Recovery of purchased power capacity costs

A new Federal Energy Regulatory Commission (FERC) rule requires that all the costs associated with short-term wholesale power purchase will be recovered through fuel adjustment clauses under certain conditions. This article discusses the features and rationale for the ruling and several state statutes and commission decisions, as well as examining the various permutations of the purchased power capacity cost recovery options. It concludes that the issue is not whether costs are recoverable, but how to recover the various components: fuel, nonfuel, long-term capacity, and short-term capacity costs. The FERC ruling may represent a rethinking that may occur at the state level.