DR 98-173
Keene Gas Corporation
1998/1999 Winter Cost of Gas Adjustment
Order Approving the Cost of Gas Adjustment
O R D E R N O. 23,055
October 30, 1998
APPEARANCES: John F. DiBernardo for Keene Gas
Corporation; Ransmeier & Spellman, Professional Corporation
by
Dom S. D'Ambruoso, Esq. for New Hampshire Gas Corporation;
Michelle A. Caraway and Stephen P. Frink for the Staff of
the New
Hampshire Public Utilities Commission.
I. PROCEDURAL HISTORY
On October 1, 1998, Keene Gas Corporation (Keene
Gas),
a public utility engaged in the business of distributing gas
to
approximately 1,000 customers in Keene, New Hampshire,
filed with the New Hampshire Public Utilities Commission
(Commission) its Cost of Gas Adjustment (CGA) for the period
November 1, 1998 through April 30, 1999 for effect November
1,
1998. Keene Gas's filing included the direct testimony and
supporting attachments of John F. DiBernardo, ex-Assistant
General Manager working on an as needed basis.
On October 1, 1998, Steven R. Adams, New York
State
Electric & Gas Corporation Manager of Gas Pricing,
Regulation &
Strategy, filed testimony on behalf of New Hampshire Gas
Corporation (NHGC), related to Keene Gas's 1998/1999 Winter
CGA.
NHGC will acquire Keene Gas on November 1, 1998 pursuant to
Commission Order 23,017.
An Order of Notice was issued on October 1, 1998
setting the date of the hearing for October 23, 1998 at
10:00
a.m. at the Commission's office in Concord, New Hampshire.
A duly noticed hearing on the merits was held at
the
Commission on October 23, 1998. At the hearing, Mr.
D'Ambruoso
made a motion to intervene on behalf of NHGC, which was
granted.
Other than NHGC and the Office of Consumer Advocate (OCA),
which
is a statutorily recognized intervenor, there were no other
intervenors.
II. POSITIONS OF THE PARTIES AND STAFF
Keene Gas Corporation
Keene Gas witness John F. DiBernardo testified at
the
hearing and explained: a) the calculation of the CGA and its
impact on customer bills; b) the primary reason for the
reduction
in the proposed rate; and c) elimination of the trigger
mechanism.
A. Calculation and Rate Impact of the Proposed CGA
The proposed 1998/1999 Winter CGA credit of
$0.0583 per
therm was calculated by reducing the anticipated cost of gas
of
$365,705 by the prior period over collection of $78,976 and
related interest of $865, dividing the resulting anticipated
costs of $285,864 by projected therm sales of 787,388 to
arrive
at a per unit cost of gas of $0.3631 per therm, and then
deducting the base unit cost of gas of $0.4214 per therm.
Keene Gas's proposed 1998/1999 Winter CGA credit
of
$0.0583 per therm represents a decrease of $0.1413 per therm
from
the 1997/1998 Winter CGA charge of $0.0830 per therm.
The proposed CGA rate of ($0.0583) per therm will
reduce an average residential heating customer's monthly gas
bill
by approximately $10, or 13 percent.
B. Factors Contributing to the Decreased CGA
Mr. DiBernardo testified that the primary reason
for
the significant decrease in the proposed CGA per therm price
compared to last winter's rate can be attributed primarily
to the
substantial prior period overcollection to be returned to
customers this winter and, to a lesser extent, lower propane
costs.
Mr. DiBernardo stated that the overcollection
resulted
from the much warmer than normal winter experience last
year.
According to Keene Gas records, the 1997/1998 winter was the
warmest winter in fifteen years. The 1997/1998 winter
period gas
usage was significantly lower than anticipated and propane
prices
dropped, resulting in an abnormally large overcollection.
C. Elimination of the Trigger Mechanism
The "trigger mechanism" was implemented in 1985
and
requires Keene Gas to file a revised CGA if the actual and
projected revenues and costs deviate by 10 percent or
greater.
The trigger mechanism was designed to prevent the carry
forward
of substantial over or under recoveries from one CGA period
to
the next as was experienced by Keene Gas.
Mr. DiBernardo stated that monthly adjustments
should
ensure that the ten percent deviation that the trigger
mechanism
stipulated should not be reached. If a large deviation
were
ever to develop, a revised CGA would be filed.
NHGC
Mr. Steven R. Adams testified that NHGC will
acquire
Keene Gas November 1, 1998, as approved by NHPUC Order
23,017
(September 14, 1998), and that he had reviewed the Keene Gas
CGA
filing and that Mr. DiBernardo's testimony and exhibits were
acceptable to NHGC.
NHGC agreed to adopt the monthly adjustment
mechanism
in the Settlement approved in the above referenced Order,
and Mr.
Adams testified that with implementation of the monthly
adjustment mechanism there would no longer be a practical
need
for the trigger mechanism, and that NHGC concurred with the
suggestion made by Staff that the trigger mechanism be
eliminated.
Staff
Staff stated that after a review of the filing and
subsequent discovery, Staff believes that the proposed
1998/1999
Winter CGA credit of $0.0583 per therm is reasonable and
should
be approved.
Staff recommended the elimination of the trigger
mechanism, stating that it is Staff's belief that the tools
are
in place to effectively prevent large over or under
recoveries.
Staff did state that if a material over or under collection
were
projected, it would expect a revised CGA filing.
OCA
While the OCA was unable to attend the hearing,
the OCA
asked Staff to represent its support for the elimination of
the
trigger mechanism based on the above stated reasons.
III. REPORT OF THE HEARINGS EXAMINER
The Hearing Examiner reviewed the filing and supporting
testimony presented at the October 23, 1998 hearing and
recommended approval of the 1998/1999 Winter CGA for Keene
Gas,
and its successor, NHGC, of a credit of $0.0583 per therm
and
elimination of the "trigger mechanism."
III. COMMISSION ANALYSIS
We find that the projected costs, sales and
adjustments
to the CGA filing are consistent with those approved by the
Commission in past CGAs. We find that Keene Gas's proposed
CGA
credit of $0.0583 per therm, which is a decrease from the
1997/1998 Winter CGA, is just and reasonable and in the
public
good and, accordingly, approve the proposed rate.
With the purchase of Keene Gas by NHGC, as
approved by
the Commission, the NHGC tariff that allows for monthly CGA
adjustments in response to projected over or under
recoveries
will be in effect for the 1998/1999 winter period. With the
implementation of the new mechanism, it is our belief that
the
10% trigger mechanism is no longer needed. Accordingly, we
approve the elimination of the trigger mechanism as proposed
by
Staff and recommended by the Hearings Examiner.
Based upon the foregoing, it is hereby
ORDERED, that NHGC's Original Page 24, NHPUC No. 1
-
Gas tariff of NHGC providing for a winter CGA credit of
$0.0583
per therm for the period November 1, 1998 through April 30,
1999,
is approved, effective for bills rendered on or after
November 1,
1998; and it is
FURTHER ORDERED, that NHGC may adjust the approved CGA
rate of ($0.0583) per therm upward or downward monthly based
on
NHGC's calculation of the projected over or under collection
for
the period, but the cumulative adjustments shall not exceed
ten
percent, or $0.0363, of the approved unit cost of gas of
$0.3631
per therm; and it is
FURTHER ORDERED, that NHGC will provide the
Commission
with its monthly calculation of the projected over or under
calculation, along with the resulting revised CGA rate for
the
subsequent month. NHGC shall include a revised tariff page
24 -
Calculation of Cost of Gas Adjustment and revised rate
schedules
if NHGC elects to adjust the CGA rate; and it is
FURTHER ORDERED, that the over or under collection
shall accrue interest at the Prime Rate reported in the Wall
Street Journal. The rate is to be adjusted each quarter
using
the rate reported on the first date of the month preceding
the
first month of the quarter; and it is
FURTHER ORDERED, that NHGC shall file properly
annotated tariff pages in compliance with this Order no
later
than 15 days from the issuance date of this Order, as
required by
N.H. Admin. Rules, Puc 1603.
By order of the Public Utilities Commission of New
Hampshire this thirtieth day of October, 1998.
Douglas L. Patch Susan S. Geiger Nancy Brockway
Chairman Commissioner Commissioner
Attested by:
Thomas B. Getz
Executive Director and Secretary