2016 Kentucky Revised Statutes CHAPTER 278 - PUBLIC SERVICE COMMISSION .5085 Presumption of reasonableness of supply contract for natural gas produced from coal through gasification process.
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278.5085
Presumption of reasonableness of supply contract for natural gas
produced from coal through gasification process.
If a gas distribution utility as defined in KRS 278.010(3)(b) enters into a twenty (20) year
supply contract with any person for pipeline quality synthetic natural gas produced from
coal through a gasification process, the commission shall find the transaction reasonable
and shall allow the utility to recover the cost of the synthetic natural gas if:
(1) The only coal used in the gasification process is coal subject to the tax imposed
under KRS 143.020;
(2) The price per million British thermal units (BTU) is no greater than the long-term
market price derived from the simple average of the Henry Hub monthly futures
prices for natural gas as reported by the New York Mercantile Exchange (NYMEX)
for the sixty (60) months immediately following the effective date of the contract,
adjusted annually based upon the change in the Annual Consumer Price Index for
All Urban Consumers for the Midwest Region as published in April by the United
States Department of Labor, Bureau of Labor Statistics, or a suitable Consumer
Price Index calculation if this Consumer Price Index is not available. The total price
adjustment over the life of the contract shall not exceed one dollar and fifty cents
($1.50) per million BTU; and
(3) The utility's aggregate long-term supply contracts for the purchase of synthetic
natural gas produced from coal through the gasification process do not exceed
twenty five-percent (25%) of the annual system supply requirements of the utility,
by volume, as measured in thousand cubic foot units (Mcf) at the time the utility
enters into the contract.
Effective: July 12, 2006
History: Created 2006 Ky. Acts ch. 55, sec. 1, effective July 12, 2006.
Legislative Research Commission Note (7/12/2006). A reference to "million cubic
foot units (Mcf)" in subsection (3) of 2006 Ky. Acts ch. 55 has been changed in
codification by the reviser of statutes to correct a drafting error to read "thousand
cubic foot units (Mcf)" to conform with the U. S. Census Bureau's Harmonized
Commodity Description and Coding System which collects information based on the
metric standard.
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