National Fuel Gas Distribution Proposes Rate for Unbundled, Bypassable Gas Procurement Charge

National Fuel Gas Distribution Corporation has filed with the Pennsylvania PUC a tariff to unbundle certain gas procurement charges from distribution rates, for inclusion in the bypassable Price to Compare.

Costs included in the new bypassable Gas Procurement Charge (GPC) are natural gas procurement costs including natural gas supply service, acquisition, and management costs including natural gas supply bidding, contracting, hedging, credit, risk management costs, and working capital, plus administrative, legal, regulatory, and general expenses related to those natural gas procurement activities, excluding those related to the administration of firm storage and transportation capacity.

Work activities related to storage capacity and transportation capacity have been excluded from the analysis as per the direction of the PUC regulations. However, the working capital associated with the Storage Inventory has been included since Distribution holds storage inventory for retail sales customers and releases storage capacity to the Natural Gas Supplier (NGS) to supply inventory for the NGS's Choice customers.

In testimony, National Fuel Gas Distribution said that the total Gas Procurement Charge (GPC) is about $1.99 million. Dividing this total by the expected sales volumes of 16.6 million Mcf calculates a GPC rate of $0.1196/Mcf, National Fuel Gas Distribution said. The volumes are forecasted retail sales volumes assuming an additional migration to NGS services of approximately 18% of current sales volumes.

The Gas Procurement Charge as listed in an updated tariff, however, is $0.1177/Mcf.

National Fuel Gas Distribution said that the 18% additional volumetric migration factor noted above is based on Distribution's New York Division current customer migration percentages.

"With the establishment of the GPC, Distribution's Pennsylvania Division will generally have a similar program structure as Distribution's New York Division. Given the general similarities, it is reasonable to assume the Pennsylvania Division can achieve an overall customer migration from sales service to transportation service similar to that of the New York Division which is 21%. The additional volumetric migration factor of 18% equates to the proportion of current sales volume that will migrate to transportation services in the Pennsylvania Division as a result of overall participation in Choice services in Pennsylvania being comparable to current New York participation rates. In addition, the subsidiaries are similar in that both have POR programs. Distribution believes that a similar migration percentage can be achieved in the Pennsylvania Division," National Fuel Gas Distribution said.

"However, if new laws, rulemakings or orders are instituted after this filing is accepted that will materially alter the migration, the Company reserves the right to propose modifications to the filing to adjust the migration assumptions," National Fuel Gas Distribution said.