Form FORM-580 Interrogatory on Fuel and Energy Purchase Practices Purs

OMB #: 1902-0137, exp 6/30/07
Filing Date: September 15
FERC FORM 580
1.

Identify whether your Company had a "Fuel Cost and Purchased Economic Power
Adjustment Clause" (FAC) 1 on file with the Commission at any time during
calendar years 2004 or 2005, and whether a FAC will be on file during 2007.
If your Company did not have a FAC during 2004 or 2005 submit your responses
to this question and questions 12 and 15.
If your Company had a FAC during 2004 or 2005 on file with the Commission,
submit your responses to this question and all questions below.
a.

2.

3.

Does your Company plan to have a FAC on file with the
Commission in calendar year 2007?

Provide copies of all audits, studies, reports, etc. in their entirety, including
exhibits and all attachments, prepared in 2004 or 2005 addressing:

a.

the Company's fuel supply contracts,

b.

the Company's fuel procurement policies and practices and

c.

fuel prices.

For each fossil fuel supply contract (including informal agreements with associated
companies2) of 1 year duration, or longer, and in force at any time during 2004 or
2005, provide the following data for each contract separately:

[No response to Question 3 for fuel oil No. 2 is necessary.]
a. for coal, oil, and gas- identify:
1. the name and address of the supplier,
2. the location of the fuel production,3 and
3. the type of supplier.4

b. for coal supplies only - identify:
1. the producer, if not shown above,
2. the name of the mine,
3. the type of mine (surface or underground) and producing seam(s),

OMB #: 1902-0137, exp 6/30/07
Filing Date: September 15
c. for coal, oil, and gas1. Is the utility associated with the fuel supplier, fuel broker, or fuel
transportation system? If the answer is yes, identify the specific type of
utility involvement from the list below.
Check where appropriate
a. The fuel supplier is associated with the utility. _________
b. The utility owns the fuel supplier directly. _________
c. The utility owns, or is associated with, the fuel procurement
middleman. _________
d. The utility, or an associate, owns, or controls, the fuel
reserve. _________
e. The utility, or an associate, owns, or controls, some part of the
transportation
system. _____________
f. The utility, or an associate, has loan, or loan guarantee, arrangements
with the
fuel supplier. _________
g. The utility, or an associate, has loan, or loan guarantee, arrangements
with the fuel transportation system. _________
h. Other utility involvement. (Explain) _________
Note: For each item checked above, describe the utility's involvement.
d. for coal, oil, and gas - show the date of:
1.
2.
3.
4.
5.

first contract signing,
first delivery under the contract,
contract expiration,
most recent renegotiation, if any, and
renewal, and price reopeners, if any. If the contract is an extension, or
renewal of an earlier contract, provide the date of the original
contract.

2

OMB #: 1902-0137, exp 6/30/07
Filing Date: September 15
e. for coal, oil, and gas - identify the annual base quantities for each
calendar year 2004 and 2005 specified in the contract, and the quantities
actually delivered (coal-103 tons, oil-103 barrels, gas-103 MMBtu).
If the quantities delivered in calendar years 2004 or 2005 were less
than the minimum quantity specified under the contract, show the
quantity shortfall for each year.
f. for coal, oil, and gas - identify the actual quantities (coal-103 tons; oil103 barrels; gas-103 MMBtu) delivered to each of the Company's plants
under this contract in each calendar year 2004 and 2005.
g. for coal, oil, and gas - identify the fuel quality characteristics specified
in the contract (Coal: Btu per pound, percent sulfur, percent ash, and
percent moisture; Oil: Btu per gallon and percent sulfur; Gas: Btu per
cubic foot).
h. for coal, oil, and gas - identify the weighted average quality
characteristics (Coal: Btu per pound, percent sulfur, percent ash, and
percent moisture; Oil: Btu per gallon and percent sulfur; Gas: Btu per
cubic foot) of the fuel delivered to each of the Company's plants under
this contract in each calendar year 2004 and 2005.
i. for coal, oil, and gas - identify the actual weighted average fuel price
paid (including all adjustments), FOB origin (5), in cents per million Btu,
under this contract in each calendar year 2004 and 2005.
If the average annual FOB origin price is different for different plants
receiving fuel under this contract, identify the weighted average FOB
origin prices paid for each plant.
j. for coal, oil, and gas - identify the actual weighted average fuel price
paid (including all adjustments), FOB plant, in cents per million Btu,
separately for calendar years 2004 and 2005 for each of the Company's
plants receiving fuel under this contract.
k. for coal, oil, and gas - is the price reported for j) above a fully allocated
price which includes all the costs associated with producing and
transporting the fuel to each plant?
If the answer is no, identify all the cost components associated with
producing and transporting the fuel that are not included in that price.
For each cost component identified, also identify the weighted average
cost, in cents per million Btu, separately for calendar years 2004 and
2005 attributable to each cost item.

3

OMB #: 1902-0137, exp 6/30/07
Filing Date: September 15
l. for coal, oil, and gas - for each plant receiving fuel under this contract, identify
for each calendar year 2004 and 2005, from origin to final destination:
1. the individual transport mode(s), i.e., rail (specify unit trains
separately), barge, truck, conveyor, pipeline, etc., and the names of the
transportation company(ies) employed, for each transportation company
employed, the distance traveled (in miles), and
2. the weighted average transportation costs (in cents per million Btu) for
each transportation mode. Show as separate cost items all associated
expenses, such as, transfer charges, storage and handling costs, demand
charges, usage charges, gathering costs, etc.
m. for coal only - based on the attached broad classification of contract types
(see Appendix A), identify this coal contract as being:
Type 1 ____ 2 ____ 3 ____ 4 ____ 5 ____ 6 ____ 7 ____
n. for gas only – using the four contract classifications shown below, identify this
gas supply contract as:
Type 1 ____ 2 ____ 3 ____ 4 ____
Type 1 = Interruptible
Type 2 = Firm
Type 3 = Off Peak
Type 4 = Other (Explain)
1. identify whether the transportation for the gas supplied under
contract was:
Type 1 ____ 2 ____ 3 ____ 4 ____ 5 ____
Type 1 = Interruptible Type 2 = Firm
Type 3 = Off Peak

Type 4 = Other (Explain)
Type 5 = Spot
4. For each contract cited in question 3 above that had quantities delivered in
calendar years 2004 or 2005 less than the minimum quantity specified under
the contract (shortfall) -

4

OMB #: 1902-0137, exp 6/30/07
Filing Date: September 15
a. Identify the contract;
b. Identify the annual quantity shortfall(s) and the year(s) of occurrence;
c. For each annual quantity shortfall, if any portion of the shortfall was
caused by the supplier's failure to ship the required quantity, identify the
following:
1. the portion of the shortfall caused by the supplier's
noncompliance, and the cause(s) of the shortfall, e.g.
disruption in production, fuel not meeting quality specifications,
dispute over contract provisions, disruption in supplier's
transportation system, etc.;
2. the utility's response to the shortfall, e.g. reschedule quantity,
purchase replacement fuel from other sources, initiate
litigation, etc.; and
3. the supplier's efforts to correct the shortfall, e.g. purchase
replacement
fuel from other sources, change production
process, produce from other sources, install cleaning equipment,
claim force majeure, etc.;
d. For each annual quantity shortfall, if any portion of the shortfall was
caused by the utility's failure to take the required quantity, identify the
following:
1. the portion of the shortfall caused by the utility's
noncompliance, and the cause(s) of the shortfall, e.g.
forced outage of unit(s), lower than anticipated load,
dispute over contract provisions, disruption in
transportation system, price not competitive with market
prices, etc.;
2. the utility's response to the shortfall, e.g. renegotiate
the contract, buy-out or buy-down of the contract,
reschedule shipments to later contract years, claim force
majeure, etc.;
3. the total payments (take-or-pay payments, deficient
tonnage payments, transportation penalty payments, etc.),
made by the utility in 2004 and 2005 as a result of the
shortfall.

5.

For each contract cited in question 3 above that was
renegotiated, bought-down, bought-out or otherwise changed
during calendar years 2004 or 2005 –
a. identify the contract;

5

OMB #: 1902-0137, exp 6/30/07
Filing Date: September 15
b. identify the party that initiated the change in the
contract;
c. identify each provision of the contract that was changed,
and explain the changes by describing the provisions of the
contract before and after the change;
d. describe in detail what prompted the change in the
contract;
e. identify any payments made to the supplier to allow the
change to the contract and the benefits received as a result
of the payments;
f. identify the amounts of the costs/payments made to
change the contract that were passed through the
wholesale FAC.

a) Did the Company renegotiate, buy-down, buy-out or
otherwise change any transportation contracts for coal, oil, or gas
during calendar years 2004 or 2005?

6.

b) If the answer to a) above is yes, for each transportation
contract changed –
1) identify the contract and the transportation company,
2) identify the fuel contract(s) reported in response to question 3
above that had fuel delivered under the transportation contract
changed,
3) identify the party that initiated the change,
4) identify each provision of the transportation contract that was
changed, and briefly explain the changes by describing the
provisions of the contract before and after the change,
5) describe briefly what prompted the change in the transportation
contract;
6) identify any payments made to the transportation company to
allow the change to the contract and the benefits received as a
result of the payments;
7) identify the amounts of the costs/payments made to change the
transportation contract that were passed through the wholesale
FAC.

7. a) Has any fuel been shipped for others under the Company's fuel
transportation contracts during calendar years 2004 or 2005?

6

OMB #: 1902-0137, exp 6/30/07
Filing Date: September 15
b) If the answer to a) above is yes, describe how the Company allocates
the cost of transportation, taking into account any volume discounts,
between itself, the other company(ies), and the Company's wholesale
ratepayers.
8. a) Submit an organizational chart showing the corporate relationship during
2004 and 2005 between the utility and all of its associated companies, (see
Appendix A for the definition of associated company), affiliate companies, sister
companies, subsidiaries, parent companies, etc, that are in any way involved
with fossil or nuclear fuels, including, but not limited to:
1.
2.
3.
4.
5.
6.

Fuel supply,
Fuel purchase and/or lease,
Fuel Production (including coal preparation plants),
Fuel storage,
Fuel transportation,
Fuel transfer,
7. Fuel reserve and/or lease ownership (land that contains fuel resources).
a) Describe the type of service(s) performed by each company shown on
the organizational chart.
b) For any fuel supplied to the utility by any company shown on the
organizational chart, provide the information requested in question 3, if
not already supplied there.

9. a) Has your Company guaranteed the loans or assumed liability for financing of
another company, whether associated or not, that was involved during calendar
years 2004 or 2005 in any aspect of fuel supply, purchase, lease, production,
storage, transportation, transfer, or that owns fuel reserves or leases?
b) If the answer to a) above is yes, identify the other company(ies), the
services (if any) that were provided to the utility during each calendar
year 2004 and 2005, and the extent of the utility's financial commitment.

10. a) Did your Company carry on its books during calendar years 2004 or
2005, any assets6 relating to:
1) Fuel production (mines, preparation plants, gas or oil wells, refineries,
etc.),
2) Off-site fuel storage,
3) Fuel transportation (rail cars, barges, colliers, pipelines, etc.),
4) Fuel transfer facilities,
5) Fuel reserves, or
6) Fuel leases?
b). If the answer to a) above is yes, describe in detail the assets involved,
the amount of the investment in each such asset, and how each such asset is
being used.

1) For each asset identified in b)(1) above that your Company was

7

OMB #: 1902-0137, exp 6/30/07
Filing Date: September 15
depreciating during 2004 or 2005, identify the service life and salvage
value used in determining the asset's depreciation expense.

c) If the answer to a) above is yes, do each of the prices reported for each
contract in question 3 include full allocation of all costs attributable to
ownership of such assets?

1) If the answer to c)(1) above is no, i.e., the prices reported in question 3
do not include all costs, identify all additional cost elements, in cents per
million Btu, that should be included to obtain full prices for each contract.

11. Did your Company recover the costs of any emission allowances through the
wholesale FAC during 2004 or 2005?
If the answer is yes, identify the number of allowances and the total costs of the
allowances recovered through the wholesale FAC during each calendar year 2004
or 2005.
12. Identify the principal contact person for clarification and additional
information concerning the Company's fuel procurement (name, title, address,
telephone number and facsimile number).
13.
If during the 2004-2005 period the Company had any contracts or
agreements for the purchase of either energy or capacity with associated energy
from a PURPA qualifying facility (QF), under which all or any portion of the
purchase costs were passed through the wholesale FAC, identify separately for
each calendar year 2004 and 2005 the following:

a) the seller(s) of the electric power,
b. the amount of energy or capacity and associated energy purchased from each
seller,
c. the annual dollar amount of the fuel cost component passed through the
wholesale FAC applicable to the purchases from each seller, and the method
used to calculate the fuel cost component, and

d. all other costs associated with the purchases from each seller that were
passed through the wholesale FAC, and the annual dollar amounts for each. If
costs other than the actual identifiable fuel cost component of purchases from
QFs were recovered through the wholesale FAC, identify the document by
Commission cite where recovery of such costs was approved.
14.
If during the 2004-2005 period the Company had any contracts or
agreements for the purchase of energy and/or capacity from an Independent
Power Producer (IPP), identify separately for each calendar year 2004 and 2005
the following:

a. the seller(s) of the electric power,

8

OMB #: 1902-0137, exp 6/30/07
Filing Date: September 15
b. the amount of energy or capacity and associated energy purchased from each
seller,
c. the annual dollar amount of the fuel cost component passed through the
wholesale FAC applicable to the purchases from each seller, and the method
used to calculate the fuel cost component, and

d. all other costs associated with the purchases from each seller that were
passed through the wholesale FAC, and the annual dollar amounts for each.
15. Identify the principal contact person for clarification and additional
information concerning the Company's purchases of electric power (name, title,
address, telephone number, facsimile number and email address).

9

OMB #: 1902-0137, exp 6/30/07
Filing Date: September 15
APPENDIX A
GLOSSARY

• 18 CFR Part 101, Definition 5A states:

"Associated (affiliated) companies" means companies or persons that
directly or indirectly through one or more intermediaries, control, or are
controlled by, or are under common control with the account company.
Question 3 (m) Contract Type Descriptions:
1. Base Price Plus Escalation
Different components of the price escalate (or de-escalate) as a function of changing
economic conditions (indices).
2. Price Renegotiation
The price is renegotiated at predetermined intervals, usually one year. This type of
contract, frequently known as an EVERGREEN CONTRACT, may also contain provisions
for price adjustments between renegotiations.
3. Price Tied to Market
Price tied to the price of coal being sold in a particular market. Product and market
area are defined in the contract. Contract may contain a "Most Favored Nations"
clause, i.e., supplier will not sell to any utility at a price lower than yours is paying.
4. Cost-Plus Contract with a Fixed Fee Provision
Purchaser agrees to pay all producer's costs plus a management fee. Some contracts
provide for payment of both a management fee and a profit. This contract has a Fixed
Fee provision.
5. Cost-Plus Contract with an Incentive Fee Provision
Purchaser agrees to pay all producer's costs plus a management fee. Some contracts
provide for payment of both a management fee and a profit. This contract has an
Incentive Fee provision, i.e., a variable fee that is tied to various productivity and cost
reduction incentives.
6. Other (explain)
7. Fixed-Price Contract
Price is fixed over the life of the contract.
1
2

See 18 CFR 35.14.
See Appendix A for the definition of an associated company.

3. For coal identify the origin state, county, and Bureau of Mines district;

10

OMB #: 1902-0137, exp 6/30/07
Filing Date: September 15
For oil identify where the utility made the purchases, i.e., identify the refinery, port of
entry, tank farm, retailer, foreign country, power plant (oil is purchased on a delivered
basis), or other (describe);
For gas identify where the utility made the purchases, e.g., at the wellhead (show the
origin state, coastal area, or province (Canada)), from a pipeline (show the
interstate, intrastate, or local distribution pipeline company), or at the burnertip.
4. For coal identify the type of supplier as a mining company, broker, associate
company of the utility, or other (explain).
For oil identify the type of supplier as a refiner, broker, retailer, foreign oil company,
associate company of the utility, or other (explain).
For gas identify the type of supplier as a producer, broker, interstate pipeline
company, intrastate pipeline company, local distribution company, associate
company of the utility, or other (explain).
5. If the fuel is purchased on a delivered basis at the power plant(s), state, 'fuel is
purchased on a delivered basis', and no FOB origin price is required to be identified. If
the fuel is not purchased on a delivered basis:
For oil FOB origin is the price where the utility made the purchases, e.g., refinery,
port of entry, tank farm, retailer, foreign country, etc.;
For gas FOB origin is the price where the utility made the purchases, e.g., wellhead,
pipeline (interstate, intrastate, or local distribution company), etc.

For coal FOB origin is the price where the utility made the purchases. Identify
whether the FOB origin price is FOB rail tipple, FOB barge, FOB truck, FOB
mine, or other (explain).
6. Also include in response to this question all fuel related investments or liabilities
that the company has which were not described in questions 8 or 9 above.

11