18 Cfr 35.14

§ 35.14

18 CFR Ch. I (4–1–16 Edition)

based, including adequate cost support
for the specified blocking.
(38) Statement BM—Construction program statement. Statement BM is a
summary of data and supporting assumptions relating to the economics of
any construction program to replace or
expand the utility’s power supply that
shall be filed if the utility is filing for
construction work in progress in rate
base under § 35.26(c)(3) of this chapter.
The filing utility shall describe generally its program for providing reliable and economic power for the period
beginning with the date of the filing
and ending with the tenth year after
the test period. The statement shall include an assessment of the relative
costs of adopting alternative strategies
including an analysis of alternative
production plant, e.g., cogeneration,
small power production, heightened
load management and conservation efforts, additions to transmission plant
or increased purchases of power, and an
explanation of why the program adopted is prudent and consistent with a
least-cost energy supply program.
(Federal Power Act, 16 U.S.C. 791–828c; Dept.
of Energy Organization Act, 42 U.S.C. 7101–
7352; E.O. 12009, 42 FR 46267, 3 CFR 142 (1978);
Pub. L. 96–511, 94 Stat. 2812 (44 U.S.C. 3501 et
seq.))
[Order 91, 45 FR 46363, July 10, 1980]
EDITORIAL NOTE: For FEDERAL REGISTER citations affecting § 35.13, see the List of CFR
Sections Affected, which appears in the
Finding Aids section of the printed volume
and at www.fdsys.gov.

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Subpart C—Other Filing
Requirements
§ 35.14 Fuel cost and purchased economic power adjustment clauses.
(a) Fuel adjustment clauses (fuel
clause) which are not in conformity
with the principles set out below are
not in the public interest. These regulations contemplate that the filing of
proposed rate schedules, tariffs or service agreements which embody fuel
clauses failing to conform to the following principles may result in suspension of those parts of such rate schedules, tariffs, or service agreements:
(1) The fuel clause shall be of the
form that provides for periodic adjustments per kWh of sales equal to the

difference between the fuel and purchased economic power costs per kWh
of sales in the base period and in the
current period:
Adjustment Factor = Fm/Sm-Fb/Sb
Where: F is the expense of fossil and nuclear
fuel and purchased economic power in
the base (b) and current (m) periods; and
S is the kWh sales in the base and current periods, all as defined below.

(2) Fuel and purchased economic
power costs (F) shall be the cost of:
(i) Fossil and nuclear fuel consumed
in the utility’s own plants, and the
utility’s share of fossil and nuclear fuel
consumed in jointly owned or leased
plants.
(ii) The actual identifiable fossil and
nuclear fuel costs associated with energy purchased for reasons other than
identified in paragraph (a)(2)(iii) of this
section.
(iii) The total cost of the purchase of
economic power, as defined in paragraph (a)(11) of this section, if the reserve capacity of the buyer is adequate
independent of all other purchases
where non-fuel charges are included in
either Fb or Fm;
(iv) Energy charges for any purchase
if the total amount of energy charges
incurred for the purchase is less than
the buyer’s total avoided variable cost;
(v) And less the cost of fossil and nuclear fuel recovered through all intersystem sales.
(3) Sales (S) must be all kWh’s sold,
excluding inter-system sales. Where for
any reason, billed system sales cannot
be coordinated with fuel costs for the
billing period, sales may be equated to
the sum of: (i) Generation, (ii) purchases, (iii) exchange received, less (iv)
energy associated with pumped storage
operations, less (v) inter-system sales
referred to in paragraph (a)(2)(iv) of
this section, less (vi) total system
losses.
(4) The adjustment factor developed
according to this procedure shall be
modified to properly allow for losses
(estimated if necessary) associated
only with wholesale sales for resale.
(5) The adjustment factor developed
according to this procedure may be further modified to allow the recovery of

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Federal Energy Regulatory Commission

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gross receipts and other similar revenue based tax charges occasioned by
the fuel adjustment revenues.
(6) The cost of fossil fuel shall include no items other than those listed
in Account 151 of the Commission’s
Uniform System of Accounts for Public
Utilities and Licensees. The cost of nuclear fuel shall be that as shown in Account 518, except that if Account 518
also contains any expense for fossil fuel
which has already been included in the
cost of fossil fuel, it shall be deducted
from this account. (Paragraph C of Account 518 includes the cost of other
fuels used for ancillary steam facilities.)
(7) Where the cost of fuel includes
fuel from company-owned or controlled 1 sources, that fact shall be
noted and described as part of any filing. Where the utility purchases fuel
from a company-owned or controlled
source, the price of which is subject to
the jurisdiction of a regulatory body,
and where the price of such fuel has
been approved by that regulatory body,
such costs shall be presumed, subject
to rebuttal, to be reasonable and includable in the adjustment clause. If
the current price, however, is in litigation and is being collected subject to
refund, the utility shall so advise the
Commission and shall keep a separate
account of such amounts paid which
are subject to refund, and shall advise
the Commission of the final disposition
of such matter by the regulatory body
having jurisdiction. With respect to the
price of fuel purchases from companyowned or controlled sources pursuant
to contracts which are not subject to
regulatory authority, the utility company shall file such contracts and
amendments thereto with the Commission for its acceptance at the time it
files its fuel clause or modification
thereof. Any subsequent amendment to
such contracts shall likewise be filed
with the Commission as a rate schedule
change and may be subject to suspension under section 205 of the Federal
Power Act. Fuel charges by affiliated
companies which do not appear to be
reasonable may result in the suspen1 As defined in the Commission’s Uniform
System of Accounts 18 CFR part 101, Definitions 5B.

§ 35.14
sion of the fuel adjustment clause or
cause an investigation thereof to be
made by the Commission on its own
motion under section 206 of the Federal
Power Act.
(8) All rate filings which contain a
proposed new fuel clause or a change in
an existing fuel clause shall conform
such clauses with the regulations.
Within one year of the effectiveness of
this rulemaking, all public utilities
with rate schedules that contain a fuel
clause should conform such clauses
with the regulations. Recognizing that
individual public utilities may have
special operating characteristics that
may warrant granting temporary
delays in the implementation of the
regulations, the Commission may,
upon showing of good cause, waive the
requirements of this section of the regulations for an additional one-year period so as to permit the public utilities
sufficient time to adjust to the requirements.
(9) All rate filings containing a proposed new fuel clause or change in an
existing fuel clause shall include:
(i) A description of the fuel clause
with detailed cost support for the base
cost of fuel and purchased economic
power or energy.
(ii) Full cost of service data unless
the utility has had the rate approved
by the Commission within a year, provided that such cost of service may not
be required when an existing fuel cost
adjustment clause is being modified to
conform to the Commission’s regulations.
(10)
Whenever
particular
circumstances prevent the use of the
standards provided for herein, or the
use thereof would result in an undue
burden, the Commission may, upon application under § 385.207 of this chapter
and for good cause shown, permit deviation from these regulations.
(11) For the purpose of paragraph
(a)(2)(iii) of this section, the following
definitions apply:
(i) Economic power is power or energy
purchased over a period of twelve
months or less where the total cost of
the purchase is less than the buyer’s
total avoided variable cost.
(ii) Total cost of the purchase is all
charges incurred in buying economic
power and having such power delivered

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§ 35.15

18 CFR Ch. I (4–1–16 Edition)

to the buyer’s system. The total cost
includes, but is not limited to, capacity
or reservation charges, energy charges,
adders, and any transmission or wheeling charges associated with the purchase.
(iii) Total avoided variable cost is all
identified and documented variable
costs that would have been incurred by
the buyer had a particular purchase
not been made. Such costs include, but
are not limited to, those associated
with fuel, start-up, shut-down or any
purchases that would have been made
in lieu of the purchase made.
(12) For the purpose of paragraph
(a)(2)(iii) of this section, the following
procedures and instructions apply:
(i) A utility proposing to include purchase charges other than those for fuel
or energy in fuel and purchased economic power costs (F) under paragraph
(a)(2)(iii) of this section shall amend its
fuel cost adjustment clause so that it
is consistent with paragraphs (a)(1) and
(a)(2)(iii) of this section. Such amendment shall state the system reserve capacity criteria by which the system operator decides whether a reliability
purchase is required. Where the utility
filing the statement is required by a
State or local regulatory body (including a plant site licensing board) to file
a capacity criteria statement with that
body, the system reserve capacity criteria in the statement filed with the
Commission shall be identical to those
contained in the statement filed with
the State or local regulatory body. Any
utility that changes its reserve capacity criteria shall, within 45 days of
such change, file an amended fuel cost
and purchased economic power adjustment clause to incorporate the new criteria.
(ii) Reserve capacity shall be deemed
adequate if, at the time a purchase was
initiated, the buyer’s system reserve
capacity criteria were projected to be
satisfied for the duration of the purchase without the purchase at issue.
(iii) The total cost of the purchase
must be projected to be less than total
avoided variable cost, at the time a
purchase was initiated, before any nonfuel purchase charge may be included
in Fm.
(iv) The purchasing utility shall
make a credit to Fm after a purchase

terminates if the total cost of the purchase exceeds the total avoided variable cost. The amount of the credit
shall be the difference between the
total cost of the purchase and the total
avoided variable cost. This credit shall
be made in the first adjustment period
after the end of the purchase. If a utility fails to make the credit in the first
adjustment period after the end of the
purchase, it shall, when making the
credit, also include in Fm interest on
the amount of the credit. Interest shall
be calculated at the rate required by
§ 35.19a(a)(2)(iii) of this chapter, and
shall accrue from the date the credit
should have been made under this paragraph until the date the credit is made.
(v) If a purchase is made of more capacity than is needed to satisfy the
buyer’s system reserve capacity criteria because the total costs of the
extra capacity and associated energy
are less than the buyer’s total avoided
variable costs for the duration of the
purchase, the charges associated with
the non-reliability portion of the purchase may be included in F.
(Approved by the Office of Management and
Budget under control number 1902–0096)
(Federal Power Act, 16 U.S.C. 824d, 824e and
825h (1976 & Supp. IV 1980); Department of
Energy Organization Act, 42 U.S.C. 7171, 7172
and 7173(c) (Supp. IV 1980); E.O. 12009, 3 CFR
part 142 (1978); 5 U.S.C. 553 (1976))
[Order 271, 28 FR 10573, Oct. 2, 1963, as amended by Order 421, 36 FR 3047, Feb. 17, 1971; 39
FR 40583, Nov. 19, 1974; Order 225, 47 FR 19056,
May 3, 1982; Order 352, 48 FR 55436, Dec. 13,
1983; 49 FR 5073, Feb. 10, 1984; Order 529, 55 FR
47321, Nov. 13, 1990; Order 600, 63 FR 53809,
Oct. 7, 1998; Order 714, 73 FR 57532, Oct. 3,
2008; 73 FR 63886, Oct. 28, 2008]

§ 35.15 Notices of cancellation or termination.
(a) General rule. When a rate schedule, tariff or service agreement or part
thereof required to be on file with the
Commission is proposed to be cancelled
or is to terminate by its own terms and
no new rate schedule, tariff or service
agreement or part thereof is to be filed
in its place, a filing must be made to
cancel such rate schedule, tariff or
service agreement or part thereof at
least sixty days but not more than one
hundred-twenty days prior to the date
such cancellation or termination is

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