N.Y. Comp. Codes R. & Regs. Tit. 16 §§ 720-6.5

Current through Register Vol. 46, No. 45, November 2, 2024

Section 720-6.5 - Gas cost adjustment clauses

(a) Definitions. The following definitions shall apply in connection with this section:

(1) Gas is natural gas distributed by a public utility to its customers without change or after mixing with other gas, and pipeline quality gas manufactured from liquified propane.

(2) Base cost of gas is the cost per Ccf, Mcf or therm which is included in stated tariff rates and established as the basis for computing the gas cost adjustment. Upon approval by the commission, the base cost of gas can be eliminated from the base tariff rates.

(3) Fees are amounts paid to brokers, agents, individuals or clearinghouses, which are directly associated with identifiable gas supply purchases. To be included in the average cost of gas computation, such fees are subject to the following conditions:

(i) such fees must provide a net reduction in the delivered cost to the public utility on an avoided cost basis, i.e., the combination of gas costs, delivery costs, and fee payments must be less than the cost of the supply that would have been taken but for said purchase;

(ii) the payment may not be made to an affiliate of the public utility, nor may it be for gas ultimately purchased from an affiliate;

(iii) no costs attributable to public utility personnel, (e.g., wages or expenses) may be included in such fee payment;

(iv) the fee payment must be related to a specific gas volume and may not be of a general nature, such as an expense for performing a survey or a start-up expense for a broker, agent, individual or clearinghouse;

(v) lump sum fees must be recovered over the estimated quantities of gas with which such fees are associated;

(vi) the utility must fully detail and justify all such costs in annual gas cost recovery reconciliations and in rate case presentations as part of the review of gas purchasing practices; and

(vii) in conjunction with the first claim for recovery of each fee through a gas cost adjustment, work papers supporting such filings must clearly set forth the new fee and include a statement that the gas supply was not available to the public utility without said payment.

(4) Risk management costs are costs associated with transactions that are intended to reduce price volatility or reduce overall costs to customers. These costs include transaction costs, and gains and losses associated with transactions made in commodities exchanges and with other risk management entities.

(b) Statements. Where provisions are made in gas schedules for automatic adjustment of rates because of changes in the cost of gas, gas corporations or municipalities may elect to file statements to their schedules in lieu of amendments. Such statements shall not be part of the schedule and will not bear a leaf designation. Each statement shall be numbered consecutively. A copy of the effective statement shall be kept available with each schedule to which it applies and may be attached to or bound with the schedule. If bound with the schedule, statements shall follow all leaves and supplements which are part of the schedule. Every such statement shall be filed not less than three days prior to the date on which it is proposed to be effective, except that a new statement may be filed on one day's notice to become effective not more than five days after the effective date of the initial statement if the replacement of cost estimates in the initial statement with actual figures results in a change in the average cost of gas of more than five percent. Each statement shall contain:

(1) an identification of the schedules and service classifications to which they apply;

(2) the date when the increase or decrease in rates shall become effective and the period it will remain in effect;

(3) the present average cost to the public utility of gas purchased to serve customers subject to the gas adjustment;

(4) the date at which, and the period for which, the average was determined;

(5)

(i) the base cost of gas (stated separately, when more than one base is used in the schedule); and

(ii) if the gas costs are unbundled, the base cost of gas need not be shown;

(6) the amount per unit of consumption affected;

(7) a summary of refunds or surcharges to be applied to the adjustment;

(8) the net amount per unit of consumption affected; and

(9) the weather normalization adjustment factor for each billing cycle for the prior month.

(c) Application of charge. The gas adjustment charge shall be applied to bills by prorating the gas adjustments in effect during the period of service based on the number of days each gas adjustment is in effect during each billing period, and calculating the average cost of gas using transporter, storage provider, and supplier rates estimated to be in effect on the effective date of the gas adjustment (pursuant to subparagraph [d][1][ii] of this section).

(d) Average cost of gas. The average cost of gas shall be computed as follows:

(1) by applying the fixed rates and charges of the transporters, storage providers, and suppliers to the billing determinants associated with pipeline capacity, storage capacity, and supplier reservation charges, and dividing by, either the weather normalized quantities of gas taken for delivery to the utility's own sales customers during the 12 calendar months immediately preceding the computation date, or the forecast quantities of gas to be taken for delivery to the utility's own sales customers during the 12 calendar months ending the following August 31st. Fixed costs assigned to non-sales customers should be excluded;

(2) by applying the variable rates and charges of the transporters, storage providers, and suppliers to the billing determinants associated with the transportation, storage, and gas supply, for the forecasted weather normalized quantities of gas to be taken for delivery to the utility's own customers during the month in which the gas adjustment will be in effect;

(3) by applying the average unit cost of liquefied propane in storage at the date of computation to the quantities of said product used to serve a utility's own customers during the prior month;

(4) by applying the average unit cost of gas in storage at the date of computation to the quantities of gas estimated to be withdrawn from storage for a utility's own customers during the month in which gas adjustment will be in effect;

(5) the total average cost of gas equals the amount computed in paragraph (1) of this subdivision plus the amounts computed in paragraphs (2)-(4) of this subdivision divided by the forecasted weather normalized quantities of gas to be taken for delivery to the utility's own customers during the month in which the gas adjustment will be in effect. The total average cost of gas shall be adjusted to reflect credits from the released capacity, storage services, and sales and transportation of gas provided to interruptible and off-system customers;

(6) risk management costs may be included in paragraphs (1)-(4) of this subdivision; and

(7) supporting data and workpapers underlying gas cost adjustments and the historical cost of purchased gas, in the format set forth in Appendix 7-H of this Title so as to clearly identify sources of gas and related costs as delivered to the utility, shall be filed with the commission and accompany the statement. Supporting documents may be computer generated.

(e) Factor of adjustment. The factor of adjustment shall be determined in a rate proceeding. At the conclusion of each succeeding rate proceeding, a new factor of adjustment will become effective and continue in effect until a new factor is established in the next rate proceeding.

(f) Refunds. Each utility shall file with the commission, and include in its tariff schedule, a plan to flow through to consumers credits received from suppliers due to rate settlements or retroactive rate reductions. Refunds shall include interest, calculated at the rate prescribed by the commission, on the unrefunded balances. Where exceptional circumstances warrant, the utility may petition the commission for waiver of its filed refund plan.

(g) Annual reconciliation. Actual gas cost recoveries shall be reconciled with actual gas expenses each year, and a surcharge or refund to recover gas adjustment under-recoveries or refund gas adjustment over-collections shall be computed as follows:

(1) Taking the cost of gas, adjusted for supplier refunds, and liquefied propane consumed, as recorded on its books during the determination period, adjusting that cost to reflect a level of purchased gas commensurate with actual sales and the fixed factor of adjustment as determined in the preceding rate proceeding, and subtracting therefrom an amount equal to:

(i) the base cost of gas, as defined in paragraph (a)(2) of this section, multiplied by the quantities of gas purchased;

(ii) gas adjustment revenues recorded during the determination period, adjusted to eliminate associated revenue tax recoveries;

(iii) costs recorded during the determination period assignable to gas sold to customers not subject to gas cost adjustments; and

(iv)

(a) the previous year's over-collection, including interest, to the extent not refunded; or

(b) adding the previous year's under-collection, including interest, to the extent not recovered.

(2) The amount derived in paragraph (1) of this subdivision shall be divided by the quantities of gas to be sold by the utility to its customers during the surcharge/refund period.

(3) Appropriate adjustment shall be made to eliminate the effect of net credits which have been included in the gas adjustment due to interruptible or other flexibly priced sales.

(4) Surcharge or refund amounts shall bear interest, at a rate prescribed by the commission, on unamortized balances.

(5) The determination period to be used in the computation of the surcharge or refund shall be the 12 months ended August 31st of each year. The computation shall be filed with the commission on or before October 15th. The resulting surcharge or refund shall be effective with the first January billing cycle date.

(6) Interim refunds or surcharges during the 12-month period ended August 31st will be permitted for the purpose of preventing large over-collection or under-collection balances from accruing at August 31st. The methodology used to determine the amount of over-collection or under-collection and the method of refund or surcharge shall be determined by the utility and filed with the commission.

(h) Gas adjustments based on load characteristics. Utilities are permitted to calculate gas adjustments for various service classifications, sub-classes, customer groups, or customers based on load characteristics. Implementation of such gas adjustments must be approved by the commission.

(i) Alternative gas cost pricing. Utilities are permitted to offer customers alternative pricing mechanisms other than those specified above. Risk management costs and other costs associated with alternative pricing mechanisms shall be excluded from the gas adjustment. Implementation of such alternative pricing mechanisms must be approved by the commission.

N.Y. Comp. Codes R. & Regs. Tit. 16 §§ 720-6.5