SCS/SB 1124 - This act allows electrical companies to recover all reasonable and prudent costs incurred for fuel delivery and variable cost components of purchased electrical energy through energy cost adjustment schedules. Companies can pursue this option either through filing a proposed schedule with the Public Service Commission (PSC) as part of a general rate proceeding or in cases where the PSC has explicitly permitted the option in another contested proceeding.

Under this act, the PSC shall establish and implement a true-up mechanism, which will remedy any over or under- collections from previous adjustment periods through inclusion of such over or under recoveries in subsequent cost adjustments.

The PSC shall allow modification of energy adjustment schedules no more often than every ninety days to reflect varying fuel and purchased energy costs reflected in the permanent base rates filed with the Commission.

Electrical corporations are not allowed under this act to collect energy cost adjustments for a period exceeding three years unless it has been explicitly permitted to do so by the Commission. Once the corporation has begun collecting costs under such an agreement, the corporation shall not discontinue the use of an energy adjustment clause unless it has been explicitly permitted to do so by the Commission.

Nothing in this act allows corporations to avoid any rate freeze, moratorium, or other commitments made in connection with a prior proceeding settlement. And nothing shall be construed as limiting the authority of the PSC to review and consider fuel and purchased energy costs.

The Commission may take into account any reduction in business risk to an electrical corporation resulting from the energy adjustment clause in setting the electrical corporation's allowed return in any rate proceeding.

This act provides the commission with the authority to implement mechanisms designed to provide the electrical corporation with incentives for performance in the acquisition of fuel and purchased power.

The act directs that any corporation adopting an energy adjustment clause conduct its affairs in a reasonable and prudent manner, with its actions being subject to prudence review at least once every thirty-six months. Every corporation operating under an energy adjustment clause shall reconcile its differences between the revenues resulting from such adjustment and the appropriate pretax revenues found by the Commission during that time; such a reconciliation shall occur every twelve months and be subject to review by the commission.
MEGAN CRAIN