W. Va. Code R. § 150-2-22

Current through Register Vol. XLI, No. 38, September 20, 2024

Section 150-2-22 - Purchase of Gas Supplies

22.1. (Historical Rule 43). Burden of Proof and Filing Requirements Concerning Rate Increases for Natural Gas Utilities Relating to the Purchase of Gas Supplies.

22.1.1. Applicability

22.1.1.a. These rules are applicable to all natural gas utilities in die State subject to the Commission's jurisdiction.

22.1.1.b. These rules apply to any proceeding before the Commission which involves a rate increase for a natural gas utility due to, or partly due to, an increase in gas costs. In this regard, gas shall mean synthetic natural gas as well as natural gas.

22.1.2. Burden of Proof

22.1.2.a. In addition to other burdens of proof generally applicable to utility rate proceedings, a natural gas utility, in any proceeding before the Commission which involves a rate increase for a natural gas utility due to, or partly due to, an increase in gas costs, must show the following;

22.1.2.a.1. That dependable, lower-priced supplies are not readily available from other sources;

22.1.2.a.2. That contracts between the utility and its suppliers for purchase of gas are negotiated at arms length and are not detrimental to its customers. Transactions between non-affiliated entities shall be presumed to be at "arms-length;" however, transactions between affiliated entities must be shown to be non-detrimental to both the utility and to its customers;

22.1.2.a.3. That die utility has let out bids for die purchase of a substantial quantity of natural gas supplied to its customers. "Let out bids" shall include, but not be limited to, die utility's accepting sealed bids, buying at auction or other methods of purchasing which offer sellers of natural gas the opportunity to compete for die sale; and

22.1.2.b. Should die applying utility not satisfactorily meet the burden of proof set forth in Paragraph 22.1.2., then die Commission may not authorize an increase greater than that which reflects reasonable costs of gas which is determined to be readily available. In the event the Commission cannot make this determination from the record in the proceeding, the application may be dismissed.

22.1.3. Filing Requirements.

22.1.3.a. In addition to other filing requirements prescribed by the Commission's rules and by statute, die utility must file, at the time of its application to die Commission, documentary material which demonstrates that all reasonably available sources of gas have been thoroughly investigated and that the utility's purchases, actual and expected, are at the lowest available price among reliable sources at die time of the purchase.

22.1.3.b. The filing shall include the following;

22.1.3.b.1. The utility shall submit a list of all offers to purchase gas issued by the utility during the twelve (12) months ending the June 30 preceding die filing of die application, which shall include the language of the offer, die manner in which it was issued, die parties to whom the offer was made, the response thereto, and any agreements or contracts which resulted therefrom.

22.1.3.b.2. The utility shall submit a list of all offers to sell gas received by the utility from suppliers or potential suppliers, during the twelve months ending the June 30 preceding the filing of the application, which shall include die language of the offer, the manner in which it was received, die person from whom it was received, the response thereto, and any agreements or contracts which resulted therefrom.

22.1.3.b.3. The utility shall submit a list of the names of all persons, firms, and corporations which were investigated as sources of gas during the twelve months ending the June 30 preceding the filing of the application, whether or not such investigation resulted in an agreement to purchase and/or sell gas, including investigations of sources with "shut-in" wells, which list shall include the following information;

22.1.3.b.3.A. The price per Mcf at which each investigated party offered gas for sale, if any;

22.1.3.b.3.B. The availability and cost of transporting such gas and the potential transporting pipeline or utility;

22.1.3.b.3.C. The amount of gas potentially available each month by such investigated party;

22.1.3.b.3.D. The date by which such deliveries could commence; and

22.1.3.b.3.E. The extent of the gas reserves which can be made available to the utility.

22.1.3.b.4. The utility shall submit a list of all of its contracts which shall include, but need not be limited to, the following information: The name of the supplier (if purchased from an affiliated entity, a statement of die nature of the affiliation), die quantity of gas relevant to die test period or application period, price, price escalator provisions, the county wherein the production is located, if applicable, and the term of die contract.

22.1.3.b.4.A In the case of contracts involving the wellhead purchase of natural gas, the utility shall submit die following information; producer's name, well name/number, the American Petroleum Institute (API) Identification Number, the date drilling commenced, NGPA Classification, the date NGPA determination was received, the contract date, contract expiration date, price adjustment provisions, contract quantities, current contract price in dollars per MMBtu and Mcf. If additional explanations are necessary, footnote and attach a page which explains the footnote.

22.1.3.b.5. The utility shall separately indicate which of the contracts listed contain take-or-pay provisions, indefinite price escalators, and/or most favored nation clauses as defined within W. Va. Code § 24-2-16. With respect to those contractual provisions, die utility must show that the clauses do not require the utility to buy more than the reasonable amount of gas at a greater than reasonable price.

22.1.3.b.6. The utility shall submit copies of all relevant tariffs approved by the Federal Energy Regulatory Commission, or other regulatory bodies, under which it purchases gas together with die applicable service agreements and any legal instrument relating thereto.

22.1.3.b.7. If a utility presently has its own production, it shall provide historical information regarding such production for die period of time beginning with January 1st of the calendar year immediately preceding the year of die filing of die proposed rate increase through the month immediately preceding die month of filing. The utility shall provide estimated data and information regarding company production for the period of time beginning with die month of filing through December 31st of the calendar year following die year of filing. The information shall contain actual or estimated company production on a monthly basis, together with the actual or, if not available, estimated cost of production per Mcf, on a cost of service basis. The information shall indicate the number of producing wells and proven and/or estimated reserves, as well as a general description of die utility's future plans respecting its own production. The information shall further indicate the extent to which the utility has or plans to "shut-in" its production. If a utility owns mineral rights or holds leases which are not currently producing gas it shall provide evidence regarding die feasibility and cost effectiveness of developing gas wells on such rights or leases. If any of the rights or leases are currently producing, the utility shall provide evidence regarding the feasibility and cost effectiveness of expanding these producing properties, either through new wells, reworking existing wells or extending existing wells.

22.1.3.b.8. For all attached production obtained from suppliers, the utility shall indicate the extent to which the utility has or plans to shut-in suppliers' production. The utility shall identify die wells involved, by the API number, and quantify die volume of gas shut-in or expected to be shut-in.

W. Va. Code R. § 150-2-22