Settlement to Set Peoples Natural Gas's Unbundled Gas Procurement Charge

A settlement in Peoples Natural Gas Company's Pennsylvania rate case would establish the level of the new, bypassable Gas Procurement Charge (R-2012-2285985).

The Gas Procurement Charge reflects newly unbundled gas supply costs formerly included in distribution rates. The bypassable Gas Procurement Charge shall be $0.09/Mcf under the settlement.

Additionally, the settlement updates the Merchant Function Charges, applicable to bypassable commodity costs, to 3.55% for residential customers, and 0.77% for commercial and industrial customers. These same factors shall serve as the Purchase of Receivables uncollectibles discount factors.

The settlement would also reduce the POR administrative adder to 0.0417% from the current 0.1086%. The adder will be eliminated once actual costs of establishing the POR program are recovered.

Any shortfall in recovery of the uncollectible expenses and administrative costs of the POR program will not be recovered from sales customers.

The stipulation would reduce Peoples' existing pooling fees applicable to NP-1 and P-1 pools from $0.08/Mcf to $0.0436/Mcf. Additionally, the settlement would cease the exemption from the pooling fee currently granted to residential customers.

Furthermore, the settlement revises Peoples' storage rules, and adopts a more flexible approach than originally proposed. In a statement of support, retail suppliers said that the changes to the rules for rate schedules ST and ST-SW will ensure that Peoples will have some control over injections but eliminates the onerous ban on winter-time injections for storage services.

"These modifications are a reasonable compromise from what the Company had initially proposed, which would have prohibited suppliers from filling storage in the winter months and which would have greatly limited supplier flexibility in non-normal weather situations," Dominion Retail and Interstate Gas Supply said. The two suppliers called the settlement storage terms "favorable" to suppliers, "by allowing them the latitude to continue to make injections during the winter months so long as there is no system-wide emergency."