Under a PBR tariff formula, flow-through (or pass-through) elements can be incorporated to account for uncontrollable costs incurred by the utility that arise during the normal course of business. In most cases, expense items are estimated with the expectation of being fixed throughout the tariff period, subject to true-up procedures. But there are some circumstances where one or more expense items are provided pass-through treatment. This is appropriate when the expense item has three characteristics:
