Gas Performance Incentive Mechanism

In conjunction with its GPRMP, the utility shall implement a GPIM in accordance with this rule and the specific terms set forth in its GCA tariff sheets. The utility shall implement a GPIM for each GCA rate area with more than 50,000 full service customers or each purchasing region as specified in the utility's GPP.#

(a)An application to establish a GPIM for a utility with more than 50,000 but less than 500,000 full service customers shall contain the following elements. The utility shall specifically reference and respond to the requirements of subparagraphs (I) through (IV) of this rule and shall provide cross-references and footnoted work-papers in executable format with all cell formulas intact, using spreadsheet software that is compatible with software used by Commission staff.#

(I)GPIM benchmark. Methodology to establish the GPIM benchmark for commodity gas purchases based on verifiable, reported market indices, with a reasonable adjustment, and for appropriate locations.#

(II)GPIM commodity gas volumes. Description and explanation of all gas volumes to be included in the GPIM.#

(A)The volumes and costs associated with fixed-price, long-term supply contracts may be excluded from the GPIM and risk sharing calculation.#

(B)The volumes and costs associated with storage injections and withdrawals, including both physical and contract storage, may be excluded from the GPIM and risk sharing calculation. Utilities shall provide a description of storage assets to be either included or excluded from the GPIM.#

(C)The volumes and costs associated with associated with financial hedging shall be excluded from the GPIM and risk sharing calculation.#

(D)All other actual gas volumes and costs shall be subject to the GPIM with consideration of reasonable adjustments as determined by the Commission.#

(III)Upstream supply costs. Description and explanation of upstream costs included in the GPIM risk sharing mechanism, including the methodology for developing an appropriate benchmark for such costs, if appropriate.#

(IV)Risk sharing amount. Methodology for calculating the risk sharing amount.#

(A)A formula will calculate a percentage of the difference between the actual gas costs and the benchmark formula for applicable gas volumes, either positive or negative, borne or retained by the utility, subject to applicable limitations.#

(B)The utility shall explain:#

(i)any proposed deadband around the GPIM benchmark whereby price variation within the deadband is excluded from risk sharing formula;#

(ii)any proposed cap or floor on the results of the risk sharing; and#

(iii)any proposed methodology for applying force majeure or similar provisions to the risk sharing mechanism.#

(C)Backcasting analysis, based on a minimum of the most recent three years of historical data, will demonstrate how the proposed GPIM benchmark would have been calculated and how the proposed risk sharing mechanism would have performed over the historical period. This analysis shall assume the utility made no changes to its actions in response to the mechanism and ignore any force majeure or similar events. The utility may, in its discretion, present additional analysis.#

(b)An application to establish a GPIM for a utility with more than 500,000 full service customers shall contain the following elements. The utility shall specifically reference and respond to the requirements of subparagraphs (I) through (IV) of this rule and shall provide cross-references and footnoted work-papers in executable format with all cell formulas intact, using spreadsheet software that is compatible with software used by Commission staff.#

(I)GPIM benchmark gas rate. The GPIM benchmark gas rate for the completed calendar quarter preceding the GCA filing will be calculated as the average of the GPIM total gas cost for that same quarter in the previous three years divided by the GPIM total gas quantity for the same quarters in the previous three years.#

(II)GPIM actual gas rate. The GPIM actual gas rate for the completed calendar quarter preceding the GCA filing will be calculated as the GPIM total gas cost for that quarter divided by the GPIM total gas quantity for that same quarter.#

(III)GPIM sharing amount. The GPIM sharing amount will be calculated as four percent of the difference between the GPIM benchmark gas rate and the GPIM actual gas rate, either positive or negative, multiplied by the GPIM total gas quantity for the completed calendar quarter preceding the GCA filing, subject to the following limitations:#

(A)the GPIM sharing amount for a quarter shall be zero if the difference between the GPIM benchmark gas rate and the GPIM actual gas rate is less than $0.50 per Mcf or Dth;#

(B)the GPIM sharing amount for a quarter shall be the difference between the GPIM benchmark gas rate and the GPIM actual gas rate that is above or below the $0.50 per Mcf or Dth threshold in subparagraph 4607(b)(III)(A); and#

(C)the utility's cumulative quarterly GPIM sharing amounts summed across all GCA rate areas or purchasing regions, positive or negative, shall be capped over a rolling twelve-month period at an amount equal to a 30 basis point return on the utility's rate base as established by the Commission in the utility's most recent base rate proceeding, set solely on the equity share of the utility's capital structure.#

(IV)The utility may request, and the Commission may grant, a force majeure exception upon good cause shown after such an event has occurred. The force majeure exception may allow the utility to exclude costs from the GPIM that are deemed to be either associated with the force majeure event as defined by the utility's tariffs on file with the Commission or associated with force majeure events as defined in the utility's upstream gas supply, storage, and transportation agreements and tariffs.#

(c)Unless subject to the limitations in subparagraph 4607(a)(IV)(B)(ii) or subparagraph 4607(b)(III)(C), the GPIM sharing amount shall be accounted for in the utility's deferred gas cost calculation for the quarterly GCA filing.#

(I)To the extent a GCA calculation is subject to a maximum cap specified in a utility's GPRMP, any new positive GPIM sharing amount will not be accounted for in the deferred gas cost calculation but instead be subject to a carryforward into subsequent GCA quarterly filings. The carried forward GPIM amount shall be eligible to offset incurred negative GPIM sharing amounts.#

(II)To the extent a GCA calculation is subject to a minimum threshold specified in a utility's GPRMP, any new negative GPIM sharing amount will not be accounted for in the deferred gas cost calculation but instead be accounted for in the deferred gas cost calculation in subsequent quarterly GCA filings in which the GCA calculation is above the minimum threshold.#