Electric Utility Fuel-Procurement Practices and the Impact of Rate Reform Activities on Small Businesses

EMD-79-2: Published: Jan 19, 1979. Publicly Released: Jan 29, 1979.

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State utility commission oversight activities were reviewed with respect to electric utility fuel-procurement practices, the use of utility-owned coal mines, and the impact of various rate structures on small business electric rates.

From the review, it was concluded that: (1) more State oversight of utility fuel-procurement practices is needed; (2) small commercial customers generally pay higher electric rates than other customer classes; and (3) rate structure reforms have little impact on small business energy costs.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: GAO believed these findings indicate the need for State commissions to: (1) establish specific fuel-procurement policies and specific captive coal mine transfer pricing guidelines for electric utility companies to insure that fuel prices are reasonable and delivery shortages are justified; (2) establish definitive guidelines for auditing utility fuel-procurement practices; (3) conduct a more critical examination of utilities' cost-of-service studies to assess the validity of claims that commercial customers cause the higher-cost peak demands on the system; and (4) conduct rate reform impact studies to consider the effect revised rate structures will have on small commercial customers.

    Agency Affected:

 

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