Subchapter K. UPGRADING OF COAL-FIRED
GENERATING UNITS

 This subchapter requires jurisdictional electric utilities with existing coal-fired generating units to uprate their electric power production by increasing the capability to use coal where economically feasible and where the uprate is beneficial to ratepayers. This subchapter also establishes an optional rate rider and preferential base rate recognition mechanisms for special cost recovery for upgradings. This subchapter is required by 66 Pa.C.S. §  514 (relating to use of coal).

   The provisions of this §  57.121 amended under Public Utility Code,66 Pa.C.S. § §  308, 331, 501, 504 and 1501.

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

   Coal-fired unit—An electric generating station fueled by coal or coal derivatives.

   Equivalent availability—A measure of generating unit availability calculated as follows:

 (a)  An electric utility with coal-fired generating capacity shall, within a reasonable period of time, commence all coal-fired unit uprating projects which are found to be economically feasible and beneficial to ratepayers.

 (b)  Upon application of the affected utility, the Commission may qualify an uprating project for special cost recovery under §  57.124 (relating to special cost recovery). The application shall provide cost/ benefit analyses which clearly demonstrate, under present value revenue requirements calculations, that the benefits of uprating the unit will exceed project costs over the operational life of the investment or the remaining life of the unit, whichever is less.

 (c)  If a utility fails, within a reasonable period of time, to commence a project shown to be cost effective and economically feasible, the utility shall be subject to adjustment of rates under 66 Pa.C.S. §  1309 (relating to rates fixed on complaint; investigation of costs of production).

   The provisions of this §  57.123a issued under the Public Utility Code, 66 Pa.C.S. § §  308, 331, 501, 504 and 1501.

 (a)  When a qualified project is completed, a utility may institute a rider under 66 Pa.C.S. §  1307 (relating to sliding scale of rates; adjustments) to surcharge base rates for more timely recovery of associate costs until a time when the costs are reflected in base rates. To be eligible for this cost recovery mechanism, the utility shall comply with the following requirements:

   (1)  The rider surcharge shall be calculated to recover the annual level of revenue required to support the project based upon depreciation and rate of return findings in the utility’s most recently litigated rate proceeding. The revenue requirement calculation shall include the net effect of anticipated operation and maintenance expense changes, exclusive of fuel expense, resulting from the project.

   (2)  The rider shall take the form of a percentage multiplier applied to base rates which shall be recomputed at least once every 12 months.

   (3)  In the course of each general rate proceeding, projected revenues from the rider shall be rolled into base rates.

   (4)  The rider may be initiated or adjusted upon 30-days notice to the Commission for either recognition of additional qualified projects or annual recomputation of the surcharge.

 (b)  Qualified projects involving existing coal-fired units which utilize Commonwealth-mined coal for more than half of the total fuel requirements may be included in the rate base of the utility up to 50% of the undepreciated original cost of the unit involved where the project has not been completed but is expected to be completed within 2 years from the end of the test year claimed in a general rate proceeding under 66 Pa.C.S. §  1308 (relating to voluntary changes in rates).

 Under 66 Pa.C.S. §  514 (relating to use of coal), revenue collected under §  57.124(b) (relating to special cost recovery) is subject to refund with interest, as specified under 66 Pa.C.S. §  514(c), if a qualified project is not completed within 2 years from the end of the test period in which the project was initially claimed and qualified.

   The provisions of this §  57.125 amended under the Public Utility Code, 66 Pa.C.S. § §  308, 331, 501, 504 and 1501.

   The provisions of this §  57.125 amended January 13, 1995, effective January 14, 1995, 25 Pa.B. 150. Immediately preceding text appears at serial page (178486).