy-related power
production expenses during the period in which they are used. Allowances may be
recoverable through the utility's energy cost rate (ECR). Gains or losses on
emissions allowance transactions will be flowed through to customers in the ECR
on an energy (KWH) basis unless the gains or losses are related to nonutility
expenses or investments and are recorded below-the-line.
Notes
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