Title 3 . Commerce, Community, and Economic Development

Chapter 50 . Telecommunications

Section 770. Purchases

3 AAC 50.770. Purchases

(a) An electric utility shall purchase, in accordance with (c) - (f) 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 must not discriminate against qualifying facilities or adversely affect the consumers of the electric utility.

(d) For purchases from a qualifying facility which supplies non-firm power, rates must be based on the cost of energy which the electric utility avoids by virtue of its interconnection with the qualifying facility. Rates under this subsection must comply with the following requirements:

(1) Unless otherwise modified by the commission, avoided energy costs, expressed in cents per kilowatt-hour, must be determined from the sum of fuel and variable operation and maintenance expenses and the energy portion of purchased-power expense for a 12-month period, 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 hydroelectric generation must be specifically excluded from the computation of avoided costs for an electric utility which relies on hydroelectric generation for 25 percent or more of its total power requirements.

(2) An electric utility shall submit to the commission the following information for the calendar or fiscal year preceding the date of filing, or a more recent 12-month period, to support rates for purchases of non-firm power:

(A) the data and computation of avoided energy costs specified in (d)(1) of this section; and

(B) at its option, the data and computation of avoided energy costs based on any other methodology deemed appropriate and justifiable by the electric utility.

(3) Rates for purchases of non-firm power must be adjusted contemporaneously with fuel-cost rate adjustments and with changes in avoided energy costs in general rate revisions.

(e) For purchases from a qualifying facility which supplies firm power, rates must be based on the costs of energy and capacity which the electric utility avoids by virtue of its interconnection with the qualifying facility. Rates under this subsection must comply with the following requirements:

(1) In determining avoided energy and capacity costs, to the extent practicable, the following factors must be taken into account:

(A) the estimated avoided energy costs stated on a cents per kilowatt-hour basis for the current calendar or fiscal year and each of the next five years;

(B) the electric utility's plan for the addition of capacity by amount and type, for purchases of firm energy and capacity, and for requirements for each year during the next 10 years;

(C) the estimated capacity costs at completion of the planned-capacity additions and planned-capacity firm purchases, on the basis of dollars per kilowatt and the associated energy costs of each unit, on the basis of cents per kilowatt-hour; these costs must be expressed in terms of individual generating units and of individual planned firm purchases;

(D) the availability of capacity or energy from a qualifying facility during system daily and seasonal peak periods;

(E) the ability of the electric utility to avoid costs due to the availability of energy or capacity from the qualifying facility; and

(F) the costs or savings resulting from variations in line losses due solely to purchases from qualifying facilities.

(2) An electric utility shall submit to the commission the information necessary to support the methodology and calculations used in developing rates for purchase of firm power based on avoided energy and capacity costs.

(f) Rates for purchases from a qualifying facility, the construction of which was commenced on or after November 9, 1978, must be set at an electric utility's full avoided costs as determined under (d) or (e) of this section. Rates for purchases from a qualifying facility, the construction of which was commenced before November 9, 1978, may be set at less than full avoided costs, provided that the lower purchase rates are established in accordance with (c) of this section.

(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.

History: Eff. 11/20/82, Register 84

Authority: AS 42.05.141 (a)

AS 42.05.151 (a)

AS 42.05.291 (c)

AS 42.05.361 (a)

AS 42.05.391 (a)