2019 Connecticut General Statutes
Title 16 - Public Service Companies
Chapter 277 - Department of Energy and Environmental Protection. Public Utilities Regulatory Authority. Office of Consumer Counsel. Miscellaneous Provisions
Section 16-19ww - Natural gas infrastructure expansion plan. Hurdle rate; rate for new customers added pursuant to the plan; rate mechanism for gas companies to recover prudent investments made pursuant to the plan outside a rate proceeding; assignment of nonfirm margin credit.

(a) On or before June 15, 2013, the gas companies, as defined in section 16-1, shall jointly submit to the Commissioner of Energy and Environmental Protection and the Public Utilities Regulatory Authority a natural gas infrastructure expansion plan to provide natural gas service to on and off-main gas customers consistent with the goals of the 2013 Comprehensive Energy Strategy approved by the Commissioner of Energy and Environmental Protection in accordance with section 16a-3d. Such plan shall include steps to expand the natural gas distribution network, increase the rate of cost-effective customer conversions, provide natural gas access for industrial facilities in the state to the greatest extent feasible, lower the costs of adding new customers, ensure the reliability and timely addition of natural gas supply and limit the risk to existing gas customers by incorporating mechanisms to increase or decrease the rate of conversions over time in response to changes in energy prices. Such plan shall include, but not be limited to, the following components: (1) A customer conversion plan and schedule for a ten-year period, (2) an analysis demonstrating the feasibility of reaching the new customer conversion goals as directed by the Comprehensive Energy Strategy for on and off-main customers, (3) a plan for outreach and marketing tailored to each customer segment, (4) a description of steps the gas companies will take to reduce the costs of conversion, (5) a strategy for capacity procurement, (6) a strategy for leveraging third-party investment to finance equipment replacement and main extensions for new customers, (7) a plan to harmonize natural gas infrastructure expansion with steps to reduce methane leakage from existing gas infrastructure, (8) a description of steps the gas companies will take to ensure that potential customers targeted for conversion to natural gas are incented to install efficient equipment and improve the efficiency of the building envelope at the time of conversion, provided such steps include, but are not limited to, providing such customers with information regarding the Home Energy Solutions audit, and to the extent feasible, an application form of said audit, and (9) a proposal for rate changes consistent with the recommendations of the Comprehensive Energy Strategy, including specific cost recovery mechanisms for each customer segment and a description of the rate impact of any proposed rate changes.

(b) Not later than thirty days after the natural gas infrastructure expansion plan is submitted to the commissioner pursuant to subsection (a) of this section, the commissioner shall review the plan and issue a preliminary determination as to whether the plan is consistent with the goals of the Comprehensive Energy Strategy.

(c) In the event that the commissioner determines that the plan is consistent with the Comprehensive Energy Strategy pursuant to subsection (b) of this section, the Public Utilities Regulatory Authority shall, in a contested proceeding during which the authority shall hold a public hearing, approve or modify the plan not later than one hundred twenty days after such plan is submitted to the authority.

(d) In reviewing the natural gas infrastructure expansion plan pursuant to subsection (c) of this section, in order to protect the interests of ratepayers and ensure revenue recovery for gas companies, and consistent with the recommendations of the Comprehensive Energy Strategy, the authority shall, in accordance with section 16-19oo, (1) establish a hurdle rate utilizing a twenty-five-year payback period to compare the revenue requirement of connecting new customers to the gas distribution system to determine the level of new business capital expenditures that will be recoverable through rates, taking into consideration any nonfirm margin credits pursuant to subparagraph (B) of subdivision (4) of this subsection that will offset the expansion costs of the gas companies, provided the authority shall develop a methodology that reasonably accounts for revenues that would be collected from new customers who signaled an intention to switch to natural gas over a period of at least three years within a common geographic location, (2) establish a new rate for new customers added pursuant to the natural gas infrastructure expansion plan to offset incremental costs of expanding natural gas infrastructure pursuant to such plan, (3) establish a rate mechanism for the gas companies to recover prudent investments made pursuant to the approved natural gas infrastructure expansion plan in a timely manner outside of a rate proceeding, provided such mechanism shall take into consideration the additional revenues that the gas companies will generate through implementation of such plan, and (4) notwithstanding the provisions of section 16-19b, effective for the period of the natural gas expansion plan, (A) assign at least half of the nonfirm margin credit to be credited to ratepayers of the gas companies through a purchased gas adjustment clause established pursuant to section 16-19b, and (B) assign the lesser of (i) an amount equal to half of the nonfirm margin credit, or (ii) an amount equal to fifteen million dollars from the nonfirm margin credit annually for all gas companies in the aggregate, apportioned to each gas company in proportion to revenues of the existing and new capacity contracted for by each gas company, to offset expansion costs, including, but not limited to, the costs of adding new state, municipal, residential, commercial and industrial customers.

(e) On or before June 15, 2014, and annually thereafter for a period of nine years, the gas companies shall jointly report to the commissioner and the authority the status and progress of such implementation. Such report shall include, but not be limited to (1) the number of customers added over the previous year, (2) a comparison of actual expenditures to estimated expenditures for the previous year, (3) a forecast of new customers and expenditures for the upcoming year, and (4) any additional information that either the authority or the commissioner deems appropriate.

(P.A. 13-298, S. 51; P.A. 14-94, S. 51.)

History: P.A. 13-298 effective July 8, 2013; P.A. 14-94 amended Subsec. (d) by requiring authority to take into consideration any nonfirm margin credits pursuant to Subdiv. (4)(B) in Subdiv. (1), and by requiring authority to assign a portion of the nonfirm margin credit to credit ratepayers through a purchased gas adjustment clause, adding residential customers to list of expansion customers, and deleting provision re societal benefits in Subdiv. (4), effective June 6, 2014.