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H.878

Referred to Committee on Commerce

Date:

Subject:  Public service; regulation of corporations; fuel and purchased power adjustment clauses

Statement of purpose:  This bill proposes to allow utilities to adjust their rates in between rate filings according to changes in the cost of fuel or purchased power.

AN ACT RELATING TO FUEL AND PURCHASED POWER ADJUSTMENT CLAUSES

It is hereby enacted by the General Assembly of the State of Vermont:

Sec. 1.  30 V.S.A. § 218e is added to read:

§ 218e.  FUEL ADJUSTMENT CLAUSE; PURCHASED POWER

              ADJUSTMENT CLAUSE

(a)  As used in this chapter:

(1)  “Fuel adjustment clause” means any mechanism which allows an electric or gas company to adjust its retail charges above or below the base amount included in its rates, based upon changes in costs of fuel for generation of electricity or of gas for resale to customers.

(2)  “Purchased power adjustment clause” means any mechanism which allows an electric company to adjust its retail charges above or below the base amount included in its rates based upon changes in net costs of wholesale power purchased from others which may include the cost of related transmission services necessary to accomplish such wholesale power purchases and sales.

(3)  “Purchased power and fuel adjustment charge” means a charge, including a credit, authorized under an approved purchased power adjustment clause or fuel adjustment clause.

(b)  The public service board may adopt rules to define what terms and conditions must be included in a purchased power adjustment clause and fuel adjustment clause.  The rules adopted pursuant to this section may:

(1)  define allowable costs and revenues, including costs related to hedging practices, for inclusion in purchased power and fuel adjustment charges, which shall ensure that any allowable costs are adjusted to reflect revenues from excess power sold to others greater than those reflected in existing rates;

(2)  establish procedures for notifying customers of purchased power and fuel adjustment charges;

(3)  establish procedures for reviewing purchased power adjustment clauses and fuel adjustment clauses, including the time period after filing at which such clause can be effective, and for reviewing purchased power and fuel adjustment charges periodically to ensure compliance with this section and rules adopted pursuant to this section;

(4)  establish the frequency of applying such an adjustment to a company’s purchased power and fuel adjustment charge and the method, if any, for treating excess costs incurred or over collections incurred during adjustment periods; and

(5)  establish standards for the monitoring, reporting, and administration of fuel adjustment clauses or purchased power adjustment clauses, or both.

(c)  No electric or gas company may implement a fuel adjustment clause or purchased power adjustment clause until such fuel adjustment clause or purchased power adjustment clause has been approved by the public service board after finding the clause to be consistent with the rules adopted pursuant to this section.  The board and the department of public service shall review a request by an electric or gas company to adopt or modify a fuel adjustment clause or purchased power adjustment clause in accordance with sections 225, 226, and 227 of this chapter.  The terms and conditions of an approved fuel adjustment clause or purchased power adjustment clause, or both, shall be included in the rate schedules maintained in accordance with the requirements of section 228 of this chapter and may be subject to investigation and modification pursuant to the provisions of subsection 227(b) of this chapter.

(d)  On its own motion or at the request of the department of public service, the board may investigate whether the adjustment is consistent with the terms of the company’s approved purchased power adjustment clause or fuel adjustment clause and require the filing of a bond in the manner prescribed by section 226(a) of this chapter.  If, after opportunity for a hearing, the public service board determines that the adjustment is inconsistent with the terms of the company’s approved purchased power adjustment clause or fuel adjustment clause and results in charges in excess of those permitted by said clause or clauses, the board may require a refund with interest.

(e)  Any change to an approved fuel adjustment clause or purchased power adjustment clause shall take effect prospectively only.

(f)  Nothing in this section shall be construed to limit the public service board’s authority under this title to initiate an investigation into an electric or gas company’s rates and to establish an appropriate remedy, including the authority to determine whether any purchased power adjustment clause or fuel adjustment clause has resulted in unjust and unreasonable charges to customers.

(g)  Each electric or gas company with an approved purchased power adjustment clause or fuel adjustment clause shall separately disclose in its customer bills the per unit cost of its charges pursuant to such clauses.  The board shall adopt rules to implement this disclosure requirement.

Sec. 2.  30 V.S.A. § 225 is amended to read:

§ 225.  Rate schedules

(a)  Within a time to be fixed by the board, each company subject to the provisions of this chapter shall file with the department, with separate filings to the directors for regulated utility planning and public advocacy, schedules which shall be open to public inspection, showing all rates, including joint rates for any service performed or any product furnished by it within the state, and as a part thereof shall file the rules and regulations that in any manner affect the tolls or rates charged or to be charged for any such service or product.  Those schedules, or summaries of the schedules approved by the department, shall be published by the company in two newspapers with general circulation in the state within 15 days after such filing.  A Except in connection with purchased power and fuel adjustment charges authorized pursuant to section 218e of this chapter, a change shall not thereafter be made in any such schedules, including schedules of joint rates or in any such rules and regulations, except upon 45 days notice to the board and to the department of public service, and such notice to parties affected by such schedules as the board shall direct.  The board shall consider the department’s recommendation and take action pursuant to sections 226 and 227 of this title before the date on which the changed rate is to become effective.  All such changes shall be plainly indicated upon existing schedules, or by filing new schedules in lieu thereof 45 days prior to the time the same are to take effect.  Subject only to temporary increases or purchased power and fuel adjustment charges, rates may not thereafter be raised without strictly complying with the notice and filing requirements set forth in this section.  In no event may a company amend, supplement or alter an existing filing or substantially revise the proof in support of such filing in order to increase, decrease or substantiate a pending rate request, unless, upon opportunity for hearing, the company demonstrates that such a change in filing or proof is necessary for the purpose of providing adequate and efficient service.  However, upon application of any company subject to the provisions of this chapter, and with the consent of the department of public service, the board may for good cause shown prescribe a shorter time within which such change may be made; but a change which in effect decreases such tolls or rates may be made upon five days’ notice to the board and the department of public service and such notice to parties affected as the board shall direct.

(b)  Immediately Except in connection with purchased power and fuel adjustment charges authorized pursuant to section 218e of this chapter, immediately upon receipt of notice of a change in a rate schedule filed by a company, the department shall investigate the justness and reasonableness of that change.  At least 15 days prior to the date on which the change is to become effective, the department shall either report to the board the results of its investigations together with its recommendation for acceptance of the change, or it shall notify the board and other parties that it opposes the change.  If the department of public service reports its acceptance of the change in rates the board may accept the change, or it may on its own motion conduct an investigation into the justness and reasonableness of the change, or it may order the department to appear before it to justify its recommendation to accept the change.  In no event shall a change go into effect without the approval of the board, except when a rate change is suspended and temporary or permanent rates are allowed to go into effect pursuant to § 226(a) or 227(a) subsection 226(a) or 227(a) of this title or in connection with a purchased power and fuel adjustment charge authorized pursuant to section 218e of this title.  The board shall consider the department’s recommendation and take action pursuant to sections 226 and 227 of this title before the date on which the changed rate is to become effective.  In the event that the department opposes the change, the board shall hear evidence on the matter and make such orders as justice and law require.  In any hearing on a change in rates, whether or not opposed by the department, the board may request the appearance of the attorney general or appoint a member of the Vermont bar to represent the public or the state.

Sec. 3.  30 V.S.A. § 226(a) is amended to read:

(a)  Except in the case of municipal companies formed under local charter or under chapter 79 and cooperatives formed under chapter 81 of this title or in connection with a purchased power and fuel adjustment charge approved under section 218e of this chapter, upon six days’ notice to the company affected, the board may suspend a rate change until it makes a final determination on the request for a rate change.  However, if it shall be made to appear to the satisfaction of the board, that the public interest requires a change in rates, charges or services, or that such change is necessary for the purpose of providing adequate and efficient service or for the preservation of the property of the public service company devoted to public use, the board, after public notice and preliminary hearing, shall authorize upon such terms, conditions or safeguards as it deems proper an immediate reasonable temporary increase in such price pending the final determination of the price to be thereafter charged by any such public service company and the board may as a condition of its order allowing such temporary increase, require the petitioning company to file with the board a bond running to the board members and their successors in office in amount and with sureties approved by the board, conditioned that within a reasonable time prescribed by the board after the termination of such proceedings, the company shall, with interest, repay to or may credit the account of the persons from whom such changed rates shall be collected all sums collected in excess of the rate in force at the time such changes are filed or of such rate as shall be determined to be just and reasonable.  If the board fails to determine the application for temporary rates, if requested, within 30 days after it is made or within 45 days after suspension, whichever is later, the requested temporary rates shall take effect subject to refund as provided above in this subsection.

Sec. 4.  EFFECTIVE DATE.

This act shall take effect upon passage.



Published by:

The Vermont General Assembly
115 State Street
Montpelier, Vermont


www.leg.state.vt.us