As shown in Table 3 [above], under the proposal, the Company’s May 2012 commodity C-Factor would have been $1.75457 per Mcf. During May 2012, [Distribution] was paying approximately $2.80 per Mcf in commodity charges for gas delivered to its system. It is unreasonable to charge significantly less for gas than the actual cost of the gas. . . . The proposal could also result in a price-to-compare Company’s which is not accomplishing its intended purpose. The (“PTC”) PTC reflects the costs which a current sales customer would avoid if the customer elected to purchase their gas from a competitive natural gas supplier rather than [Distribution]. As such, the PTC serves as a basis of comparison between the cost of gas from [Distribution] and that offered by [a natural gas supplier]. The CFactor is a component of the PTC. If the C-Factor component of the PTC is not reflective of the price [Distribution] is paying for gas, the desired comparison will be distorted. The OCA submits that a proposal which would charge customers $1.75 per Mcf of gas, when the Company was paying $2.80 per Mcf, is not more reflective of market prices and is contrary to sound ratemaking principles. Both OCA and BIE assert that a mechanism which would charge customers significantly less for gas than the actual cost of gas should not be approved. Distribution counters that contrary to and contentions, over the entire BIE’s OCA’s twelve-month period ended July 31, 2012, on average, C-factor, calculated under Distribution’s its existing methodology was less accurate, less close to the current actual commodity cost i.e., of purchased gas than the C-factor calculated using proposed truncation Distribution’s methodology. As shown in PGC Exhibit No. 206, during this twelve-month Distribution’s period, on average, the C-factor computed using the current methodology produced rates that deviated from the actual commodity costs of natural gas by $0.9217. Using Distribution’s proposed truncation methodology, the C-factor was only $0.5492 from the actual on average proof of commodity cost of purchased gas, an improvement of $0.3725 per Mcf over the entire twelve-month period.
As shown in Table 3 [above], under the Company’s proposal, the May 2012 commodity C-Factor would have been $1.75457 per Mcf. During May 2012, [Distribution] was paying approximately $2.80 per Mcf in commodity charges for gas delivered to its system. It is unreasonable to charge significantly less for gas than the actual cost of the gas. . . . The Company’s proposal could also result in a price-to-compare (“PTC”) which is not accomplishing its intended purpose. The PTC reflects the costs which a current sales customer would avoid if the customer elected to purchase their gas from a competitive natural gas supplier rather than [Distribution]. As such, the PTC serves as a basis of comparison between the cost of gas from [Distribution] and that offered by [a natural gas supplier]. The CFactor is a component of the PTC. If the C-Factor component of the PTC is not reflective of the price [Distribution] is paying for gas, the desired comparison will be distorted. The OCA submits that a proposal which would charge customers $1.75 per Mcf of gas, when the Company was paying $2.80 per Mcf, is not more reflective of market prices and is contrary to sound ratemaking principles. Both OCA and BIE assert that a mechanism which would charge customers significantly less for gas than the actual cost of gas should not be approved. Distribution counters that contrary to BIE’s and OCA’s contentions, over the entire twelve-month period ended July 31, 2012, on average, Distribution’s C-factor, calculated under its existing methodology was less accurate, i.e., less close to the current actual commodity cost of purchased gas than the C-factor calculated using Distribution’s proposed truncation methodology. As shown in Distribution’s PGC Exhibit No. 206, during this twelve-month period, on average, the C-factor computed using the current methodology produced rates that deviated from the actual commodity costs of natural gas by $0.9217. Using Distribution’s proposed truncation methodology, the C-factor was on average only $0.5492 from the actual proof of commodity cost of purchased gas, an improvement of $0.3725 per Mcf over the entire twelve-month period.
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