Regulators Set Policy on Gas Transition Costs

Fortnightly Magazine - June 15 1995
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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.).

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