2014 Kentucky Revised Statutes CHAPTER 278 - PUBLIC SERVICE COMMISSION 278.5085 Presumption of reasonableness of supply contract for natural gas produced from coal through gassification process.
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278.5085 Presumption of reasonableness of supply contract for natural gas
produced from coal through gassification 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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