Columbia Pa. Settlement Would Issue WACOG-Related Credit to Customers Without Distorting Price to Compare

A settlement among several parties would approve Columbia Gas of Pennsylvania's petition to convert its accounting methodology for gas storage inventory from an annual Last-in, First-out (LIFO) methodology to a weighted average cost of gas (WACOG) methodology with several clarifications (P-2010-2209925).

The change would be retroactive to January 1, 2011. The application was first reported in Matters, (11/17).

Under the settlement, Columbia will provide a credit to customers equal to the projected difference of $35.7 million between Purchased Gas Costs (PGC) using a LIFO method and PGC costs using the WACOG method for the 12 months ending September 30, 2011. The credit would be paid as soon as possible after a Commission order through September 2011.

The bill credit would be applied in the same manner as the "migration rider" in Columbia's tariff. In other words, sales customers that switch to choice service, or that have switched within the past 12 months, will receive the credit for up to 12 months following their switch (through the September 2011 expiration). Choice customers that switch or have switched back to sales service will not be eligible to receive the credit for up to 12 months following their switch.

"In this fashion, the WACOG bill credit will not distort the Price to Compare," settling parties said.

If the credit is applied beginning in March 2011, it would be $3.2932/Mcf per month.

Switching to the WACOG methodology is meant to reduce PGC volatility, by aligning the PGC and storage pricing years, and by eliminating storage re-pricing.

Settling parties include Columbia Gas, the Office of Trial Staff, Office of Consumer Advocate, and Office of Small Business Advocate.