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Pa. Gas Utility To Examine Charges Applied To Choice Suppliers For Released Capacity, May Propose Changes

June 27, 2018

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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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Philadelphia Gas Works has agreed to examine in next year's Gas Costs Rates (GCR) proceeding the charges applicable to Choice suppliers for released capacity, after the Office of Consumer Advocate recommended changes to the charge.

A settlement among PGW, OCA, and the PUC's Bureau of Investigation and Enforcement (I&E) addressed the issue. An ALJ has recommended approval of the settlement without modification

Under the settlement, PGW agrees to include a proposal in next year’s 2019-2020 GCR proceeding to charge Choice suppliers for released capacity based on PGW’s weighted average cost of Tetco and Transco capacity, or to demonstrate why such an approach is not appropriate for PGW.

Parties are free to support, oppose, or take no position on PGW’s proposal.

I&E noted that this capacity release issue was developed through the testimony of an OCA witness, who indicated that the rates assessed to Choice suppliers were less than the weighted average cost that PGW pays for Tetco and Transco FT capacity. OCA's witness said that Choice suppliers should not pay less for Tetco and Transco FT capacity than PGW’s GCR customers pay, and that, instead, Choice suppliers should be assessed for released capacity based upon PGW’s weighted average cost for that capacity.

In response, a PGW witness said that the rates that PGW charges to Choice suppliers are reasonable because they take into account the maximum rates on each of the interstate pipelines that govern how much PGW can charge for the capacity that it has released to the suppliers. Additionally, as described by the ALJ, I&E asserted that PGW only charges suppliers for the capacity that is released to them, and the weighted average cost of Tetco and Transco includes costs for capacity and therefore would not be appropriate.

Although PGW said that its current charges to Choice suppliers are reasonable because they are the maximum rates on each of the interstate pipelines that PGW can charge for the capacity that PGW has released to the suppliers, PGW has agreed to further examine the concerns raised by OCA under the settlement

Under another provision of the settlement, PGW agrees to present an analysis in next year’s 2019-2020 GCR proceeding of the impact of its interruptible transportation (IT) reconciliation procedures for the period September 2017 – August 2018. Parties are free to propose changes to the company’s existing IT reconciliation procedures in next year’s proceeding.

During the case, an OCA witness had recommended modifications to PGW’s current monthly imbalance reconciliation procedures for interruptible transportation service applicable for monthly deliveries in excess of usage by up to 3.5%.

Under the current imbalance reconciliation rules, OCA contends that deliveries in excess of usage by 3.5% or less are purchased by PGW at an average of daily Tetco Zone M-3 and Transco Zone 6 Non-New York index prices during the month. OCA said that in January 2018, the application of these procedures resulted in PGW purchasing gas at a price of $15.04 per Dth when alternative supplies were available in the $3.00 to $4.00 per Dth range.

In rebuttal testimony, a PGW witness presented an analysis that evaluated the period from September 2016, through August 2017, but did not include the January 2018, time period. PGW contends that its analysis to date has shown that the current methodology has been, and continues to be, reasonable and PGW does not, at this time, support revising these procedures. As part of the settlement, however, PGW agrees to provide OCA with the specified data and the parties retain the right to propose changes in the context of next year’s proceeding.

R-2018-2645938

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