Title 3 . Commerce, Community, and Economic Development

Chapter 52 . Telecommunications

Section 610. Computation of power cost equalization

3 AAC 52.610. Computation of power cost equalization

(a) Power cost equalization per kilowatt-hour is determined separately for each rate schedule.

(b) The power cost equalization per kilowatt-hour for each rate schedule is the least of

(1) the average rate per kilowatt-hour for that rate schedule;

(2) the amount equal to .95 x (52.5 - B) where B is the base amount set by the commission under (c) of this section;

(3) the amount equal to .95 x (F + NF - A - B) where F is the total fuel cost per kilowatt-hour;

F is the total fuel cost per kilowatt-hour; NF is the total nonfuel cost per kilowatt-hour; and A is other assistance per kilowatt-hour that reduces a customer's rate on a kilowatt-hour basis and that is provided to the utility within 60 days before the commission determines the power cost equalization per kilowatt-hour; and B is the base amount established by order of the commission under (c) of this section.

(c) During each fiscal year the commission will notify the public and each utility receiving power cost equalization of a proposed base amount per kilowatt-hour and the basis for that amount. Within 45 days after notice of the proposed base amount is issued, the commission will hold a public hearing to receive comments on the proposed base amount. Within 60 days after notice of the proposed base amount is issued, the commission will issue an order establishing the base amount.

(d) In the case of all service provided under a flat kilowatt-hour rate structure and in the case of service provided under a declining block rate structure to a customer that is not a community facility, the average rate per kilowatt-hour is calculated by dividing the cost of the first 500 kilowatt-hours of service by 500 kilowatt-hours and subtracting the base amount established under (c) of this section from the result. In calculating the cost of the first 500 kilowatt-hours of service, all energy charges, including base rates, fuel surcharge rates, and customer charges, are included, but demand charges are not included.

(e) In the case of all service provided under an inclining block rate structure and in the case of service provided under a declining block rate structure to a community facility, the average rate per kilowatt-hour is determined separately for each block of the declining or inclining block rate structure. For each block of service within each rate schedule, the average rate per kilowatt-hour is the total energy charges for each kilowatt-hour in that block (including both base rates and fuel surcharge rates but not including demand charges) minus the base amount established under (c) of this section.

(f) For a regulated participating electric utility, total fuel cost is calculated in accordance with the fuel surcharge calculation made under 3 AAC 52.502 - 3 AAC 52.504 for that utility, subject to adjustment if the utility does not achieve the generation efficiency standards set out in 3 AAC 52.620.

(g) For a nonregulated participating electric utility, total fuel cost is calculated as follows:

(1) total fuel cost is calculated by multiplying the price of fuel per gallon times the lesser of the

(A) actual number of gallons consumed for electric generation; or

(B) number of gallons that would have been consumed if the utility had achieved the generation efficiency standards set out in 3 AAC 52.620;

(2) for a utility that does not have substantial inventory capacity, the price of fuel per gallon is the current invoiced price of fuel; for a utility that has substantial inventory capacity, the price of fuel per gallon is the most current weighted average cost of fuel; in either event, the price of fuel per gallon includes costs of delivery of the fuel to the utility;

(3) in determining total fuel cost per kilowatt-hour, both the number of gallons consumed and the kilowatt-hours sold are based on a 12-month period ending no more than 30 days before the date that the utility requests a change in its power cost equalization per kilowatt-hour;

(4) in determining whether the utility achieved the generation efficiency and line loss standards set out in 3 AAC 52.620, the number of gallons consumed, the kilowatt-hours generated, and the kilowatt-hours sold are based on the same 12-month period used in (3) of this subsection.

(h) Subject to the standards set out in 3 AAC 52.630, total nonfuel costs include all nonfuel costs, except return on equity, that regulated electric utilities are allowed to include in the revenue requirement recoverable from ratepayers.

(i) In calculating the fuel and nonfuel costs per kilowatt-hour under this section, neither the costs nor kilowatt-hour sales associated with a United States Department of Defense facility are considered.

(j) Fuel and nonfuel costs per kilowatt-hour are calculated by dividing total fuel and nonfuel cost by the greater of the

(1) actual number of kilowatt-hours sold; or

(2) number of kilowatt-hours that would have been sold if the utility had achieved the line loss standards set out in 3 AAC 52.620.

History: Eff. 10/28/89, Register 112; am 5/18/96, Register 138; am 9/11/2004, Register 171

Authority: AS 42.05.141

AS 42.05.151

AS 42.45.110

AS 42.45.130

AS 42.45.160

AS 42.45.170