Section 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.

The provisions of this § 69.294 adopted February 26, 1993, effective February 27, 1993, 23 Pa.B. 972.

Notation

Cross References

This section cited in 52 Pa. Code § 69.291 (relating to general); 52 Pa. Code § 69.292 (relating to definitions); and 52 Pa. Code § 69.293 (relating to regulatory oversight of emission allowance trading).