65- 407 C.M.R. ch. 360, § 3

Current through 2024-51, December 18, 2024

Section 407-360-3 - ADMINISTRATIVE DETERMINATION OF AVOIDED COSTS

A. Applicability. Except as otherwise provided, this section applies to each investor-owned electric or transmission and distribution utility in the State. This section shall remain effective until the date of retail access.

B. Energy and Capacity. Each electric or transmission and distribution utility shall submit the following pursuant to a schedule set by Commission order.

1. Avoided energy costs

a. The estimated avoided energy costs on the electric utility's system, for various levels of purchases from qualifying facilities. Except as provided in this subsection such levels of purchases shall be stated in blocks of not more than 50 megawatts for utilities with a peak demand of 500 megawatts or more, and in blocks equivalent to not more than 10% of the peak demand for utilities of less than 500 megawatts. At least two such blocks shall be provided. In the event that the utility can reasonably be expected to purchase an amount of energy at the rates established by the Commission pursuant to Section 4(C) which exceeds the amount of energy reflected in the first of the two blocks described above then the first block shall be stated in an amount equal to the reasonably anticipated purchases. The avoided costs shall be stated on a cents per kilowatt-hour basis (showing the same number of significant digits as were employed by the electric utility in its last Fuel Cost Adjustment tariff), during daily peak and off-peak periods, by month, for the most recent 12 months, and in each of the next 18 months or until the date of retail access if that date occurs within the 18 month period.

b. The utility's avoided energy costs shall include, as applicable, reasonable estimates of avoided fuel costs, avoided start-up costs, avoided variable operating and maintenance costs, and energy purchase costs.

c. In each estimate required by subparagraph (a) above, the avoided costs shall be calculated by determining the difference between the total electric energy costs estimated to serve a utility's load and the total electric energy costs estimated for that load reduced in every hour consistent with the block and time periods discussed above divided by the kilowatt hours reflected in such load reductions.

2. Avoided capacity costs.

a. The estimated avoided capacity costs on the electric utility's system, for various levels of purchases from qualifying facilities. Except as provided in this subsection, such levels of purchases shall be stated in blocks of not more than 50 megawatts for utilities with a peak demand of 500 megawatts or more, and in blocks equivalent to not more than 10% of the peak demand for utilities of less than 500 megawatts. At least two such blocks shall be provided. In the event that the utility can reasonably be expected to purchase an amount of energy and capacity at the rates established by the Commission pursuant to Section 4(C) which exceeds the amount of energy and capacity reflected in the first of the two blocks described above then the first block shall be stated in an amount equal to the reasonably anticipated purchases. The avoided costs shall be stated on a cents per kilowatt-hour basis (showing the same number of significant digits as were employed by the electric utility in its last Fuel Cost Adjustment tariff), during daily peak and off-peak periods, by month, for the most recent 12 months, and in each of the next 18 months or until the date of retail access if that date occurs within the 18 month period.

b. The utility's avoided capacity costs shall include, as applicable, reasonable estimates of avoided capacity construction costs, capacity purchase costs, and capacity sale values.

c. In each estimate required by subparagraph (a) above, the avoided costs shall be calculated by determining the difference between the total electric capacity costs estimated to serve a utility's load and the total electric capacity costs estimated for that load reduced in every hour consistent with the block and time periods discussed above divided by the kilowatt-hours reflected in such load reductions.

3. Supporting analyses and data. A copy of all analyses used to derive the estimates required by paragraphs (1) and (2) above together with all input data and a detailed description of the methodology used and all assumptions employed.

C. Commission Review. Material submitted pursuant to subsection B above shall be subject to review and approval by the Commission. In any such proceeding the utility has the burden of coming forward with justification for its data.

65- 407 C.M.R. ch. 360, § 3