(a) Availability.--The commission shall promulgate rules and regulations concerning the rates, terms, conditions and availability of cogeneration in this Commonwealth. The commission shall require that utility rates to the public reflect the costs and savings to the utility from cogeneration, including, but not limited to, the costs incurred by utilities under contracts with nonutility generating unit project developers for the purchase of electric capacity or energy, or both; the costs recoverable under subsection (b) to buy out and cancel unfinished nonutility generating unit projects by mutual agreement of the project developer and the public utility; and the costs prudently incurred by utilities under a voluntary buyout, buydown or other restructured arrangement which are just and reasonable and which reduce the cost to customers of nonutility generating unit projects.

(b) Recovery of cancellation costs of nonutility generating unit projects.--A nonutility generating unit project is a generating unit project that is not owned by a public utility. If the construction of a nonutility generating unit project for which a public utility has a contract, whether entered into voluntarily or pursuant to commission order, to purchase project energy or project capacity and energy is canceled by mutual agreement of the project developer and the public utility prior to the unit's completion and operation, the public utility may recover all costs to be paid to the project developer and all costs directly related thereto which are prudently incurred as a result of such cancellation. The burden of proof to show that any costs claimed were prudently incurred shall be on the public utility. In reviewing a claim for such costs:

(1) the commission shall not disallow any portion solely on the basis that it constitutes an amount greater than actual development expenditures and all costs related thereto; and

(2) the commission shall consider the amount of the claim compared to the utility's total estimated costs of obligations under the contract.

(July 10, 1986, P.L.1238, No.114, eff. imd.; July 2, 1996, P.L.542, No.94, eff. imd.)

1996 Amendment. See the preamble and section 2 of Act 94 in the appendix to this title for special provisions relating to legislative findings and construction of act.

Cross References. Section 527 is referred to in sections 2803, 2804, 2808 of this title.