Gas – Rates
Application
Apex Utilities Inc. (“AUI”) applied for approval of its 2023-2024 unaccounted-for gas (“UFG”) Rate Rider E of 1.07 percent and Rate Rider H of 1.09 percent, which represented an increase of 0.05 percent and 0.06 percent for Rider E and Rider H, respectively, from the previously approved amounts.
Decision
The AUC approved AUI’s UFG Rate Rider E of 1.07 percent and Rate Rider H of 1.09 percent, as filed, effective November 1, 2023.
Pertinent Issues
Unaccounted-for gas refers to the variance between the amount of natural gas that goes into the distribution system and the deliveries actually received by customers. There are several reasons why gas may be lost throughout the distribution system. The causes can generally be categorized into (i) physical losses and (ii) measurement and accounting errors.
In accordance with the current regulatory framework, the cost of UFG is ultimately passed on to customers through retailers; gas producers using the distribution system to deliver their product also pay for their share of UFG. In AUI’s case, this is done through Rider E and Rider H.
Rider H recovers UFG in kind from all retailers and default supply providers that use the AUI distribution system. Rider E recovers UFG associated with producer transportation service to ensure the quantity of gas AUI delivers on behalf of gas producers is kept in balance with the quantity of gas AUI receives from its producers.
UFG Calculations and Rider E and Rider H Amounts
AUI indicated that the most significant causes of UFG, in the order of estimated contribution to overall UFG on its system, were the following:
- Third-party pipeline damages;
- Pipeline leaks;
- Safe purging of natural gas into the atmosphere due to construction activities;
- Measurement issues, including meter failures and billing errors;
- Gas theft; and
- Natural gas releases due to normal system operations, such as purging and maintenance.
The AUC was satisfied that AUI calculated UFG Rider E and Rider H accurately and consistently with the approved method. The AUC was also satisfied that the variances in UFG levels, such as those submitted by AUI, can be expected from normal operations of the gas distribution system.
Compliance with Previous AUC Directions
AUI further provided information in compliance with the AUC’s directions in Decision 27552-D01-2022 regarding AUI’s 2022-2023 Rider E and Rider H. The information included monthly data for the period of June 2013 to May 2023, UFG by region, and a description of actions taken to reduce UFG and UFG fluctuations.
The AUC reviewed the data and information provided by AUI in response to its directions and determined that AUI complied with all directions contained in Decision 25772-D01-2022.
