WGL Intends to Bill Retail Suppliers for Costs Disallowed from Inclusion in Sales Service PGA

Washington Gas Light intends to bill competitive service providers (CSPs) for the "excess" gas costs that will be calculated by the Maryland PSC and excluded from the sales service rate due to WGL's decision to allow cash-outs by retail suppliers for imbalances, rather than applying a volumetric adjustment to suppliers' deliveries (9509(d)).

As only reported by Matters, the PSC recently held that the use of a cash-out was, "outside the provisions of [the WGL] tariff," and remanded the case to the hearing examiner division to determine the costs which should be disallowed from being collected from sales service customers under the Purchased Gas Adjustment (PGA) mechanism.

Ses 9/9 story for background on the proceeding and discussion of the PSC's order

The at-issue cash-outs were provided to retail suppliers for the period January through March 2009 to remedy retail supplier over-deliveries resulting from an error in the model that determined the suppliers' daily delivery requirements for the winter 2008-2009. The cash-outs to suppliers resulted in an increase in WGL gas costs which could not be adjusted for in summer rates without undue rate shock to customers.

WGL has sought reconsideration of the PSC's determination which excluded the higher gas costs resulting from cash-outs from being included in the PGA. The PSC's order was largely premised on the Commission's finding that a cash-out was not permitted under the tariff, and thus such costs should not be borne by sales service customers. In its rehearing request, WGL again argued that the use of a cash-out is permissible under its tariff, as the tariff only states that WGL "may" apply a volumetric adjustment to a supplier's delivery requirements to address imbalances.

However, if the PSC does ultimately disallow costs under the PGA, WGL said that such disallowed costs, "should not be absorbed by the Company."

"As the public utility, the Company should not have to absorb gas costs for CSPs due to the unavailability of the software program used to estimate the Daily Required Volume for each CSP, and due further to the Company's good faith interpretation of its tariff," WGL said.

"Instead, the Company intends to bill the CSPs for the 'excess' gas costs that will be calculated in the next phase of this proceeding," WGL reported.