Missouri Defends PGA Clause

Fortnightly Magazine - June 1 1996
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The Missouri Public Service Commission (PSC) has rejected a call by its staff, the state's consumer advocate, and customers of Missouri Gas Energy to eliminate the latter's purchased-gas adjustment clause (PGA) in favor of traditional rate-case analysis. It deemed such efforts misguided, as the PGA was the "only process presented to date" that would maintain a level of business risk "compatible with financial viability and reasonable rates."

Instead, the PSC OK'd an experimental incentive PGA to track gas procurement practice by employing a spot-market price (plus a premium) as a benchmark for measuring company performance. Stockholders and ratepayers will share in any savings earned (em plus any risk that financial performance might fall short of market standards.

To ensure that the incentive does not skew gas purchases too much toward the short term, the PSC directed the company to file gas-supply reliability data on a regular basis. It rejected a call for unbundled rates and services as a condition for the new PGA incentive. Re Missouri Gas Energy, a div. of Southern Union Co., Case No. GO-94-318, Phase II, Feb. 14, 1996 (Mo.P.S.C.).

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