You've heard talk lately about the convergence of electricity and natural gas. That idea has grown as commodity markets have matured for gas and emerged for bulk power.
The Connecticut Department of Public Utility Control (DPUC) has authorized Connecticut Natural Gas Corp., a natural gas local distribution company (LDC), to increase rates by $8.9 million, with a return on equity (ROE) of 10.76 percent. While reviewing the utility's expenses, the DPUC approved a company conservation budget at a level "below average" for New England gas LDCs, but found the budget adequate, given the attention paid to low-income customers and distressed businesses.
Concerning revenues, the DPUC increased the "interruptible target margin" used to estimate profits earned on interruptible sales and transportation services, as well as on sales to natural gas vehicle (NGV) customers. Margins earned by the LDC on applicable services up to $500,000 are shared 75/25 between ratepayers and stockholders, with the ratio reversing for earnings above that level. The DPUC also denied the company's request to adjust projected interruptible margins downward to account for the anticipated loss of certain cogeneration customers. It authorized the company to defer up to $1 million of the shortfall, without carrying charges. It explained that the approved target was higher than the current one and that the profits on such sales are subject to changes in gas versus alternate fuel prices in the rate year.
The DPUC also found that the LDC had "seriously erred" in estimating the appropriate amount to include in rates to recover costs associated with a switch from pay-as-you-go to accrual accounting for post retirement benefits other than pensions (PBOPs). It said that the method suggested by the LDC did not conform with what was intended under an earlier ruling requiring a five-year phase-in of the transition costs. The DPUC also said it was "deeply concerned with the burgeoning costs associated with the company's PBOP." Re Conn. Nat. Gas Corp., Dkt. No. 95-02-07, Oct. 13, 1995 (Conn.D.P.U.).
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