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Settlement In Utility Merger Proceeding Requires Utility To Propose Expansion Of Purchase Of Receivables (POR) Program

Stipulation Addresses Other Retail Choice Issues As Well

August 15, 2018

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Copyright 2010-17
Reporting by Paul Ring •

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A settlement among parties in a Pennsylvania PUC proceeding addressing the proposed merger of UGI's three Pennsylvania natural gas utilities into a single utility -- with distinct rate zones and tariffs -- addresses various retail choice issues, including requiring UGI to propose expansion of its purchase of receivables (POR) program to all three territories

As previously reported, UGI proposes to merge UGI Utilities - Gas Division, UGI Central Penn Gas, and UGI Penn Natural Gas into a single utility. Initially, such utility would have three distinct rate zones as follows:

• Penn Natural Gas Would become UGI North

• Central Penn Gas Would become UGI Central

• UGI Utilities - Gas Division would become UGI South

However, as further discussed below, the settlement provides for a process to consider rate consolidation in the future.

Currently, only UGI Utilities - Gas Division (UGI South) has a purchase of receivables program.

Under the settlement, by no later than October 30, 2018, UGI shall propose, as part of one or more limited purpose tariff filing(s), to expand the pre-merger UGI Gas Purchase of Receivable program to the UGI Central and UGI North rate districts.

Also under the settlement, UGI shall propose, by no later than October 30, 2018, to modify the financial surety requirements applicable to Natural Gas Suppliers on the consolidated UGI Gas distribution system to reflect 1) a minimum surety level of $50,000; or 2) if higher, the sum of the surety level requirements calculated on a customer basis in accordance with the Gas Choice Supplier Tariffs of the UGI North, UGI South and UGI Central rate districts.

The settlement provides that, on or before September 30, 2018, UGI, the retail suppliers (NGS Parties) and other interested parties will meet and initiate the collaborative process for the purpose of developing an initial strawman uniform gas choice and non-choice transportation programs proposal. The following issues will be addressed:

(a) Establishing uniformity of rules in each of the consolidated UGI Gas Division rate districts governing choice and, separately, non-choice transportation programs.

(b) Scheduled delivery confirmation process and communication.

(c) Imbalance Cash-out provisions.

(d) Cost recovery associated with program rule changes and additional facilities or equipment, including but not limited to recovery of the costs of information system modification necessitated by the program changes.

In conjunction with such collaborative process, no later than February 28, 2019, or such later date as the parties to the collaborative may agree, either as part of a base rate proceeding or as a limited purpose tariff filing before the Commission, UGI shall propose uniform rules governing the gas choice and non-gas choice transportation programs throughout the UGI Gas service territory. To the extent that parties do not agree with any provisions, those parties shall retain all rights to challenge the tariff filing.

Under the settlement, UGI will support the filing of a license amendment or a petition for declaratory ruling, filed by one or more Natural Gas Suppliers (NGS) licensed to provide competitive retail natural gas supply services in one or more of UGI Gas, UGI CPG, and UGI PNG service territories in existence prior to the merger, to extend the scope of their existing licenses into the entire UGI service territory post-merger, to the extent that such filing is limited in scope to the geographic scope of a NGS license on the UGI Gas system.

Under the settlement, UGI commits to implementing any order issued by the Commission at Dockets L-2016-2577413 (accelerated NGS switching) and L-2017-2619223 (capacity assignment), that require NGDCs to switch customers more rapidly than is done presently, within the time frames established in those proceedings.

The settlement also provides that, in its first base rate case post-merger, UGI shall be permitted to include a proposal to create uniform rates for the three UGI Gas rate districts, inclusive of base rates, PGC (purchased gas cost / supply) rates, and other surcharges, which shall not be opposed on the basis that such proposal should be made in a PGC rate or other type of proceeding. All parties reserve their right to take positions on revenue requirement, cost of service, rate structure, rate design, or other relevant ratemaking issues.

UGI will also be required to file in such rate case separate revenue requirement models and cost allocation studies on a consistent basis for each rate district

The settlement was signed by UGI, the PUC's Bureau of Investigation and Enforcement, the Office of Consumer Advocate ("OCA"), the Office of Small Business Advocate ("OSBA"), and various retail suppliers

Docket A-2018-3000381

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