| (ii) the reduction or offset is necessary for an unpermitted
electric generating facility to obtain a permit in the manner provided by
PURA §39.264; and
(E) associated with the engineering, procurement, or installation
of pollution control equipment or transportation equipment, or the purchase
of emissions allowances.
(2) Qualifying retirement costs. Retirement costs
may be included in the electric generating facility's stranded cost determination
if retirement of the facility is the most cost-effective alternative, taking
into account the cost of replacement generating capacity. Recoverable retirement
costs are the net book value of the facility, including retirement costs,
less salvage value.
(3) When costs incurred. For purposes of this section,
the electric utility or affiliated power generation company has incurred costs
if it has expended funds or has committed to expend funds under the terms
of a written agreement.
(4) Operating and maintenance costs. This section does
not authorize the recovery of operating and maintenance costs or the capital
cost of a new electric generating facility.
(5) Apportionment of reductions. As provided in this paragraph,
the commission may apportion the capital invested to reduce emissions of nitrogen
oxides, sulfur dioxide, or both, among one or more entities owning facilities
located in the same region. The capital investments for which recovery is
sought must have been incurred pursuant to a written agreement between the
entities executed prior to the date any such costs were incurred. The commission
may not apportion capital costs under this provision unless the criteria of
paragraph (1) of this subsection are met for each electric generating facility
seeking capital cost recovery. Capital costs shall be apportioned by prorating
the total capital invested between entities on the basis of reductions of
nitrogen oxides, sulfur dioxide, or both, realized at each participating entity's
facilities in the region.
(e) Request for approval of cost-effectiveness determination.
(1) Application. On or before January 10, 2003, an electric
utility or affiliated power generation company that seeks recovery of capital
costs pursuant to this section shall file an application for a determination
that its plan for meeting the requirements of PURA §39.264 and the regulatory
programs designed to achieve compliance with national ambient air quality
standards are cost-effective under this section. No more than one application
may be filed for generating facilities owned by the same electric utility
or affiliated power generation company in the same region. The application
shall include the information specified in subparagraphs (A) - (H) of this
paragraph.
(A) Description. A general description of the generating facility,
including but not limited to:
(i) net generating capacity in megawatts;
(ii) type of fuel used for electric generation;
(iii) the county and region in which each facility addressed
in the application is located;
(iv) average capacity factor for the three most current calendar
years as reported to the commission;
(v) generation in megawatt-hours for the three most current
calendar years, as reported on Form EIA-767 or if not available on Form EIA-767,
then as reported to the Public Utility Commission of Texas;
(vi) the expected remaining life of the facility; and
(vii) any other information required to perform the analysis
prescribed by this section.
(B) Total emissions. The total annual emissions (in tons) of
nitrogen oxides and sulfur dioxide:
(i) for the year 1997;
(ii) for the most recent calendar year for which data is available;
(iii) that is expected for the first calendar year after the
implementation of the air quality improvement strategies for which cost recovery
will be requested; and
(iv) for the calendar years 2003 through 2005.
(C) Allocated emissions allowances. The number of emission
allowances allocated to the electric generating facility by the conservation
commission.
(D) Capital cost estimate. The total amount of qualifying capital
costs for each option evaluated by the electric utility or affiliated power
generation company.
(E) Alternatives. A decision analysis for all electric generating
facilities owned by a utility or affiliated power generation company in the
same region comparing the cost-effectiveness of the retirement option with
retrofit options and all other possible options considered by the electric
utility or affiliated power company. Other options shall include:
(i) offsetting emissions at the electric generating facility
by installing control technology at another facility, consistent with the
rules of the conservation commission; and
(ii) switching fuel used for electricity generation at the
electric generating facility.
(F) Comparative cost analysis. The net present value of the
capital, operating, and maintenance costs of each option considered pursuant
to subparagraph (E) of this paragraph. The period of the analysis shall begin
on May 1, 2003, and extend for a period of 15 years. The discount rate used
in the analysis and the cost of capital associated with each option shall
be calculated differently. Both shall start with the capital structure and
cost of capital as they are reported for the end of 1999 in the utility's
annual report made pursuant to PURA §39.257. The discount rate shall
be the after-tax weighted cost of capital, while the cost of capital associated
with each option shall be taken directly from the annual report, except for
the cost of debt. The cost of debt for this purpose shall be the average cost
of debt for the months of October, November, and December 1999 as reported
by Moody's Investors Service for utilities with the same Moody's bond rating
as the utility making the filing adjusted to reflect any tax-exemption benefits
for which a particular option might qualify. All assumptions used in the analysis
shall be provided. If the lowest-cost alternative is not selected as the most
cost-effective, an explanation of why it was not selected shall be provided.
Where an electric generating facility is required to remain active to ensure
reliability, retrofit shall be deemed to be the most cost-effective alternative
for that facility. The commission shall give great weight to the recommendation
of the Electric Reliability Council of Texas (ERCOT) Independent System Operator
(ISO) in determining whether a facility is needed for reliability purposes.
(G) Retrofit. The retrofit alternative analysis shall include
calculation of retrofit cost and an estimate of the total cost per ton of
pollutant reduced for each option considered. The retrofit alternative analysis
shall also include the time-discounted, probability-adjusted cost of environmental
retrofits that are reasonably foreseeable to require air quality improvement
compliance no later than 2010. If the expected remaining life of the generating
facility is less than 15 years, the retrofit analysis shall include the net
present value of all relevant costs of retirement for those years remaining
after the retirement date.
(H) Retirement. The retirement analysis shall include the net
present value of all relevant costs of retirement for each electric generating
facility, including:
(i) the cost of replacement generating capacity in dollars
as defined in subsection (c)(2) of this section. The amount of replacement
generating capacity shall be the generating capacity of the unit retired adjusted,
when appropriate and depending upon the size of the unit, to reflect energy
savings or additions attributable to energy efficiency, transmission upgrades,
distributed generation, and other similar measures; and
(ii) the net book value of the facility, including retirement
costs and offsetting salvage value, which includes but is not limited to the
market value of the land after the facility is retired, and the value of water
rights, pollution credits or benefits associated with the facility, and other
infrastructure.
(2) Notice. Notice of an application for approval
of a cost-effectiveness determination shall be provided through newspaper
publication once a week for two consecutive weeks in a newspaper of general
circulation throughout the service area of each electric generating facility
addressed in the application. Such newspaper notice shall state in plain language:
(A) the purpose of the application;
(B) the electric generating facilities addressed in the application;
(C) the air quality improvement strategy proposed for each
electric generating facility addressed in the application; and
Cont'd... |
