July 1, 2001
L.A. Loves a Loophole
There's no getting around it...
N.C. Sets Fuel Cost Proxy for Purchased Power
Resolving a new issue now arising under fuel cost adjustment clauses, the North Carolina Utilities Commission has ruled that electric utilities who buy wholesale power from marketers should treat 75 percent of the energy price component as a "fuel cost," in those instances where the seller cannot or will not provide actual fuel cost data.
The case involved Duke Power Co., which had purchased power from Enron for resale.
Using information submitted by Duke Power (the utility had gathered data on actual fuel costs incurred by Enron's power supply resources), the commission had figured fuel cost for the 1996 rate period as only 59 percent of the reported production cost of the purchases from Enron. Nevertheless it accepted a nonunanimous stipulation to use the 75-percent figure on a generic basis for all utilities, as well as for the Duke Power case. It said the new 75-percent figure comported with a study of fuel costs for off-systems sales by the state's major utilities and accepted that number as a proxy for the overall wholesale power market. Re Duke Power Co., Docket No. E-7, sub 598, June 17, 1997 (N.C.U.C.). t
Phillip S. Cross is an associate legal editor of PUBLIC UTILITIES FORTNIGHTLY.
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