KRS 278.183: Surcharge to recover costs of compliance with environmental requirements

for coal combustion wastes and by -products -- Environmental compliance

plan, review and adjustment.

(1) Notwithstanding any other provision of this chapter, effective Janu ary 1, 1993, a

utility shall be entitled to the current recovery of its costs of complying with the

Federal Clean Air Act as amended and those federal, state, or local environmental

requirements which apply to coal combustion wastes and by-products from facilities

utilized for production of energy from coal in accordance with the utility's

compliance plan as designated in subsection (2) of this section. These costs shall

include a reasonable return on construction and other capital expenditures and

reasonable operating expenses for any plant, equipment, property, facility, or other

action to be used to comply with applicable environmental requirements set forth in

this section. Operating expenses include all costs of operating and maintaining

environmental f acilities, income taxes, property taxes, other applicable taxes, and

depreciation expenses as these expenses relate to compliance with the

environmental requirements set forth in this section.

(2) Recovery of costs pursuant to subsection (1) of this sectio n that are not already

included in existing rates shall be by environmental surcharge to existing rates

imposed as a positive or negative adjustment to customer bills in the second month

following the month in which costs are incurred. Each utility, before initially

imposing an environmental surcharge pursuant to this subsection, shall thirty (30)

days in advance file a notice of intent to file said plan and subsequently submit to

the commission a plan, including any application required by KRS 278.020(1), for

complying with the applicable environmental requirements set forth in subsection

(1) of this section. The plan shall include the utility's testimony concerning a

reasonable return on compliance -related capital expenditures and a tariff addition

containing the terms and conditions of a proposed surcharge as applied to individual

rate classes. Within six (6) months of submittal, the commission shall conduct a

hearing upon the request of a party, and shall, regardless of whether or not a hearing

is requested:

(a) Consider and approve the plan and rate surcharge if the commission finds the

plan and rate surcharge reasonable and cost -effective for compliance with the

applicable environmental requirements set forth in subsection (1) of this

section;

(b) Establish a reasonable return on compliance-related capital expenditures; and

(c) Approve the application of the surcharge.

(3) The amount of the monthly environmental surcharge shall be filed with the

commission ten (10) days before it is scheduled to go into e ffect, along with

supporting data to justify the amount of the surcharge which shall include data and

information as may be required by the commission. At six (6) month intervals, the

commission shall review past operations of the environmental surcharge o f each

utility, and after hearing, as ordered, shall, by temporary adjustment in the

surcharge, disallow any surcharge amounts found not just and reasonable and

reconcile past surcharges with actual costs recoverable pursuant to subsection (1) of

this sect ion. Every two (2) years the commission shall review and evaluate past

operation of the surcharge, and after hearing, as ordered, shall disallow improper

expenses, and to the extent appropriate, incorporate surcharge amounts found just

and reasonable into the existing base rates of each utility.

(4) The commission may employ competent, qualified independent consultants to assist

the commission in its review of the utility's plan of compliance as specified in

subsection (2) of this section. The cost of any c onsultant shall be included in the

surcharge approved by the commission.

(5) The commission shall retain all jurisdiction granted by this section and KRS

278.020 to review the environmental surcharge authorized by this section and any

complaints as to the amount of any environmental surcharge or the incorporation of

any environmental surcharge into the existing base rate of any utility.