Rules & Regulations of the State of Tennessee
Title 1220 - Tennessee Public Utility Commission
Subtitle 1220-04 - Division of Public Utilities
Chapter 1220-04-07 - Purchased Gas Adjustment Rules
Section 1220-04-07-.03 - COMPUTATIONS AND APPLICATION OF THE PURCHASED GAS ADJUSTMENT (PGA)

Universal Citation: TN Comp Rules and Regs 1220-04-07-.03

Current through September 24, 2024

(1) The PGA shall consist of three major components:

(a) the Gas Charge Adjustment;

(b) the Refund Adjustment and

(c) the Actual Cost Adjustment (ACA).

(a) Computation of Gas Charge Adjustment. The Company shall compute the jurisdictional Gas Charge Adjustment at such time that the Company determines that there is a significant change in its Gas Costs.
1. Formulas. The following formulas shall be used to compute the Gas Charge Adjustment:
(i) Firm GCA =

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(ii) Non-Firm GCA

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2. Definitions of Formula Components.
(i) GCA = The Gas Charge Adjustment in dollars per Ccf/therm, rounded to no more than five decimal places.

(ii) D = The sum of all fixed Gas Costs.

(iii) DACA = The demand portion of the ACA.

(iv) P = The sum of all commodity/gas charges.

(v) T = The sum of all transportation charges.

(vi) SR = The sum of all FERC approved surcharges.

(vii) CACA = The commodity portion of the ACA.

(viii) DB = The per unit of demand costs or other fixed charges included in base rates in the most recently completed general rate case (which may be zero if the Company so elects and the Commission so approves).

(ix) CB = The per unit rate of variable Gas Costs included in base rates in the most recently completed general rate case (which may be zero if the Company so elects and the Commission so approves).

(x) SF = Firm sales.

(xi) ST = Total sales.

3. Determination of Factors - Gas Charge Adjustment.
(i) Demand Charges (Factor D)

All Fixed Gas Costs that do not vary with the amount of gas purchased or transported, including, but not limited to, the product resulting from the multiplication of (1) the respective Demand Billing Determinants by (2) the respective Supplier demand rates that are effective, known or reasonably anticipated at the time the PGA is filed with the Commission and (3) any fixed storage charges.

(ii) Demand Actual Cost Adjustment (Factor DACA)

See subsection (1)(c) Actual Cost Adjustment.

(iii) Purchased Commodity Charges (Factor P)

All commodity or other variable Gas Costs associated with the amount of gas purchased or transported including, but not limited to, the product resulting from the multiplication of (1) the respective Demand Billing Determinants by (2) the respective Supplier demand rates that are effective, known or reasonably anticipated at the time the PGA is filed with the Commission and (3) any fixed storage charges.

(iv) Transportation Charges (Factor T)

The transportation charges actually invoiced to the Company during the Computation Period or expected to be invoiced in the Company during the current period.

(v) FERC Approved Surcharges (Factor SR)

The sum of all FERC approved surcharges, including gas inventory charges or its equivalent, actually invoiced or expected to be invoiced to the Company during the Computation Period or that are effective, known or reasonably anticipated at the time the PGA is filed with the Commission.

(vi) Actual Cost Adjustment (Factor ACA)

See subsection (1)(c) Actual Cost Adjustment.

(viii) Total Sales (Factor ST) Total volumes billed to all the Company's customers during the Computation Period, regardless of source, adjusted for known measurable changes.

4. Modification of Formulas.
(i) The formulas set forth above are not designed for use with two-part demand/commodity rate schedules; however, the formulas may be modified form time to time to carry out the intent of these PGA Rules. Any proposed modification to the formulas shall contain a proposed effective date. The Commission may suspend the modification within thirty (30) days of filing, in which case the proposed modification shall be subject to notice and hearing; otherwise, the modification to the formula shall be effective on the proposed effective date.

5. Filing with the Commission.
(i) The computation of the Gas Charge Adjustment shall be filed in accordance with the notice requirements specified in Rule 1220-04-07-.02(3) shall remain in effect until a revised Gas Charge Adjustment is computed and filed pursuant to these Rules.

(ii) The Company shall file with the Commission a transmittal letter, an exhibit showing the computation of the Gas Charge Adjustment, a PGA tariff sheet, and any applicable revised tariff sheets issued by Suppliers. The transmittal letter shall state the PGA tariff sheet number, the service area(s), the primary reasons for revision, and the effective date.

(iii) If the Company proposes to recover any Gas Costs relating to (1) any payments to an affiliate or (2) any payments to a nonaffiliate for emergency gas, over-run charges, or (3) the payment of any demand or fixed charges in connection with an increase in contract demand, the Company must file with the Commission a statement setting forth the reasons why such charges were incurred and sufficient information to permit the Commission to determine if such payments were prudently made under the conditions which existed at the time the purchase decisions were made.

(iv) Any filing of a rate change under these Rules shall be effective on the proposed effective date unless the Commission shall act to suspend the proposed change within thirty (30) days after the filing, in which case the filing shall be subject to notice and hearing.

(b) Refund Adjustment. The Refund Adjustment shall be separately stated for firm and non-firm customers, and may be either positive or negative.
1. Computation of Refund Adjustment. The Company shall compute a Refund Adjustment on the last day of each calendar quarter using the following formulas:
(i)

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(ii)

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2. Definitions of Formula Components.
(i) RA = The Refund Adjustment in dollars per Ccf/therm, rounded to no more than five decimal p1aces.

(ii) DRI = Demand refund not included in a currently effective Refund Adjustment and received from Suppliers by check, wire transfer. or credit memo.

(iii) DR2 = A demand surcharge from a Supplier not includable in the Gas Charge Adjustment, and not included in a currently effective Refund Adjustment.

(iv) CR1 = Commodity refund not included in a currently effective Refund Adjustment, and received from Suppliers by check, wire transfer, or credit memo.

(v) CR2 = A commodity surcharge from a Supplier not includable in the Gas Charge Adjustment, and not included in a currently effective Refund Adjustment.

(vi) CR3 = The residual balance of an expired Refund Adjustment.

(vii) I = Interest on the "Refund Due Customers' Account", using the average monthly balance based on the beginning and ending monthly balances. The interest rates for each calendar quarter used to compute such interest shall be a rate equal to the arithmetic mean (to the nearest one-hundredth of one percent) of the prime rate value published in the "Federal Reserve Bulletin" or in the Federal Reserve's "Selected Interest Rates" for the 4th, 3rd and 2nd months preceding the 1st month of the calendar quarter.

(viii) SFR = Firm sales as defined in the Gas Charge Adjustment computations, less sales under a transportation or negotiated rate schedule.

(ix) STR = Total sales as defined in the Gas Charge Adjustment computation, less sales under a transportation or negotiated rate schedule.

(x) U = Eligible uncollected gas costs surcharged or refunded under this Rule.

3. Modification of Formula. The formulas set forth above are not designed for use with two-part demand/commodity rate schedules; however, the formulas may be modified from time to time to carry out the intent of these PGA Rules. Any proposed modification to the formulas shall contain a proposed effective date. The Commission may suspend the modification within thirty (30) days of filing, in which case the proposed modification shall be subject to notice and hearing; otherwise, the modification to the formula shall be effective on the proposed effective date.

4. Filing with the Commission.
(i) The computation of the Refund Adjustment shall be filed in accordance with the notice requirements specified in Rule 1220-04-07-.02(3) and shall remain in effect for a period of twelve (12) months or for such longer or shorter period of time as required to appropriately refund the applicable refund amount.

(ii) The company shall file with the Commission a transmittal letter, exhibits showing the computation of the Refund Adjustment and interest calculations, and a PGA tariff sheet. The transmittal letter shall state the PGA tariff sheet number, the service area(s), the reason for adjustment, and the effective date. Should the Company have a Gas Charge Adjustment filing to become effective the same date as a Refund Adjustment, a separate transmittal letter and PGA tariff sheet shall not be necessary.

(c) Actual Cost Adjustment.
1. Commencing with the initial effective date of these Rules, the Company shall calculate the ACA monthly. The Company shall be required to include the ACA in its calculation of the Gas Charge Adjustment at least monthly. Should the Company or Commission Staff determine it appropriate to include the ACA in the Gas Charge Adjustment more frequently than once per year, then the company may be allowed/directed to do so. The Commission shall resolve disputes between the Company and the Staff regarding timing of such ACAs.

2. The ACA shall be the difference between (1) revenues billed customers by means of the Gas Charge Adjustment and (2) the cost of gas invoiced the Company by suppliers plus margin loss (if allowed by order of the Commission in another docket) as reflected in the Deferred Gas Cost Account. The balance of said account shall be adjusted for interest at the rate provided for the calculation of interest with respect to the Refund Adjustment. The ACA shall be segregated into demand and commodity, and shall be added to or deducted from, as appropriate, the respective demand and commodity costs included in the Gas Charge Adjustment. Supplemental sheets showing the calculations of margin losses and cost savings shall also be provided.

3. Adjustments to Prior Period ACAs. In the event that circumstances warrant a correction to or restatement of a prior period ACA, such correction or restatement shall be made in accordance with the ACA calculation in effect for the time period(s) to which the correction or restatement relates. The resulting adjustment shall then be added to or deducted from the appropriate ACA in the next ensuing ACA filing with the Commission.

(2) Annual Filing with the Commission. Each year, the Company shall file with the Commission an annual report reflecting the transactions in the Deferred Gas Cost Account. Unless the Commission provides written notification to the Company within one hundred eighty (180) days from the date of filing the report, the Deferred Gas Cost Adjustment Account shall be deemed in compliance with the provisions of these Rules. This one hundred eighty (180) day notification period may be extended by mutual consent of the Company and the Commission Staff or by order of the Commission.

Authority: T.C.A. §§ 65-2-102 and 65-4-104.

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