DR 98-171
Northern Utilities, Inc. - Pelham Division
1998/1999 Winter Cost of Gas Adjustment
Order Approving the Cost of Gas Adjustment
O R D E R N O. 23,054
October 30, 1998
APPEARANCES: LeBoeuf, Lamb, Greene, and MacRae by
Meabh Purcell, Esq. on behalf of Northern Utilities, Inc.;
and
Robert Egan and Stephen P. Frink for the Staff of the New
Hampshire Public Utilities Commission.
I. PROCEDURAL HISTORY
On September 28, 1998, Northern Utilities, Inc.
(Northern) 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. The filing was accompanied by a cover
letter
and supporting schedules of Joseph A. Ferro, Director of
Pricing
Services. The proposed 1998/1999 Winter CGA is a charge of
$0.0601 per therm.
An Order of Notice was issued on September 30,
1998
setting the date of the hearing for October 22, 1998 at
10:00
a.m. at the Commission's office in Concord, New Hampshire.
Apart from the Office of Consumer Advocate (OCA)
which
is a statutorily recognized intervenor, there were no
intervenors
in this docket. A duly noticed hearing on the merits was
held at
the Commission on October 22, 1998.
II. POSITIONS OF THE PARTIES AND STAFF
Northern
Northern witness Joseph A. Ferro, Director of
Pricing
Services, addressed the following issues: a) calculation of
the
firm Sales CGA and the impact on customer bills; b) factors
contributing to the decreased rate; and c) elimination of
the
trigger mechanism.
A. Calculation and Rate Impact of the Proposed CGA
The proposed 1998/1999 Winter CGA charge of
$0.0601 per
therm was calculated by reducing the anticipated cost of gas
of
$29,074 by the prior period over collection of $1,901 and
related
interest of $124, dividing the resulting anticipated costs
of
$27,049 by projected therm sales of 60,821 to arrive at a
per
unit cost of gas of $0.4447 per therm, and then deducting
the
winter base unit cost of gas of $0.3846 per therm.
Northern's proposed 1998/1999 Winter CGA charge of
$0.0601 per therm represents a decrease of $0.1643 per therm
from
the 1997/1998 Winter CGA charge of $0.2244 per therm.
The Pelham Division is made up of 17 commercial
customers and the proposed CGA charge of $0.0601 per therm
will
decrease the heating customer's monthly bill in the range of
10
to 20 percent and non-heating in the range of 9 to 18
percent,
compared to last winter's rate.
B. Factors Contributing to the Decreased CGA
The 16 cent reduction in the proposed CGA per
therm
price compared to last winter's rate can be attributed
primarily
to the projected lower cost of propane purchases and, to a
much
lesser extent, the prior period over collection compared to
the
costs of purchases and prior period over collection
associated
with the 1997/1998 winter period.
C. Elimination of the Trigger Mechanism
The "trigger mechanism" was implemented in 1985
and
requires Northern to file a revised CGA if the actual and
projected revenues and costs deviate by 10 percent or
greater.
Northern stated that the trigger mechanism was designed to
prevent the carry forward of substantial over or under
recoveries
from one CGA period to the next.
Northern believes that it now has the tools to
effectively control over and under recoveries and that the
trigger mechanism is no longer necessary. Northern stated
that
with implementation of the monthly adjustment mechanism,
approved
in NHPUC Order 22,918 (April 30, 1998), Northern is now able
to
better control over and under collections and the trigger
mechanism is no longer needed.
Staff
Staff stated that after a review of the filing and
subsequent discovery, Staff believes Northern's gas
purchasing
policies are sound and reasonable and that the proposed
1998/1999
Winter CGA charge of $0.0601 per therm 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 Northern to file a revised CGA.
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 Hearings Examiner reviewed the filing and
supporting testimony presented at the October 22, 1998
hearing
and has stated that the CGA rate appears to be reasonable
based
on Staff's and Northern's representations.
IV. COMMISSION ANALYSIS
We have reviewed the filing, testimony and the
Report
of the Hearings Examiner and agree that the proposed revised
1998/1999 Winter CGA charge of $0.0601 per therm will result
in
just and reasonable rates and is hereby approved.
With the new mechanism that allows Northern to
make
monthly adjustments to its CGA rate in response to projected
over
or under recoveries, it is our belief that the 10% trigger
mechanism is no longer needed. Accordingly, we approve the
elimination of the trigger mechanism as recommended by Staff
and
supported by Northern and the OCA.
Based upon the foregoing, it is hereby
ORDERED, that Northern's Seventeenth Revised Page
33
Superseding Sixteenth Revised Page 33, N.H.P.U.C. tariff of
Northern Utilities, Inc. - Pelham Division, providing for
the
Winter CGA charge of $0.0601 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 Northern may adjust the
approved
CGA rate of $0.0601 per therm upward or downward monthly
based on
Northern's calculation of the projected over or under
collection
for the period, but the cumulative adjustments shall not
exceed
ten percent, or $0.0445, of the approved unit cost of gas of
$0.4447 per therm; and it is
FURTHER ORDERED, that Northern 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, not less than five (5) business days
prior
to the first day of the subsequent month. Northern shall
include
a revised tariff page 32 - Calculation of Cost of Gas
Adjustment
and revised rate schedules if Northern 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 Northern 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