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	What is a Deferred Energy Rate Case
	At least once a year, an electric utility will make a deferred energy rate application with the Public Utilities Commission (PUC). The questions and answers below provide a basic background on deferred energy rate cases.
	What is reviewed in a deferred energy rate case?
	The case involves a review of the utility’s fuel and purchased power costs. All other costs for the utility are reviewed in general rate cases.
	What are fuel and purchased power costs?
	Fuel costs are the utility’s cost of buying coal and natural gas to generate electricity from its power plants. Purchased power costs are the utility’s cost of buying electricity in the wholesale market.
	Are utilities allowed to profit on fuel and purchased power costs?
	No. The allowable profit for a utility is part of a general rate case. Fuel and purchased power costs are passed on to you without a profit to the utility.
	How can you be assured the utility doesn’t profit on fuel and purchased power costs?
	The utility is required to establish an account, called the deferred account, to record the difference between its actual costs for fuel and purchased power and its revenues from fuel and purchased power rates. If costs exceed revenues, ratepayers owe the utility money. If revenues exceed costs, the utility owes ratepayers money. The annual deferred energy filing is to settle the account.
	Does the utility recover all of its fuel and purchased power costs from ratepayers?
	Not necessarily. The law requires the PUC to disallow recovery of any fuel and purchased power costs that it determines were imprudent. The deferred account is adjusted to reflect any disallowance by the PUC.
	How is the deferred rate for fuel and purchased power costs determined?
	The utility divides the adjusted number in the deferred account by the total number of kilowatthours sold during the past year to establish the deferred energy rate per kilowatt-hour. This rate is called the Deferred Energy Accounting Adjustment or DEAA.
	Are any other rates determined in deferred energy rate cases?
	Yes. The utility seeks approval of a new rate for ongoing fuel and purchased power costs. This rate is called the Base Tariff Energy Rate or BTER. The PUC will review the proposed BTER to make sure it is reasonable.
	How is the Base Tariff Energy Rate set?
	The utility projects its total costs for fuel and purchased power for the upcoming year. That number is divided by the total number of kilowatt-hours sold during the past year to establish the BTER per kilowatt-hour.
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