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Pa. PUC Approves Settlements Requiring Direct Assignment of Capacity at UGI CPG,
PNG
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October 15, 2010
The Pennsylvania PUC approved settlements in the
1307(f) rate investigations of UGI Central Penn Gas (R-
Vice Chairman Tyrone Christy issued a statement highlighting the capacity release provisions which, "serve to correct an inappropriate shifting of costs from Choice customers to purchased gas cost customers."
As only reported in Matters (8/24/10), the settlement at UGI Penn Natural Gas would establish four direct assignment options for the period December 1, 2010 trough October 31, 2011, and the period November 1, 2011 through October 31, 2012.
Two of these options are the two methods originally proposed by PNG: (1) a monthly release of pipeline capacity in an amount equivalent to the average projected delivery obligation of the Choice Supplier during the month of January assuming normal weather (the January Normal Daily Delivery Requirement, NDDR); or (2) a release of pipeline capacity equal to 35% of the January NDDR, combined with bundled baseload city gate sales of gas equal to 65% of the January NDDR, sold ratable each day of the month, at prices reflecting average published INSIDE FERC First of Month gas prices for Transco Zone 6, plus variable transportation and storage charges associated with a specified delivery path.
The two additional direct assignment options for these periods would be similar in nature to the two methods described above, except that they would be based on peak day, rather than January NDDR, requirements.
For the twelve month period commencing November 1, 2012 and each twelve month period thereafter, suppliers would have the option of (1) a release of pipeline capacity based on the peak day requirements of a Choice Supplier's Choice customers, or (2) a release of capacity equal to 35% of such peak day requirements coupled with a bundled city gate sale equal to 65% of the Daily Delivery Requirement of the Choice Customers served by the Choice Supplier during the months of November through March priced at the average of a published index price during the months of April through October plus variable transportation and storage costs associated with a specified delivery path.
Notably, all capacity releases would be at a price equal to the projected weighted
average demand cost of all transportation, storage and peaking assets held to serve
core market customers. The mandatory direct assignment would apply to Rate RT (General
Service -
Gateway Energy Services had moved to intervene in the PNG case after the settlement had been filed, noting that, "PNG's proposed Weighted Average Cost Of Capacity approach would allow PNG to charge all suppliers for natural gas storage even though only suppliers covered under bulk sales programs would actually have access to that storage."
"Such a system would put the utility and some suppliers at a competitive advantage in the marketplace and therefore undermine energy choice in the Commonwealth," Gateway argued
At UGI Central Penn Gas, the approved settlement directs CPG to propose mandatory direct assignment rules in its 2011 Purchased Gas Cost proceeding, under a program which (a) retains its current methodology through October 30, 2012 and (b) is consistent with the UGI Penn Natural Gas rules, with appropriate modifications for the index price, storage percentage and delivery path, for annual periods beginning November 1, 2012 and thereafter (Only in Matters, 8/25/10). Accordingly, effective November 1, 2012, CPG is to base mandatory direct assignment options on each Choice Supplier's peak day requirements, as such will be the requirement at PNG.
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