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Regulators Set Policy on Gas Transition Costs

Fortnightly Magazine - June 15 1995

The Massachusetts Department of Public Utilities (DPU) has announced its policy for the recovery of Federal Energy Regulatory Commission (FERC) Order 636 pipeline transition charges by natural gas local distribution companies (LDCs). According to the DPU, the policy reflects analysis of cost causation among LDC customer classes as well as review of the benefits accruing to each class as a result of the industry restructuring under

Order 636.

The policy requires LDCs to treat Account 191 transition charges (uncollected costs for gas sold to LDCs by the pipelines prior to the FERC's rate and service unbundling) in the same way as other reconcilable gas costs, with recovery limited to firm sales customers and transportation customers with backup service. All other transition costs (em including GSR, stranded, and new facilities costs (em must be allocated to firm sales customers as well as transportation customers, except where transportation customers without backup service can show that the charges are already paid as part of their arrangements with interstate pipelines. Since interruptible customers enjoy flexible pricing, allocating transition costs to that class would have no practical effect except to prevent some sales by the LDC, the DPU said. It did require, however, allocating transition costs to new special contracts customers. Re FERC Order 636-related Transition Costs, D.P.U. 94-104-C, Mar. 8, 1995 (Mass.D.P.U.).

The District of Columbia Public Service Commission (PSC) will permit Washington Gas Light Co., a natural gas local distribution company (LDC), to continue recovering its FERC Order 636 transition costs through its purchased-gas adjustment clause. The PSC had previously found no advantage to deferring the costs, but had directed a working group to study the matter of recovery. The PSC also adopted working group recommendations to limit recovery of the pipeline charges to 2.5 million per year as well as recovery of a $.0025 surcharge on interruptible customers. Re District of Columbia Natural Gas, a Division of Washington Gas Light Co., Formal Case No. 874, Order No. 10602, Apr. 7, 1995 (D.C.P.S.C.).

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