§ 57.1. Definitions.

 The following words and terms, when used in this chapter, have the following meanings, unless the context clearly indicates otherwise:

   Alternate route or alternative route—A reasonable right-of-way which includes not more than 25% of the right-of-way of the applicant’s proposed route.

   Commence construction—To begin clearing or disturbing the land or the first act in erecting thereon an artificial structure, but does not include action necessary for the purpose of gathering survey, geological, environmental or similar data.

   Customer—A party supplied with electric service by a public utility.

   Customer’s installation—Wiring and equipment on the premises of a customer, and poles, wires or cables and other facilities necessary to bring the terminus of the wiring of a customer to a location where it may be connected to the service line.

   Electric supply line—The wires or cables, with the necessary supporting or containing structures and appurtenances, used in connection with an overhead or underground system of a public utility, providing electric power, located on a public highway or utility right-of-way and used to transmit or distribute electric energy.

   Eminent domain application—An application filed with the Commission by a public utility for a certificate of public convenience for approval of the exercise of the power of eminent domain to acquire rights-of-way for the construction, operation and maintenance of an aerial transmission line.

   Existing transmission line right-of-way—A right-of-way of sufficient width to accommodate two or more transmission lines on May 20, 1978 and on which at least one transmission line was erected as of May 20, 1978, or a right-of-way of sufficient width to accommodate two or more lines for which siting approval was received and on which at least one line has been constructed.

   HV transmission line or HV line—An overhead electric supply line with a design voltage greater than 100,000 volts.

   Line extension—An addition to the public utility electric supply line necessary to serve the premises of a customer which addition is so located that it cannot be supplied by means of a service line from the existing electric supply line.

   Proposed route—The right-of-way on which the applicant desires to construct an HV transmission line.

   Public utility—Persons or corporations in this Commonwealth owning or operating equipment or facilities for generating, transmitting, distributing or furnishing electricity for the production of light, heat or power to or for the public for compensation. The term does not include either of the following:

     (i)   A person or corporation not otherwise a public utility who or which furnishes service only to himself or itself.

     (ii)   A bona fide cooperative association which furnishes service only to its stockholders or members on a nonprofit basis.

   Service line—The wires or cables and appurtenances which connect the electric supply line of the public utility with the customer’s installation and which comply with either of the following:

     (i)   If overhead-open-wire or cable-construction, the span, normally 100 feet, extending to a suitable support provided by the customer.

     (ii)   If the electric supply line is of underground construction, the underground facilities extending to but not exceeding 18 inches inside the property line of the customer.

   Service terminal—The point at which the service lines of the public utility terminate and the customer’s facilities for receiving the service begin.

   Siting application—An application filed with the Commission by a public utility under §  57.71 (relating to application).

   Transmission line—An overhead electric supply line with a design voltage greater than 35,000 volts.

   Transmission line right-of-way—A right enjoyed over the property of another subject to certain conditions which arise by reason of one of the following:

     (i)   A lease.

     (ii)   An easement.

     (iii)   A right to use or license.

     (iv)   An option to buy with right of possession.

     (v)   Ownership in fee simple absolute or any lesser estate of land, obtained for the purpose of constructing and maintaining a transmission line or HV line.

   The provisions of this §  57.1 issued under the Public Utility Code, 66 Pa.C.S. § §  331, 501, 504 and 1501.

   The provisions of this §  57.1 adopted February 25, 1946; amended through May 29, 1973; amended May 19, 1978, effective May 20, 1978, 8 Pa.B. 1403; amended January 7, 1983, effective January 8, 1983, 13 Pa.B. 131. Immediately preceding text appears at serial pages (78435) to (78436).

   Electric Supply Line and Service Line Distinguished

   A supply line, by definition, never connects to buildings, structures, or facilities that use or otherwise consume electrical energy; only service lines perform such a function. This definitional distinction is significant because it justifies consistently treating service lines differently from supply lines with respect to refunding contributions-in-aid-of-construction payments. Kossman v. Pennsylvania Public Utility Commission, 694 A.2d 1147 (Pa. Cmwlth. 1997).

   This section cited in 52 Pa. Code §  57.144 (relating to transmission line projection).

Subchapter B. SERVICE AND FACILITIES

Sec.

§ 57.11. Accidents.

 (a)  General. A public utility shall submit a report of each reportable accident involving the facilities or operations of the public utility in this Commonwealth to the Secretary of the Commission.

 (b)  Reportable accidents. Reportable accidents are those involving utility facilities or operations which result in one or more of the following circumstances:

   (1)  The death of a person.

   (2)  Injury to an employe on duty sufficient to incapacitate him from performing his ordinary duties for a period longer than 3 days.

   (3)  Injury to a person other than an employe on duty sufficient to incapacitate the injured person from following his customary vocation, or mode of life, for a period of more than 1 day.

   (4)  An occurrence of an unusual nature, whether or not death or injury of a person results, which apparently will result in a prolonged and serious interruption of normal service.

 (c)  Telegraphic reports. A report by telephone or telegraph shall be made at once in the event of the occurrence of a reportable accident resulting in the death of a person or in an occurrence of an unusual nature.

 (d)  Written reports. A written report shall be made on Form UCTA-8 immediately following the occurrence of a reportable accident. Accidents reportable on forms required by the Bureau of Workmen’s Compensation, Pennsylvania Department of Labor and Industry, may be reported by transmitting a copy of such reports in lieu of a report on Form UCTA-8.

 (a)  Investigations. A public utility shall make a full and prompt investigation of complaints made by its customers, either directly to it or through the Commission.

 (b)  Record of complaints. A public utility shall preserve written electric service complaints showing the name and address of the complainant, the date and nature of the complaint, the action taken and the date of final disposition.

 (a)  Standard voltage. A public utility shall adopt a standard nominal service voltage for the entire territory served by the public utility, and shall file with the Commission data on such standard service voltage or voltages as part of its officially filed tariff. The suitability and adequacy of the standard nominal service voltage or voltages adopted may be determined at any time by the Commission.

 (b)  Allowable voltage variation (primarily lighting). For service rendered primarily for lighting purposes, the allowable variation in voltage measured at the service terminals of the customer may not exceed, for a longer period than 1 minute in each instance, 5% above or below the standard nominal service voltage and a total variation from minimum to maximum of 8% during normal system operation.

 (c)  Allowable voltage variation (primarily power). For service rendered primarily for power purposes, the allowable variation in voltage measured at the service terminals of the customer may not exceed, for a longer period than 1 minute in each instance, 10% above or below the standard nominal service voltage during normal system operation.

 (d)  Variation in excess of allowable limits.

   (1)  A public utility may, if approved by the Commission, furnish service under conditions of greater voltage variations if there is a filing of the following with the Commission:

     (i)   A copy of existing contracts containing a provision for the supply of service with such greater variations of voltage.

     (ii)   A copy of contracts made which contemplate the supply of service under conditions of greater voltage variations and which in each case contain a clause stating the probable variations in voltage which will occur in the service rendered under such contract, and further that such greater variations in voltage will not result in unreasonable discrimination in favor of or against any customer.

   (2)  Variations of voltage in excess of those specified, caused by the operations of the facilities of the customer in violation of his contract or the filed tariff rules of the public utility, or from causes beyond the control of the public utility, will not be considered as violations of this section.

 (e)  Records. A public utility shall keep in continuous operation at least one graphic recording voltmeter on each primary network system or on at least one circuit from each substation supplying more than 1,000 customers. These meters shall be installed either at the substation or near the load center of such area or circuits. The hourly readings of indicating voltmeters recorded at points of supply, such as generating stations and main transmission or distribution substations where attendants are regularly on duty, shall constitute a satisfactory voltage record. A public utility shall also install additional graphic recording voltmeters at such places and for such periods of time as the Commission may require.

   The provisions of this §  57.14 issued under the Public Utility Code, 66 Pa.C.S. § §  331, 501, 504 and 1501.

 (a)  Standard frequency. An electric distribution company supplying alternating current service shall adopt and file with the Commission a standard frequency or frequencies for its system, the suitability of which may at any time be determined by the Commission.

 (b)  Allowable variation. An electric distribution company shall maintain the system frequency within 3% of the standard frequency adopted. Momentary variations of frequency of more than 3%, which are clearly not due to lack of proper equipment or reasonable care on the part of the electric distribution company will not be considered as violations of this section.

 (c)  Records. An electric distribution company shall continuously monitor and record system frequency variations. The records shall be provided to the Commission on request.

 (a)  Records required. A public utility shall keep in continuous operation meters and instruments and maintain records necessary to determine the characteristics of the system load and the mode of operation.

 (b)  Content of records. Records of load and operation shall include all of the following:

   (1)  Operation of a turboelectric and hydroelectric generating station.

   (2)  Readings of switchboard recording instruments at attended generating stations and substations. The hourly readings of indicating instruments recorded at regularly attended generating stations and substations shall constitute a satisfactory continuous record.

 (c)  Records of electric energy transactions. A public utility purchas-ing, selling or interchanging electric energy or power from, to, or with another public utility under the jurisdiction of the Commission shall install such instruments and meters as may be necessary to furnish continuous records of the energy and demand involved, unless such other public utility has itself installed such instruments and meters from which these records may be obtained. A public utility purchasing, selling, or interchanging electric energy or power from, to, or with a utility not under the jurisdiction of the Commission shall install or cause to be installed such instruments and meters as may be necessary to furnish continuous records of the energy and demand involved.

   The provisions of this §  57.16 issued under the Public Utility Code, 66 Pa.C.S. § §  331, 501, 504 and 1501.

 (a)  Definitions. The following words and terms, when used in this section, have the following meanings, unless the context clearly indicates otherwise:

   Contractor cost—The amount paid by a public utility to a contractor for work performed on a line extension.

   Direct labor cost—The pay and expenses of public utility employes directly attributable to work performed on line extensions, but does not include construction overheads or payroll taxes, workmen’s compensation expenses or similar expenses.

   Direct material cost—The purchase price of materials used for a line extension, but does not include related stores expenses. In computing direct material costs proper allowance should be made for unused materials, materials recovered from temporary structures, and discounts allowed and realized in the purchase of materials.

   Maximum extension distance—The distance in feet below which a public utility will provide a line extension without imposing a charge on or requiring a revenue guarantee from the customer requesting the extension.

 (b)  Duty to make line extensions. The public utility shall make line extensions within the territory in which it is authorized to operate.

 (c)  Tariffs to include line extension rule. The public utility shall file with the Commission as part of its tariffs a rule setting forth its maximum extension distance for single-phase line extensions and the conditions under which it will make the line extensions beyond this distance. The rule shall also include a plan whereby the public utility will construct, operate, and maintain single-phase and polyphase line extensions required to serve customers who will guarantee revenues in an amount sufficient to comply with the requirements set forth in the rule, and a statement of the terms upon which the guarantee shall be reduced to the minimum charges as provided in the rate schedules applicable to each class of service supplied.

 (d)  Determination of guarantees for single-phase line extensions. The amount of revenue to be guaranteed and subsequent changes thereto shall be determined solely on the basis of contractor costs, direct labor costs and direct material costs attributable to the construction of the line extension beyond the maximum extension distance. Appropriate adjustments shall be made at least annually in the amount of revenue guaranteed by a customer by reason of change in the number or classification of customers supplied from the line extension. The amount of costs attributable to the construction of a line extension below the maximum extension distance may be determined by multiplying the cost of the line extension by the percentage of distance of the line extension below the maximum extension distance.

 (e)  Determination of guarantees for polyphase line extensions. In determining the revenues originally to be guaranteed and subsequent changes, the following conditions shall be applicable, as appropriate:

   (1)  Guarantees of revenue shall be based upon the total construction cost to the public utility of the line extension.

   (2)  Guarantees of revenue shall be based upon the length of pole line required to furnish service.

   (3)  Guarantees shall be based upon a reasonable plan by which the construction cost, length of line extension, or number of customers served or to be served from the line extension are given consideration.

   (4)  Appropriate adjustments shall be made at least annually in the amount of revenue guaranteed by the customer by reason of change in the number or classification of customers supplied from the line extension.

 (f)  Service to additional customers. Additional customers shall be connected to a line extension of a line already built or to a further extension of a line only upon the same terms and conditions as would apply if the extension were being made for customers including the new customers, if the inclusion of new customers would not increase the guarantees of the existing customers. If the guarantees of existing customers would be increased, the line extension constructed to serve additional customers shall be considered and treated as a new and separate line extension for these additional customers.

 (g)  Wiring and equipment of customers. Wiring and equipment on the premises of the customer shall be installed to conform with the rules and standards established by the public utility. The customer shall provide poles, wires and other construction necessary to bring the terminus of the customer’s installation to a location where it may be connected to a line extension by means of a service line.

 (h)  Underground electrical service in new residential developments. Extensions of underground electrical service in new residential developments, as defined in §  57.81 (relating to definitions), shall conform to § §  57.81—57.87.

   The provisions of this §  57.19 issued under the Public Utility Code, 66 Pa.C.S. § §  331, 501, 504 and 1501.

 (a)  No watthour meter which has an incorrect register constant, test constant, gear ratio or dial train, or which ‘‘creeps,’’ that is, registers upon no load, may be placed in service or allowed to remain in service without adjustment and correction. A meter in service creeps if, with the load wires disconnected, the moving element makes one complete rotation in 5 minutes or less.

 (b)  For the purpose of this section, the term ‘‘light load’’ means not less than 10%, nor more than 15%, of the rated test current of the meter. The term ‘‘heavy load’’ means not less than 75%, nor more than 100%, of the rated test current of the meter.

 (c)  No watthour meter which has an error in registration of more than 2.0% at light load or heavy load may be placed in service or allowed to remain in service without adjustment. If, upon installation, periodic or other tests, a watthour meter is found to exceed these limits, it shall be adjusted or removed from service.

 (d)  A public utility shall maintain records of service watthour meters. The record for a meter shall identify the manufacturer, type, rating, year of purchase, year and location of the present installation in service, the year of the last test and the reason for the test, the registration accuracy recorded as found before adjustment and the registration accuracy recorded as left upon the completion of the test.

 (e)  A public utility shall make periodic tests of its watthour meters in service as follows:

   (1)  Two and three-wire single-phase and network-induction-type meters, up to and including 50 amperes rated test current, shall be tested at least once in each of the following periods:

     (i)   If manufactured prior to January 1, 1940, and the meters are not Class I and II temperature compensated and are not equipped with surge-proofed magnets or surge shields—3 years.

     (ii)   If the meters are Class I and II temperature compensated and are equipped with surge-proofed magnets or surge shields—15 years.

     (iii)   If manufactured since January 1, 1959, and the meters are Class I and II temperature compensated and are equipped with surge-proofed magnets, surge discharge gaps and a shielded magnetic bearing system—20 years.

   (2)  An an alternative, meters described in paragraph (1)(ii) and (iii) shall be tested according to statistical procedure in Section 8.1.8.6 of the current edition of the ANSI C-12 Code for Electric Meters, Fifth Edition.

     (i)   Groups which meet the accuracy requirements of the applied statistical procedure shall continue in service without test or adjustment until a subsequent annual statistical analysis indicates the need for corrective action or the Commission on its own motion requests retest of either entire groups or individual meters. Test results affecting billing shall be furnished to customers without charge.

     (ii)   Groups which fail to meet the accuracy requirements of the applied statistical procedure are subject to one of the following immediate corrective measures:

       (A)   Meters within the group affected shall be removed from service upon notification to the Commission and in compliance with a program acceptable to the Commission. A customer’s accounts billed according to registration by these meters shall be retained by the public utility from 2 years prior to discovery of registration error until date of meter removal or adjustment. Test results affecting billing shall be furnished to customers without charge and shall be retained by the public utility for at least 2 years after the meter is retired.

       (B)   Meters within groups affected shall be placed on an accelerated program of testing and maintenance until subsequent annual statistical analysis indicates that the affected groups again meet the accuracy requirements of the statistical testing program. Records of customer accounts and of test results affecting billing shall be retained by the public utility and furnished to customers under clause (A).

   (3)  Two and three-wire single-phase and network-induction-type meters, of over 50 amperes rated test current, shall be tested at least once every 8 years.

   (4)  Single-phase meters connected through current transformers or current and voltage transformers shall be tested as follows:

     (i)   Meters without surge-proof magnets, at least once every 8 years.

     (ii)   Meters with surge-proof magnets, at least once every 16 years.

   (5)  Self-contained polyphase meters shall be tested as follows:

     (i)   Meters without surge-proof magnets, at least once every 8 years.

     (ii)   Meters with surge-proof magnets, at least once every 16 years or according to statistical procedures as described in paragraph (2).

   (6)  Polyphase meters connected through current transformers or current and voltage transformers shall be tested as follows:

     (i)   Meter without surge-proof magnets, at least once every 8 years.

     (ii)   Meters with surge-proof magnets, at least once every 16 years.

 (f)  An alternating current watthour meter shall be tested and adjusted before installation for correct registration within ±2%, at a power factor of approximately 50% and 100% at rated test current. When in service, meters not tested and adjusted before installation shall be tested and adjusted to the percent accuracy specified as soon as the circumstances permit, or shall be removed from service.

 (g)  A service watthour meter installed shall be tested for accuracy by the public utility prior to its installation, or shall be so tested within 90 days after its installation. It shall also be inspected by the public utility for proper connection, mechanical condition and suitability of location within 90 days after installation.

 (h)  A service watthour meter which is removed from service shall be tested for ‘‘as found’’ registration accuracy.

   The provisions of this §  57.20 amended under the Public Utility Code, 66 Pa.C.S. § §  501, 1501 and 1504.

   The provisions of this §  57.20 adopted February 25, 1946; amended through May 29, 1973; amended January 2, 1981, effective January 3, 1981, 11 Pa.B. 19; amended August 7, 1987, effective August 8, 1987, 17 Pa.B. 3324. Immediately preceding text appears at serial pages (103566) to (103567) and (80594) to (80595).

 (a)  A demand meter of the block interval type, which fails to properly reset completely to zero at the end of each time interval, or a demand meter which has an incorrect register constant, test constant gear ratio or dial train may not be placed in service or allowed to remain in service without adjustment and correction.

 (b)  Tests of graphic and indicating types of demand meters shall be made at points about 1/3 to 2/3 scale in terms of full scale indication. The deviation shall be recorded in terms of full scale deflection.

 (c)  A demand meter of the block interval type which has an error in demand indication of more than ±2% in terms of full scale indication on graphic and indicating meters may not be placed in service or allowed to remain in service without adjustment. If a timing element also serves to keep a record of the time of day at which the demand occurs, it shall be adjusted if its rate is more than ±.25% in error.

 (d)  A thermal type demand meter which has an error in demand indication or registration of more than ±3% in terms of full scale indication on graphic and indicating meters may not be placed in service or allowed to remain in service without adjustment. If a timing element also serves to keep a record of the time of day at which the demand occurs, it shall be adjusted if its rate is more than -.25% in error.

 (e)  A demand meter with solid state digital display for measured quantities shall be tested for accuracy of the register using its internal input pulse initiator and a watthour meter or using an auxiliary pulse device as the input source. The applied test current or pulse rate may not exceed the class of the meter. The accuracy of the displayed demand shall be within ±2.0% of the input.

 (f)  A utility shall make periodic test of its demand meters in service, as follows:

   (1)  Self-contained thermal demand meters, up to and including 50 amperes rated test current, shall be tested on the same schedule as the watthour meters with which they are associated.

   (2)  Self-contained thermal demand meters, of over 50 amperes rated test current, shall be tested at least once every 96 months.

   (3)  Thermal demand meters connected through current transformers or current and potential transformers shall be tested at least once every 48 months.

   (4)  Curve drawing watt meters used for determining demands shall be tested at least once every 24 months.

   (5)  Demand meters of the block interval type shall be tested on the same schedule as the watthour meters with which they are associated.

 (g)  A demand meter shall be tested for accuracy by the public utility prior to its installation, or be so tested within 90 days after its installation. It shall also be inspected by the public utility for proper connection, mechanical condition and suitability of location within 90 days after installation.

   The provisions of this §  57.21 issued under: the Public Utility Code, 66 Pa.C.S. § §  331, 501, 504 and 1501; amended under: Public Utility Code,66 Pa.C.S. § §  501, 1501 and 1504.

   The provisions of this §  57.21 adopted February 25, 1946; amended through May 29, 1973; amended January 7, 1983, effective January 8, 1983, 13 Pa.B. 131; amended August 7, 1987, effective August 8, 1987, 17 Pa.B. 3324; amended March 8, 1991, effective March 9, 1991, 21 Pa.B. 947. Immediately preceding text appears at serial pages (125377) to (125378).

 (a)  Tests by the public utility. A public utility shall make a test of the accuracy of registration of a service meter upon the written request of the customer for whom the meter is installed upon payment of the fee specified in this section. If a customer desires either personally or by a representative to witness the testing of a meter, the customer may require the seal of the meter to be broken only in the customer’s presence or that of a representative. If the meter tested upon request is found to be accurate within the limits specified in § §  57.20 and 57.21 (relating to watthour meter testing; and demand meter testing), the fee shall be retained by the public utility. If not so found, the cost shall be borne by the public utility furnishing the service and the fee paid by the customer shall be refunded. A report of the test shall be made to the customer.

 (b)  Tests by the Commission. If service meter test is to be made by the Commission upon written request and payment of the fee by the customer, as specified in this section, the public utility owning the meter shall be notified that a test is to be made and shall have a representative present to open the meter, assist in the test and adjust and seal the meter after the test. If a tested meter is found to be accurate within the limits specified in § §  57.20 and 57.21, the fee paid for the test shall be retained by the Commission. If not so found, the fee shall be refunded to the customer and the cost of the test shall be borne by the public utility furnishing the service. A public utility may apply in writing for a test of a meter and, upon payment of the fee specified for that class of meter, the Commission will make the test and furnish the public utility with a record of the results.

 (c)  Meter testing fees. Meter testing fees for watthour and demand meters shall be as follows:

   (1)  Direct current and single-phase self-contained watthour meters operating on 600 volts or less shall be $20.

   (2)  Single-phase transformer-rated and polyphase watthour meters with or without instrument transformers shall be $38.

   (3)  In addition to charges associated with paragraphs (1) and (2) there shall be an additional charge of $11 for block interval or thermal demand registers and separate demand recorders.

   The provisions of this §  57.22 amended under the Public Utility Code, 66 Pa.C.S. § §  501, 1501 and 1504.

   The provisions of this §  57.22 adopted February 25, 1946; amended through May 29, 1973; amended January 2, 1981, effective January 3, 1981, 11 Pa.B. 19; amended August 7, 1987, effective August 8, 1987, 17 Pa.B. 3324. Immediately preceding text appears at serial pages (80597) to (80598).

 (a)  Location. Tests provided for in § §  57.20 and 57.21 (relating to watthour meter testing; and demand meter testing), except those made previous to installation, shall be made in the place of permanent location on the premises of the customer or at a laboratory equipped with adequate facilities for making tests.

 (b)  Tests of meters with accessories. Service meters connected to the line through instrument transformers, shunts or multipliers shall be tested jointly with accessories, unless the tests for ratio and phase angle of the instrument transformers and the resistance of the shunts have been determined in a laboratory before installation, or unless their operating characteristics affecting metering accuracy have been determined in service within the previous 10 years and are on the records of the public utility. Laboratory tests shall be deemed acceptable only when made by the National Bureau of Standards, a standardizing laboratory approved by the Commission, or by the laboratory of the public utility, whose standards have been checked, and are subject to further checks or tests by the Commission.

 (c)  Adjustment after test. Meters shall be adjusted as closely as practicable to the condition of zero error; the tolerances specified shall be interpreted as maximum variations from adjustments to the condition of zero error. In the adjustment of meters no improper advantages of prescribed tolerance limits shall be taken.

 (d)  Change of frequency. If a public utility changes its standard of frequency, it shall give reasonable notice to the customers it is serving and make necessary tests and readjust service meters as soon as practicable.

   The provisions of this §  57.23 amended under the Public Utility Code, 66 Pa.C.S. § §  501, 1501 and 1504.

   The provisions of this §  57.23 adopted February 25, 1946; amended through May 29, 1973; amended August 7, 1987, effective August 8, 1987, 17 Pa.B. 3324. Immediately preceding text appears at serial pages (80598) to (80599).

 (a)  Average meter error. In meter tests made by the public utility or by the Commission at the request of a customer, the correctness of adjustment of the meter and its performance in service shall be judged by its average error, determined as follows:

   (1)  If the meter is used to measure a load which is substantially constant, the meter shall be tested at that load. The error of the meter at the constant load shall be accepted as the average meter error.

   (2)  If the meter is used to measure a variable load, the average error shall be obtained by taking 1/5 of the algebraic sum of both of the following:

     (i)   One part of the error at light load.

     (ii)   Four parts of the error at heavy load.

   (3)  If, in the opinion of the Commission, another load is more representative of the average operating load, the error of the meter at the average operating load will be accepted as the average meter error.

 (b)  Fast meters. If, upon testing, a meter is found to have an average meter error of more than 2% fast, the public utility shall refund to the customer the overcharge, based upon the corrected meter reading for a period equal to 1/2 the time elapsed since the last previous test, but not to exceed 12 months. If the period of registration error is definitely fixed, the overcharge shall be computed for the period. If the meter has not been tested in accordance with §  57.20 (relating to watthour meter testing), the period for which it has been in service beyond the regular test period shall be added to the 12 months in computing the refund.

 (c)  Slow meters. If, upon testing, a meter is found to have an average meter error of more than 2% slow, the public utility may render a bill for the service furnished, but not covered by bills previously rendered, for a period equal to 1/2 the time elapsed since the last previous test, but not to exceed 3 months. If the period of registration error is definitely fixed, the charge may be computed for the period.

 (d)  Access to meters. The public utility shall, at reasonable times, have access to meters, service lines and other property owned by it on premises of customers, for purposes of maintenance and operation. Neglect or refusal on the part of customers to provide reasonable access to their premises for these purposes is deemed to be sufficient cause for the discontinuance of service.

   The provisions of this §  57.24 amended under the Public Utility Code, 66 Pa.C.S. § §  501, 1501 and 1504.

   The provisions of this §  57.24 adopted February 25, 1946; amended through May 29, 1973; amended August 7, 1987, effective August 8, 1987, 17 Pa.B. 3324. Immediately preceding text appears at serial page (80599).

 (a)  Adequate testing facilities. A public utility shall provide for, and have available, suitable and adequate facilities for testing its meters. Public utilities not maintaining standardizing laboratories may, upon permission from the Commission, have their meters and instruments certified by a standardizing laboratory approved by the Commission.

 (b)  Periodic tests of reference standards. The watthour meter reference standard for the public utility and shall be periodically tested for accuracy and adjusted if necessary by a representative of the Commission at a place the Commission may direct. Immediately after making final adjustment, the tester shall seal and date tag the reference standard and shall furnish the public utility with a correction curve properly dated and signed.

 (c)  Periodic tests of watthour standards. The portable watthour standards, together with other measuring equipment the Commission may require, shall also be tested and adjusted periodically by a representative of the Commission if necessary as the Commission may direct. The tester shall furnish the public utility with a correction curve properly dated and signed.

 (d)  Frequency of portable watthour standard check tests. During the interval between tests by the Commission, the portable watthour standards shall be compared with the reference standard at least every month for induction type meters, and every 3 months for the solid state meter standards. The calibration obtained shall be used in determining the accuracy of the service meters. If a portable standard is subject to either a mechanical or electrical shock, it shall be tested before being used.

 (e)  Records of check tests and correction curves. A record of check tests shall be kept showing the condition and accuracy of the watthour standard before and after testing, indicated by the words ‘‘as found’’ and ‘‘as left,’’ in form and detail to permit convenient checking of the methods and results. A complete record of the check tests and correction curves furnished by the Commission shall be preserved for 5 years.

 (f)  Fees for testing appliances of public utilities. The Commission will charge and collect from public utilities, for the testing of their instruments of precision and measuring apparatus, fees according to the following schedule:

   The provisions of this §  57.25 issued under the Public Utility Code, 66 Pa.C.S. § §  331, 501, 504 and 1501; amended under the Public Utility Code, 66 Pa.C.S. § §  501, 1501 and 1504.

   The provisions of this §  57.25 adopted February 25, 1946; amended through May 29, 1973; amended January 7, 1983, effective January 8, 1983, 13 Pa.B. 131; amended August 7, 1987, effective August 8, 1987, 17 Pa.B. 3324. Immediately preceding text appears at serial pages (80600) to (80601).

   The provisions of this §  57.26 adopted February 25, 1946; amended through May 29, 1973; amended January 7, 1983, effective January 8, 1983, 13 Pa.B. 131; amended January 24, 1997, effective January 25, 1997, 27 Pa.B. 414; amended July 17, 1998, effective July 18, 1998, 28 Pa.B. 3385. Immediately preceding text appears at serial pages (225733) to (225734).

 (a)  Definitions. The following words and terms, when used in this section, have the following meanings unless the context clearly indicates otherwise:

   Contractor costs—The amount paid by a public utility to a contractor for work performed on a pole removal or relocation.

   Direct labor costs—The pay and expenses of public utility employes directly attributable to work performed on pole removals or relocations, but does not include construction overheads or payroll taxes, workmen’s compensation expenses or similar expenses.

   Direct material costs—The purchase price of materials used in performing a pole removal or relocation, but does not include related stores expenses. In computing direct material costs, proper allowance should be made for unused materials, materials recovered from temporary structures, and for discounts allowed and realized in the purchase of materials.

   Pole removal or relocation—The removal or relocation of distribution line poles and their associated attachments made under the request of a residential property owner who is not entitled to receive condemnation damages to cover the cost of the pole removal or relocation. The term does not include pole repairs or replacements necessitated by the intentional or negligent conduct of a party.

 (b)  Tariff provisions. A public utility shall file as part of its tariff provisions setting forth its method of determining pole removal or relocation charges.

 (c)  Charges. Pole removal or relocation charges shall be limited to the contractor, direct labor and direct material costs associated with the pole removal or relocation less an amount equal to maintenance expenses avoided as a result of the pole removal or relocation.

   The provisions of this §  57.27 adopted July 12, 1985, effective July 13, 1985, 15 Pa.B. 2568.

Subchapter C. PURCHASE AND SALE OF ENERGY AND CAPACITY

Sec.

 The following words and terms, when used in this subchapter, have the following meanings, unless the context clearly indicates otherwise:

   Avoided costs—The incremental costs to an electric utility of electric energy or capacity, or both, which, but for the purchase from the qualifying facility or qualifying facilities, the utility would generate itself or purchase from another source.

   Back-up power—Electric energy or capacity supplied by an electric utility to replace energy or capacity ordinarily generated by a qualifying facility’s own generation equipment which equipment is not available during an unscheduled outage of the facility.

   Capacity payment—A payment to a supplier of electric capacity by a purchasing utility as provided in §  57.34(c) (relating to purchases of energy and capacity).

   Competitive bidding or auction or solicitation—An established procedure through which offers from qualifying facilities and other suppliers of electric generation or providers of demand-side management programs, or both, are solicited, obtained and selected in order to meet a specified need for electric capacity and associated energy.

   DSM—demand-side management—Programs designed to influence use of electricity on the customer side of the meter.

   EWG—exempt wholesale generator—Independent power producers and utility affiliated generators created under the Energy Policy Act of 1992 (42 U.S.C.A. §  13201), and defined at 15 U.S.C.A. §  79z-5a(a), which sell power exclusively to wholesale power markets.

   Energy payment—A payment to a qualifying facility by a purchasing utility for energy, as defined in §  57.34(b).

   Independent power producer—An electric power supplier which is not a qualifying facility or a public utility.

   Interconnection costs—The reasonable costs of connection, switching, metering, transmission, distribution, safety provisions and administration incurred by the electric utility directly related to the installation and maintenance of the physical facilities necessary to permit interconnection operations with a qualifying facility to the extent these costs are in excess of the corresponding costs which the electric utility would have incurred or charged to the entire customer base to serve the supplier of electric capacity if it had been a customer only.

   Interruptible power—Electric energy or capacity supplied by an electric utility subject to interruption by the electric utility under specified conditions.

   Maintenance power—Electric energy or capacity supplied by an electric utility during scheduled outages of the qualifying facilities.

   Net generating capacity—The gross generation of a power plant minus all of the power that the plant consumes for internal uses.

   Power Plant Life Extension Program—A utility program involving major capital investment in an existing baseload generating facility which will result in a continuation of the facility’s operation beyond its normal operating life.

   Purchases—The buying of electric energy or capacity, or both, from a qualifying facility by an electric utility.

   Qualifying facility—A cogeneration facility or a small power production facility which meets the criteria contained in 18 CFR Part 292 (relating to regulations under sections 201 and 210 of the Public Utility Regulatory Policies Act of 1978 with regard to small power producers and cogenerators).

   Rate—A price, rate, charge or classification made, demanded, observed or received with respect to the sale or purchase of electric energy or capacity; a rule, regulation or practice respecting a rate, charge or classification; and a contract pertaining to the sale or purchase of electric energy or capacity.

   Sale—The selling of electric energy or capacity, or both, by an electric utility to a qualifying facility.

   Short-term capacity purchase—A purchase of capacity and associated energy under a contract of not more than 5 years in duration.

   Standard schedule—A tariff schedule available to small qualifying facilities as defined at §  57.34(f).

   Supplementary power—Electric energy or capacity, supplied by an electric utility, regularly used by a qualifying facility in addition to that which the facility generates itself.

   System emergency—A condition on a utility’s system which is likely to result in imminent significant disruption of service to customers or is imminently likely to endanger life or property.

   Utility peak periods—The seasonal cost-causative peaks of the electric utility.

   The provisions of this §  57.31 adopted February 25, 1946; amended through May 29, 1973; amended December 29, 1995, effective December 30, 1995, 25 Pa.B. 6085. Immediately preceding text appears at serial pages (195592) to (195593).

   Application

   The regulations found at 52 Pa. Code § §  57.31—57.39 govern only the purchase and sale of energy and energy capacity between public utilities and private ‘‘qualifying facilities’’ and have no application to the internal accounting methods of a utility which allocates cost of its facility generating both steam and electric power to only the steam consumers. University of Pennsylvania v. Pennsylvania Public Utility Commission, 485 A.2d 1217 (Pa. Cmwlth. 1984).

   Federal Requirements

   The practical effect of the Public Utility Regulatory Policies Act of 1978, 16 U.S.C.A. §  824a-3, is to divert potential profits from regulated electric companies, whose earnings are largely based on the value of their owned facilities, to the owners of qualifying facilities. Pennsylvania Electric Co. v. Pennsylvania Public Utility Commission, 677 A.2d 831 (Pa. 1996).

   Notice

   It was unlawful for the Commission to effect a substantive change to a prior opinion and order by applying a 15% limitation to interruptable as well as firm back-up power provided to utility’s self-generating customers without notice to the parties and full opportunity to be heard. Scott Paper Co. v. Pennsylvania Public Utility Commission, 558 A.2d 914 (Pa. Cmwth. 1989).

   Rate

   Under section 1303 of the Code, 66 Pa.C.S. §  1303, the public utility must have actual knowledge of service conditions before it is required to compute the most favorable rate for its customers. Springfield Township v. Pennsylvania Public Utility Commission, 676 A.2d 304 (Pa. Cmwlth. 1996).

 (a)  Purpose. The purpose of this subchapter is to implement §  210 of the Public Utility Regulatory Policies Act of 1978, Pub. L. 95-617, Title II, §  210, 92 Stat. 3144 (16 U.S.C.A. §  824a-3(a)—(j)). To this end, this subchapter details the methodology to be used in establishing rates for sales and purchases, the responsibility for interconnection costs, the standards for system safety and reliability, and the processes by which the Commission will attempt to resolve disputes between utilities and qualifying facilities. This subchapter is intended to equalize the bargaining power of qualifying facilities with that of the utilities and protect the interests of the ratepayers. Furthermore as detailed in subsection (c), utilities are required to implement competitive bidding programs for the purchase of capacity and associated energy unless they are granted a waiver or exemption.

 (b)  Applicability. This subchapter governs the purchases and sales of energy between qualifying facilities and electric utilities. It also governs the purchases and sales of capacity and associated energy between suppliers of electric generation and electric utilities.

 (c)  Negotiated contracts for the purchase of energy.

   (1)  Regarding negotiated contracts for the purchase of energy from a qualifying facility, nothing in this subchapter:

     (i)   Limits or extends the authority of an electric utility to agree to a price for a purchase or to terms or conditions relating to a purchase which differ from the terms or conditions which would otherwise be required by this subchapter.

     (ii)   Affects the validity of a contract entered into between a qualifying facility and an electric utility for any purchase to the extent that contract is valid and in compliance with applicable statutes and regulations.

 (d)  Contract negotiations with winning bidders. Contract negotiations with winning bidders following an auction for the purchase of capacity and associated energy are governed by §  57.34(c)(10) (relating to purchases of energy and capacity).

 (e)  Filing of contracts. A utility shall file with the Commission a copy of a contract or agreement that it enters into with a qualifying facility or other supplier of electric generation with design capacity of 500 kilowatts or more under this subchapter. The contract or agreement shall be filed within 45 days of execution.

   The provisions of this §  57.32 adopted September 17, 1982, effective January 11, 1983, 12 Pa.B. 4237; amended December 29, 1995, effective December 30, 1995, 25 Pa.B. 6085. Immediately preceding text appears at serial pages (195594) to (195595).

   Capacity

 (a)  General provisions. Each utility shall purchase any energy which is made available from a qualifying facility as required by applicable statutes and regulations. Each utility is required to implement an all-source competitive bidding program for the purchase of capacity and associated energy under subsection (c).

 (b)  Purchases of energy only.

   (1)  Energy payments in mills per kilowatt hour shall be based upon costs in this paragraph.

     (i)   Energy payments will be equal to a utility’s highest cost source of energy used to supply the energy requirements of its domestic load customers at all times. When basing contract payments to qualifying facilities on the electric utility’s future avoided cost, the avoided energy cost shall be determined without considering the qualifying facility about to come on line as part of the supply mix.

     (ii)   When the utility’s energy payments for the purchases are based on its own generation, the energy payments shall include the costs of fuel, variable operation and maintenance expenses, and other costs associated with that generation. The costs of units which run, but are not economically dispatched, may be excluded by the utility in the calculation of energy payments. The energy payments shall incorporate the costs or savings resulting from variations in line losses from those that would have existed in the absence of purchases from a qualifying facility.

     (iii)   When the qualifying facility is larger than 5,000 kilowatts, the utility may base its energy payments on the average cost of its last block of energy of equivalent size rather than its single highest source of energy.

   (2)  Energy payments shall, at the option of the qualifying facility, be based on actual, projected or levelized costs.

     (i)   The actual costs of the purchasing utility calculated at the time of delivery, as described in paragraph (1).

     (ii)   The utility’s projection—for up to 10 years or the length of the contract, whichever is shorter—as filed with the Commission, of its energy costs, as defined in paragraph (1), at the time the qualifying facility elects to accept this projection.

     (iii)   The utility’s filed levelized projected energy costs, as determined by converting the cumulative present value of each year’s costs (projected in accordance with subparagraph (ii)) to an annuity with the same present value, at the time the qualifying facility elects to accept this projection. A zero risk discount factor should be used—such as, the current rate on a United States Treasury Bill of corresponding term. The term of levelization may be no longer than the term of the contract or 10 years, whichever is shorter.

     (iv)   Contracts are required where the parties agree to use a projection or a levelized projection as outlined in subparagraphs (ii) and (iii). When a levelized projection of energy costs is used, or when early year payments exceed projected avoided energy costs, for energy-only contracts, a utility may require security from the qualifying facility only to the extent the early year costs exceed the projection of energy costs for those years. The security may not be a cash deposit and shall be the least burdensome form of security among the following: an irrevocable letter of credit; a payment bond; a fully paid noncancelable project failure insurance policy; or corporate guarantee, lien, mortgage or deed of trust on the facility itself. A utility may not require a qualifying facility to reconcile payments to utility costs actually experienced during the contract period.

     (v)   Contracts may be for a period mutually agreed upon by both buyer and seller.

   (3)  Utilities shall purchase energy from qualifying facilities of 500 kilowatts or greater on a uniform, time of day, seasonal or other cost-justified basis, as determined by the utility.

   (4)  Qualifying facilities of less than 50 kilowatts may opt for net energy billing. Under net energy billing, the energy taken by the qualifying facility from the purchasing utility is billed net of the energy supplied by the qualifying facility to the purchasing utility. However, net energy billing shall not reduce the qualified facility’s minimum bill. Utility policy for net billing is to be filed with the Commission concurrent with other filings required in this subpart.

   (5)  If a qualifying facility and a utility agree for the utility to broker the qualifying facility’s power, the qualifying facility will then be entitled to the total price received by the utility for the energy, less any brokerage fee and other identifiable costs incurred.

 (c)  Mandatory competitive bidding for purchases of capacity and associated energy. Jurisdictional electric utilities with annual gross intrastate operating revenues in excess of $500 million shall establish competitive bidding programs to obtain capacity resources. Utilities are responsible for developing requests for proposals, and negotiating and enforcing contracts. Small qualifying facilities (under 5 megawatts), are exempted from the mandatory competitive bidding requirements. Utilities may purchase capacity and associated energy from small qualifying facilities outside of an all-source competitive bidding program. Utility sponsored DSM programs are exempt from competitive bidding until January 2, 2000.

   (1)  Sources of capacity.

     (i)   A utility shall allow all sources of capacity to submit offers in a competitive bidding program. These sources may include the utility conducting the bid, other electric utilities, qualifying facilities, independent power producers, exempt wholesale generators, marketers, brokers and other entities. An exempt wholesale generator which is an affiliate or an associate of the utility conducting the bid is subject to the prohibitions appearing at 15 U.S.C.A. §  79z-5a(k) (‘‘Protection against abusive affiliate transactions’’). All source bidding programs are encouraged.

     (ii)   Utility participation in its own auction. A utility seeking capacity resources and companies affiliated with the utility may participate in the capacity solicitation. All bids are to be evaluated fairly by an independent third-party evaluator selected by the utility. Abusive self-dealing is prohibited. A utility seeking to participate in its own solicitation or allow its affiliate to participate in that solicitation shall also adhere to the following requirements:

       (A)   Not less than 90 days prior to the filing of a Request for Proposal (RFP) under paragraph (4), the electric utility shall specify in writing to the Commission the names, addresses and job titles of the utility personnel that shall be directly or indirectly involved, in any fashion, in any of the following groups: the development of the requests for proposals to be utilized in the competitive selection process; the ultimate selection of successful projects or developers, or both; and the development and formulation of the bids expected to be submitted by, or on behalf of, the electric utility or any of its affiliates, or both. The utility shall identify the group in which each person will work and that person’s duties and responsibilities within the group.

       (B)   Nothing in clause (A) limits the ability of an electric utility to add personnel after the initial designation if:

         (I)   An amendment to the filing required by clause (A) is filed with the Commission within 15 days after the new personnel are added.

         (II)   Other applicable requirements of this subparagraph have been satisfied.

       (C)   No one participating in the bidding process on behalf of the utility conducting the auction may be a member of more than one of the groups identified in clause (A).

       (D)   Each member of the groups specified in clause (A) shall execute and file with the Commission within 60 days prior to the utility’s RFP filing, a written affidavit under oath acknowledging its obligations during the competitive selection process to:

         (I)   Maintain in the strictest of confidence the information, data, and the like, relating to the operators of its group and the work-product thereof.

         (II)   Refrain from communicating any information, data and the like, relating to the operations or work-product of their group to any individuals who are members of any other groups specified in clause (A).

     (iii)   DSM projects. Electric utilities have the option of including DSM providers and electric generation suppliers in the same auction or in separate auctions. In auctions which include DSM providers, the amount and type of DSM programs solicited shall be consistent with the amount and type of DSM programs contained in the utility’s Annual Resource Planning Report filed with the Commission.

       (A)   Eligible DSM projects shall include conservation as well as load management programs.

       (B)   DSM proposals shall be reliable and quantifiably cost effective.

       (C)   Bidders of DSM projects shall include in their bids the costs to consumers participating in the DSM programs.

       (D)   Commercial or industrial DSM may not contemplate only reductions in commercial or industrial plant output.

       (E)   The utility shall make known the criteria and procedures for evaluating DSM proposals in its Request for Proposals.

   (2)  Development of the Capacity Resource Plan. A competitive bidding process shall be responsive to the needs of the jurisdictional electric utilities. To provide maximum flexibility in the purchase of capacity and associated energy and DSM programs, there will be no Commission mandated benchmarks, price factors and nonprice factors in a competitive bidding process. Each electric utility initiating a competitive bidding process may propose benchmarks, price factors and nonprice factors and otherwise follow these principles:

     (i)   A utility’s competitive bidding program shall be an integral part of its Annual Resource Planning Report filed under 66 Pa.C.S. §  524 (relating to data to be supplied by electric utilities) and the Commission’s regulations. A utility’s Annual Resource Planning Report shall include information on system reliability sufficient to establish a reasonable bid block for procurement.

     (ii)   A utility’s need for capacity as identified in its Request for Proposal shall be consistent with the long-term resource plans reflected in its Annual Resource Planning Report. If the Request for Proposal is not consistent with those long-term resource plans, the utility shall justify any differences to the Commission before a Request for Proposal is issued.

     (iii)   A utility’s competitive bidding program shall be conducted at appropriate times consistent with the capacity need reflected in the utility’s Annual Resource Planning Report filings.

     (iv)   A utility is not required to hold an auction if its Annual Resource Planning Report shows that it has sufficient existing capacity to meet the needs of its customers unless the Commission determines otherwise.

     (v)   Power plant life extension programs are exempted from competitive bidding.

   (3)  Petition for Approval of Capacity Resource Plan.

     (i)   As provided in this subchapter, each jurisdictional Class A utility shall file with the Commission a Petition for Approval of its Capacity Resource Plan (petition). The petition shall be based on each utility’s then-current Annual Resource Planning Report (ARPR), filed under §  57.141 (relating to general). The petition shall contain the following information based upon the ARPR:

       (A)   The types, amounts and timing of capacity resources, which include associated energy, that the utility plans to construct or own, or both, in whole or in part, or which the utility plans to purchase from unaffiliated or affiliated utilities, independent power producers, exempt wholesale generators, qualifying facilities, marketers, brokers or other entities.

       (B)   The proposed analytical method for determining the timing, amount and duration of capacity resources, if any, that the electric utility would purchase from unaffiliated or affiliated utilities, independent power producers, exempt wholesale generators, qualifying facilities, marketers, brokers or other entities over an appropriate planning period, and the amount of capacity resources, if any, that the electric utility should construct or own, or both, itself.

       (C)   The amount, type, timing, duration, ownership and configuration of capacity resources needed over an appropriate planning period calculated in accordance with the methodology provided in compliance with §  57.150 (relating to evaluation and integration of resources).

       (D)   The type of information provided in compliance with §  57.150 for generation supply shall also be provided in regard to the utility’s plans to procure and implement demand-side management programs.

       (E)   Other data and information requested by the Commission to assist it in its ruling on the utility’s petition.

     (ii)   The Commission will provide notice of the filing of a petition to be published in the Pennsylvania Bulletin within 30 days after the petition is filed. The notice must contain sufficient information to advise the utility’s customers, the entities referenced in subparagraph (i), and other interested parties of the utility’s overall capacity resource needs and the operation of the utility’s competitive selection process. The notice will provide the interested parties with the opportunity to participate in a formal Commission proceeding concerning the petition.

     (iii)   Within 30 days of the filing of a petition, the utility shall provide further notice, including publication in newspapers of general circulation, media advertising, customer bill inserts or other notice as the Commission reasonably believes to be required to notify the utility’s customers and interested parties of the proceeding concerning the utility’s petition.

     (iv)   Within 60 days after the petition is filed, the Commission will assign the petition to the Office of Administrative Law Judge for hearings and the issuance of a recommended decision. The Commission will adopt a final order on the petition within 210 days after the petition is filed. If the Commission does not enter a final order concerning the petition within that time, the petition shall become effective as filed, requiring no further action by the Commission or the electric utility.

     (v)   A Commission order on a petition will contain findings concerning the following:

       (A)   The method or approach to be used by the electric utility to establish the amount of its capacity resource needs to be filled by its own facilities or the facilities of unaffiliated or affiliated utilities, independent power producers, exempt wholesale generators, qualifying facilities, marketers, brokers or other entities over an appropriate planning period.

       (B)   The appropriate planning period for evaluating capacity resource needs, avoided costs and the utility’s actual commitment to capacity resources.

       (C)   The electric utility’s appropriate interconnection requirements, including physical inspection and testing requirements, cost and payment procedures, reconciliation of actual costs to estimates and the like

       (D)   The appropriate allocation of costs for system upgrades among affected unaffiliated or affiliated utilities, independent power producers, exempt wholesale generators, qualifying facilities, marketers, brokers or other entities.

       (E)   The timing, type and amount of DSM programs the utility will procure and implement.

       (F)   The utility’s methodology for evaluating DSM programs.

       (G)   The utility’s proposed dispute resolution process designed to resolve in an efficient and expeditious manner disputes associated with the competitive bidding process.

       (H)   Other findings that the Commission deems reasonable and appropriate relating to the petition.

 (vi)  When a utility’s capacity resource plan, approved by Commission order under this paragraph becomes outdated or fully implemented, or becomes inappropriate for any reason, the utility shall file a new petition with the Commission consistent with this paragraph. This filing shall not affect any contract submitted under paragraph (7).

   (4)  Request for Proposal (RFP).

     (i)   Following the Commission’s disposition of the petition, a utility shall develop an RFP for the purchase of capacity. The utility’s RFP shall be filed with the Commission at the appropriate time in order to meet the utility’s capacity needs. A utility’s RFP shall provide accurate information about its need for capacity. The RFP shall provide whether the utility is seeking baseload, intermediate or peaking capacity. The RFP shall include information necessary to the preparation of the bid proposal and the following:

       (A)   The size, type and timing for which the utility anticipates contracting.

       (B)   The RFP shall specify any nonprice, benchmark or other considerations, such as fuel diversity and how those factors will be evaluated.

       (C)   Thresholds that shall be met by bidders.

       (D)   The criteria which will be used in evaluating the bids.

       (E)   Major assumptions to be used by the utility in its bid evaluation process.

       (F)   Explicit instructions for preparing bids so that bids can be evaluated on a consistent basis.

       (G)   The preferred general location of additional capacity and availability of offsets or allowances.

       (H)   Standard power purchase and operating agreements.

     (ii)   A utility shall provide bidders with the information that would reasonably be expected to have a bearing on the viability of a proposed project. Potential bidders shall be able to meet with the utility to discuss the RFP and the utility’s capacity needs.

     (iii)   Notice of the RFP shall be filed with the Commission, served on the Office of Consumer Advocate, the Office of Small Business Advocate and the Pennsylvania Energy Office and published by the Commission in the Pennsylvania Bulletin. The notice shall include information regarding when the RFP will be released, when bidders must submit their proposals, and when the utility will announce the winning bidder.

     (iv)   The RFP shall be consistent with the Commission’s order on the utility’s petition.

     (v)   There shall be a single due date for all proposals, so that all proposals may be delivered to the evaluator and opened at the same time without amendment.

     (vi)   Performance incentives and penalties are encouraged to ensure efficient project operation. Performance incentives and penalties, if used, shall be included in the RFP.

   (5)  Determination of procurement block size.

     (i)   The amount of capacity or block size which the utility solicits shall be based on the utility’s incremental capacity and associated energy needs as forecast beyond the next 5 years from the date of the utility’s most recent ARPR, consistent with the Commission’s disposition of the utility’s petition. Projects may be appropriately considered in the bid assessment when their proposed in-service date is later than the time-frame used to determine the block size.

     (ii)   Incremental needs refer to the level of capacity and associated energy needs in excess of the following, less planned utility plant retirements:

       (A)   Current utility-owned generating capacity.

       (B)   Short-term power purchase contracts, and commitments with other utility sources.

       (C)   Current signed power purchase contracts and commitments with nonutility generators which are likely to operate, with recognition of their likely in-service dates.

   (6)  Evaluation of bids.

     (i)   Evaluation of bids submitted in a competitive bidding program shall be based on the criteria identified in the utility’s RFP. All resource options competing to meet the utility’s procurement needs as determined by the Commission’s disposition of the Capacity Resource Plan shall be evaluated against each other, consistent with the requirements of the Capacity Resource Plan and the RFP.

     (ii)   For auctions in which neither the utility nor any affiliate is a participant, the utility shall objectively evaluate all bids consistent with the RFP. If the utility or its affiliates participate in their own bidding process, the Commission will require independent, third-party evaluation of all bids. The Commission will closely scrutinize all evaluations of bids.

     (iii)   A utility shall establish reasonable interconnection procedures to facilitate the wheeling of power from unsuccessful bidders to wholesale purchasers of power.

   (7)  Contract negotiations.

     (i)   Contract negotiations between the utility and a potential supplier of electricity shall be in strict accordance with the utility’s RFP. Contract negotiations may not be extensive. Fundamental changes in the nature of the project and purchase payments may not be negotiated. The fully executed contract shall include provisions that assure a facility’s performance and continued availability under that contract.

     (ii)   Security provisions for levelized contracts may not be onerous or anticompetitive.

     (iii)   Line loss savings are a matter of location integration with the current system and may be incorporated in final contracts when negotiated.

     (iv)   The price negotiated to be paid to the successful bidder for power shall reflect its share of necessary upgrades to the transmission system. The utility is encouraged to establish a standard contribution format for partial compensation by power producers to transmission system upgrades where these upgrades can be negotiated.

     (v)   Promptly upon the completion of contract negotiations, the utility shall submit a petition to the Commission seeking approval of the contract and cost recovery.

   (8)  Purchases outside of a bidding program.

     (i)   A utility with a competitive bidding program under this subsection may refuse offers of capacity that are made outside of that bidding program. Energy-only shall be purchased from an offering qualifying facility under subsection (b).

     (ii)   When a utility and a potential supplier of capacity resources intends to negotiate a purchased power contract outside of the utility’s competitive bidding program, the parties shall jointly file a petition for waiver of this subchapter under §  5.43 (relating to petitions for issuance, amendment, waiver or repeal of regulations). The parties shall demonstrate that the transaction cannot be accommodated in the competitive bidding program and that the purchase is in the public interest from both a cost and reliability standpoint.

     (iii)   An electric utility may file a petition for permission to construct its own generating plant outside of a competitive bidding program. The Commission will hold hearings on the utility’s petition and the Commission will adopt a final order within 210 days after the petition is filed. If the Commission does not adopt a final order within that time, the utility’s petition for permission to construct its own generating plant outside of a competitive bidding process shall be deemed approved as filed, requiring no further action by the Commission or the utility. The Commission may consider the following factors in reviewing the electric utility’s proposal:

       (A)   The electric utility’s proposal is the best least-cost option compared to other options.

       (B)   The electric utility’s proposal has the lowest rate impact compared to other options.

       (C)   The electric utility’s proposal has the best reliability standard compared to the reliability offered by other competitors.

       (D)   The utility’s proposal offers the greatest improvement in the electric utility’s financial standing.

       (E)   The electric utility’s proposal offers the largest economies of scale and best optimum fuel mix.

       (F)   Other factors which the Commission believes are in the public interest.

   (9)  Disputes.

     (i)   The Commission will determine the dispute resolution process to be followed during the course of a competitive bidding program in its final order on the utility’s petition filed under paragraph (3).

     (ii)   Disputes concerning the competitive bidding process specific to the unsuccessful bidder shall be brought to the Commission as a Petition for Reconsideration within 15 days of the Commission’s final order on the utility’s petition for contract approval and cost recovery.

     (iii)   The Commission will refer disputes concerning the administrative process of the RFP to the Office of the Administrative Law Judge.

   (10)  Utility reporting requirements.

     (i)   A utility conducting a competitive bid solicitation shall file a written report to the Commission within 45 days of the completion of its evaluation of bids received. This report shall describe in detail the evaluation of the bids and the electric utility’s comparison of the bids received to its own construction options. The report will be treated as proprietary information.

     (ii)   A second report shall be prepared as a public document and accompany the proprietary report.

     (iii)   A utility shall cooperate fully with Commission staff in review of the solicitation and evaluation process.

   The provisions of this §  57.34 adopted September 17, 1982, effective January 11, 1983, 13 Pa.B. 4237; corrected December 24, 1982, effective January 11, 1983, 12 Pa.B. 4338; amended December 29, 1995, effective December 30, 1995, 25 Pa.B. 6085. Immediately preceding text appears at serial pages (195595) to (195603).

   Capacity Credits

   The Commission exceeded its authority under the Public Utility Regulatory Policies Act by calculating capacity credits, for purpose of calculating payments owing to a facility and recoverable from ratepayers, based on an ‘‘offer of acceptance’’ and not a ‘‘legally enforceable obligation.’’ Armco Advanced Materials Corporation v. Pennsylvania Public Utility Commission, 579 A.2d 1337 (Pa. Cmwlth. 1990), affirmed per curiam 634 A.2d 207 (Pa. 1993).

   Fixed Charge Rate

   The fixed charge rate represents those costs that change over time, such as the cost of debt or cost of capital. Armco Advanced Materials Corp. v. Pennsylvania Public Utility Commission, 664 A.2d 630 (Pa. Cmwlth. 1995); appeal denied 674 A.2d 1079 (Pa. 1996).

   Need

   A utility is not free to claim that it does not have a need for additional capacity and refuse to negotiate contracts with qualifying facilities when in fact it does need to add capacity. The Public Utility Regulatory Policies Act of 1978 (PURPA) (16 U.S.C.A. §  824a-3), required utilities to make purchases from qualifying facilities when a need exists that qualifying facilities can fulfill. In cases where a utility denies the existence of its needs, there must be a means for compelling a capacity purchase. Otherwise, the aims of PURPA would be frustrated. Pennsylvania Electric Co. v. Pennsylvania Public Utility Commission, 677 A.2d 831 (Pa. 1996).

   The Public Utility Commission did not err in calculating capacity needs and avoided costs as of the date when the petition to compel a purchase was filed. This approach was consistent with Milesburg II (Armco Advanced Materials Corp. v. Pennsylvania Public Utility Commission, 135 Pa. Cmwlth. 15, 579 A.2d 1337 (1990), aff’d per curiam, 535 Pa. 108, 634 A.2d 207 (1993), cert. denied, 130 L. Ed. 2d 274 (1994)) and was within the bounds of the Commission’s authority under the Public Utility Regulatory Policies Act of 1978, 16 U.S.C.A. §  824a-3. Pennsylvania Electric Co. v. Pennsylvania Public Utility Commission, 677 A.2d 831 (Pa. 1996).

   Price

   Where a petitioner challenged the Pennsylvania Public Utility Commission’s order approving a utility agreement to purchase power from a cogeneration facility, the question of whether prices in the agreement were equal or below full avoided costs was preserved. The utility’s ratepayers must be provided notice and an opportunity to be heard on the terms of the agreement relating to prices. GPU Industrial Intervenors v. Pennsylvania Public Utility Commission, 628 A.2d 1187 (Pa. Cmwlth. 1993).

   Qualifying Facility Petition Date

   To hold that a contract to supply capacity must be executed before a qualifying facility can ‘‘lock in’’ needs and avoided costs would allow utility companies to impede the development of qualifying facilities by denying needs and refusing to negotiate contracts. Determining need and cost factors with reference to the date when a qualifying facility files a petition to compel a purchase is a reasonable course. Pennsylvania Electric Co. v. Pennsylvania Public Utility Commission, 677 A.2d 831 (Pa. 1996).

 (a)  Each electric utility shall establish and maintain rates, rules and regulations within its tariff for the provisions of the following services to qualifying facilities:

   (1)  Supplementary power.

   (2)  Back-up power.

   (3)  Maintenance power.

 (b)  A utility’s rate for sales of supplementary power to qualifying facilities shall recover the same costs that the utility is permitted to recover from another utility customer of the same customer class and with the same usage characteristics.

 (c)  A utility’s rate for sales of back-up power to qualifying facilities may not be based upon an assumption that forced outages or other reductions in electric output by qualifying facilities on an electric utility’s system will occur simultaneously or during the system peak, or both, unless supported by factual data. The utility’s rate for back-up power shall recover energy costs incurred by the utility plus an appropriate portion of fixed costs. Fixed costs shall be prorated over the actual days in a billing period during which back-up power is consumed by the qualifying facility.

 (d)  A utility’s rate for sales of firm maintenance power to qualifying facilities shall include energy costs and a demand or capacity charge required to recover the appropriate transmission plant and full distribution plant costs. When the scheduled outages of a qualifying facility cannot be scheduled during other than utility peak periods, the demand or capacity charge shall be the full charge stated in the utility’s filed tariff under which the qualifying facility receives this service.

 (e)  When appropriate, a utility shall provide supplementary back-up and maintenance power on both a firm and interruptible basis.

   The provisions of this §  57.35 adopted September 17, 1982, effective January 11, 1983, 13 Pa.B. 4237; amended December 29, 1995, effective December 30, 1995, 25 Pa.B. 6085; corrected February 9, 1996, effective December 30, 1995, 26 Pa.B. 590. Immediately preceding text appears at serial page (205824).

   Notice and Opportunity To Be Heard

 (a)  Obligation to pay.

   (1)  A qualifying facility shall pay any reasonable additional—that is, incremental—connection costs above the costs to service the customer’s electrical load which an electric utility may incur to allow the utility to purchase power from the qualifying facility.

   (2)  A qualifying facility shall provide the equipment necessary for it to interconnect with the utility on the qualifying facility’s side of the interconnection point in a manner which is compatible with and meets the safety standards of the utility.

   (3) The qualifying facility shall submit its interconnection plans and specifications to the utility. The utility shall accept or reject these plans within 60 days of receipt of all required documents. The utility’s acceptance or rejection shall be in writing. When plans or specifications are rejected, the utility shall identify and explain the rejection and identify actions necessary to cure the defects.

   (4)  The utility shall provide general interconnection requirements upon request.

   (5)  The qualifying facility may hire an independent contractor to perform interconnection work on the qualifying facility side of the interconnection. After the qualifying facility installs the necessary interconnection equipment, the utility can require an inspection before making the interconnection. The utility shall have this inspection conducted within 20 days of notice by the qualifying facility that the installation has been completed and shall provide the qualifying facility with the results of this inspection in writing within 5 working days. If after inspection the utility considers the interconnection to be unsatisfactory, the utility shall identify and explain the basis of its determination and described specific steps to remedy the defects. The utility shall bear the cost of this inspection.

   (6)  If the utility is performing interconnection work for the qualifying facility, the utility shall complete the work in a timely manner.

 (b)  Reimbursement of interconnection costs. Payments for the incremental interconnection costs described in subsection (a) may, at the option of the qualifying facility, be made either as one lump sum payment or be spread over a mutually agreeable period of 5 years or less. When the qualifying facility chooses to spread the payment over a reasonable time period, the payments to the utility shall include an interest payment to cover the utility’s allowed rate of return on common equity as last approved by the Commission.

 A utility shall establish reasonable standards to insure system safety and reliability of interconnected operations subject to the approval of the Commission. The standards shall be filed as part of the utility’s tariff and shall be supported by information which demonstrates the need for the standards on the basis of system safety and reliability. A utility shall provide a copy of the standards or a summary of the standards to prospective qualifying facilities upon request.

 The Commission will consider access to utility-owned transmission lines by qualifying facilities, when appropriate. Utilities shall file with the Commission their Federal Energy Regulatory Commission-approved wheeling rate applicable to qualifying facilities selling power to other utilities.

 (a)  A qualifying facility or utility may request Commission assistance concerning charges and conditions of the purchase or sale of power under this subchapter. The Commission may designate staff to consult with such parties as the need arises. Upon request for assistance, staff will attempt to aid the parties in understanding and complying with this subchapter. Staff may also suggest possible solutions to problems and disputes arising from application of this subchapter. Assistance or suggestions, however, will be wholly informational and nonbinding on both the Commission and the parties. The assistance or suggestions may not form the basis for any decision by the Commission. Requests for Commission assistance shall be in writing with copy to other parties, be addressed to the Secretary’s office, and include as a minimum the following information:

   (1)  Name of the qualifying facility.

   (2)  Owner of the qualifying facility.

   (3)  Description of the qualifying facility including type, for example, run-of-river hydro or topping cycle cogeneration; capacity in kilowatts; and estimated annual output in kilowatt-hours.

   (4)  Proposed purchasing utility.

   (5)  Whether the qualifying facility is offering to sell energy or energy and capacity.

   (6)  Terms and conditions under which the purchasing utility has offered to purchase the energy or energy and capacity and all terms and conditions the qualifying facility was willing to accept for its energy or energy and capacity.

   (7)  A short summary of the problem or question with which the party wishes Commission assistance.

 (b)  Any qualifying facility wishing to contest utility actions before the Commission under this subchapter shall comply with the act, and Chapters 1, 3 and 5 (relating to rules of administrative practice and procedure; special provisions; and formal proceedings). In addition, an initial pleading petition, or other document filed with the Commission should include, as a minimum, the information as required in subsection (a).

   The provisions of this §  57.39 adopted September 17, 1982, effective January 11, 1983, 13 Pa.B. 4237.

Subchapter D. ACCOUNTS AND RECORDS

Sec.

§ 57.41. Classification of electric public utilities.

 For accounting and reporting purposes, electric public utilities are classified as follows:

   (1)  Class A. Public utilities having annual electric operating revenues of $2.5 million or more.

   (2)  Class B. Public utilities having annual electric operating revenues of $1 million or more but less than $2.5 million.

   (3)  Class C. Public utilities having annual electric operating revenues of $150,000 or more but less than $1,000,000.

   (4)  Class D. Public utilities having annual electric operating revenues of $25,000 or more but less than $150,000.

 (a)  Each Class A and Class B electric public utility shall keep its accounts in conformity with the ‘‘Uniform System of Accounts Prescribed for Public Utilities and Licensees (Class A and Class B)’’ of the Federal Energy Regulatory Commission.

 (b)  Each Class C electric public utility shall keep its accounts in conformity with the ‘‘Uniform System of Accounts Prescribed for Public Utilities and Licensees (Class C)’’ of the Federal Energy Regulatory Commission.

 (c)  Each Class D electric public utility shall keep its accounts in conformity with the ‘‘Uniform System of Accounts Prescribed for Public Utilities and Licensees (Class D)’’ of the Federal Energy Regulatory Commission.

   The provisions of this §  57.42 issued under Public Utility Code,66 Pa.C.S. § §  331, 501, 504 and 1501.

   The provisions of this §  57.42 adopted February 25, 1946; amended through May 29, 1973; amended January 7, 1983, effective January 8, 1983, 13 Pa.B. 131. Immediately preceding text appears at serial pages (78456) to (78457).

   Federal Energy Regulatory Commission

   Although a public utility is required to keep its accounts in conformity with the Uniform System of Accounts of the Federal Energy Regulatory Commission (FERC), there is no evidence that the regulations governing the FERC were inextricably tied to or wholly incorporated into the Tax Reform Code (72 P. S. §  8101 et seq.). To the contrary, the FERC’s authority over state matters has been specifically limited such that federal regulation only extends to those matters which are not subject to regulation by the states. Thus, taxation on the ‘‘sales of electric energy’’ was governed by the Tax Reform Code and accordingly the taxability of gross receipts from residential and nonresidential late charges was not governed by the FERC regulations. Pennsylvania Power & Light Co. v. Commonwealth, 668 A.2d 620 (Pa. Cmwlth. 1995); affirmed 717 A.2d 504 (Pa. 1998).

   Gross Receipts

   The Federal accounting procedure which the Pennsylvania Code requires the electric utility to follow does not control the court’s interpretation of the Pennsylvania Tax Reform Code; thus, the gross receipts received from the higher rates imposed on late-paying customers constitute payment for the electricity sold as much as do gross receipts derived from rates applicable to timely payments. Pennsylvania Power & Light Co. v. Board of Finance and Revenue, 717 A.2d 504 (Pa. 1998).

   The gross receipts received from the higher rates imposed on late-paying customers constitute payment for the electricity sold as much as gross receipts derived from rates applicable to timely payments. Pennsylvania Power & Light Co. v. Commonwealth, 668 A.2d 620 (Pa. Cmwlth. 1995); affirmed 717 A.2d 504 (Pa. 1998).

 Revenues, costs and expenses pertaining to merchandising, jobbing and contract work shall be recorded appropriately in accounts 914 and 915 or accounts 592 and 593 in the uniform accounting system prescribed in §  57.42 (relating to systems of accounts prescribed).

 A public utility having annual electric operating revenues of $25,000 or more shall, in its accounting for plant retirements, conform to the ‘‘Units of Property for Use in Accounting for Additions and Retirements of Electric Plant’’ of the Federal Energy Regulatory Commission.

   The provisions of this §  57.44 issued under the Public Utility Code, 66 Pa.C.S. § §  331, 501, 504 and 1501.

 Each electric utility shall keep and preserve its records in conformity with the provisions applicable to it in the most recent publication of the National Association of Regulatory Utility Commissioners, entitled ‘‘Regulations to Govern the Preservation of Records of Electric Gas and Water Utilities, except as follows when the following retention periods apply: