2010 Pennsylvania Code
Title 66 - PUBLIC UTILITIES
Chapter 13 - Rates and Rate Making
1318 - Determination of just and reasonable gas cost rates.

     § 1318.  Determination of just and reasonable gas cost rates.
        (a)  General rule.--In establishing just and reasonable rates
     for those natural gas distribution companies, as defined in
     section 2202 (relating to definitions), with gross intrastate
     operating revenues in excess of $40,000,000 under section
     1307(f) (relating to sliding scale of rates; adjustments) or
     1308(d) (relating to voluntary changes in rates) or any other
     rate proceeding, the commission shall consider the materials
     provided by the utilities pursuant to section 1317 (relating to
     regulation of natural gas costs). No rates for a natural gas
     distribution utility shall be deemed just and reasonable unless
     the commission finds that the utility is pursuing a least cost
     fuel procurement policy, consistent with the utility's
     obligation to provide safe, adequate and reliable service to its
     customers. In making such a determination, the commission shall
     be required to make specific findings which shall include, but
     need not be limited to, findings that:
            (1)  The utility has fully and vigorously represented the
        interests of its ratepayers in proceedings before the Federal
        Energy Regulatory Commission.
            (2)  The utility has taken all prudent steps necessary to
        negotiate favorable gas supply contracts and to relieve the
        utility from terms in existing contracts with its gas
        suppliers which are or may be adverse to the interests of the
        utility's ratepayers.
            (3)  The utility has taken all prudent steps necessary to
        obtain lower cost gas supplies on both short-term and long-
        term bases both within and outside the Commonwealth,
        including the use of gas transportation arrangements with
        pipelines and other distribution companies.
            (4)  The utility has not withheld from the market or
        caused to be withheld from the market any gas supplies which
        should have been utilized as part of a least cost fuel
        procurement policy.
        (b)  Limitation on gas purchased from affiliates.--In any
     instance in which a natural gas distribution company purchases
     all or part of its gas supplies from an affiliated interest, as
     that term is defined in section 2101 (relating to definition of
     affiliated interest), the commission, in addition to the
     determinations and findings set forth in subsection (a), shall
     be required to make specific findings with regard to the
     justness and reasonableness of all such purchases. Such findings
     shall include, but not be limited to findings:
            (1)  That the utility has fully and vigorously attempted
        to obtain less costly gas supplies on both short-term and
        long-term bases from nonaffiliated interests.
            (2)  That each contract for the purchase of gas from its
        affiliated interest is consistent with a least cost fuel
        procurement policy.
            (3)  That neither the utility nor its affiliated interest
        has withheld from the market any gas supplies which should
        have been utilized as part of a least cost fuel procurement
        policy.
        (c)  Shut-in gas; special rule.--In determining whether a gas
     utility has purchased the least costly natural gas available,
     the commission shall consider as available to the utility any
     gas supplies that reasonably could have been brought to market
     during the relevant period but which were voluntarily withheld
     from the market by the utility or an affiliated interest of the
     utility.
        (d)  Other regulatory approvals.--The fact that a contract or
     rate has been approved by a Federal regulatory agency for
     interstate ratemaking purposes shall not, in and of itself, be
     adequate to satisfy the utility's burden of proof that gas
     prices and volumes associated with such contract or rate are
     just and reasonable for purposes of this section.
        (e)  Reports.--Each natural gas distribution utility with
     gross intrastate annual operating revenues in excess of
     $40,000,000 shall file with the commission, the Office of
     Consumer Advocate and the Office of Small Business Advocate, in
     accordance with regulations to be prescribed by the commission,
     quarterly reports setting forth the actual gas costs incurred by
     the utility on a monthly basis. Actual gas costs shall be
     reviewed for their accuracy by the Bureau of Audits at least
     annually and the results of that review shall be submitted to
     the commission.
        (f)  Definition.--As used in this section, the terms "natural
     gas," "natural gas costs," "gas costs" and "gas" shall have the
     same definitions as provided in section 1307(h).
     (May 31, 1984, P.L.370, No.74, eff. 60 days; June 22, 1999,
     P.L.122, No.21, eff. July 1, 1999)

        Cross References.  Section 1318 is referred to in sections
     1307, 2107 of this title.