Purchased gas adjustment (PGA).

19.9(1) PGA clause. Pursuant to Iowa Code section 476.6(11), PGAs shall be computed separately for each customer classification or grouping previously approved by the commission and will use the same unit of measure as the utility's tariffed rates. PGAs shall be calculated using factors filed in annual or periodic filings according to the following formula:#

PGA = (C × Rc) + (D × Rd) + (Z × Rz) + Rb + E#

S#

PGA is the purchased gas adjustment per unit.#

S is the anticipated yearly gas commodity sales volume for each customer classification or grouping.#

C is the volume of applicable commodity purchased for each customer classification or grouping required to meet sales, S, plus the expected lost and unaccounted for volumes.#

Rc is the weighted average of applicable commodity prices or rates, including appropriate hedging tools costs, to be in effect September 1 corresponding to purchases C.#

D is the total volume of applicable entitlement reservation purchases required to meet sales, S, for each customer classification or grouping.#

Rd is the weighted average of applicable entitlement reservation charges to be in effect September 1 corresponding to purchases D.#

Z is the total quantity of applicable storage service purchases required to meet sales, S, for each customer classification or grouping.#

Rz is the weighted average of applicable storage service rates to be in effect September 1 corresponding to purchases Z.#

Rb is the adjusted amount necessary to obtain the anticipated balance for the remaining PGA year calculated by taking the anticipated PGA balance divided by the forecasted volumes, including storage, for one or more months of the remaining PGA year.#

E is the per unit overcollection or undercollection adjustment as calculated under subrule 19.9(6).#

The components of the formula shall be determined as follows for each customer classification or grouping:#

a.The actual sales volumes S for the prior 12-month period ending May 31, with the necessary degree-day adjustments, and further adjustments approved by the commission. Unless a utility receives prior commission approval to use another methodology, a utility shall use the same weather normalization methodology used in its prior approved PGA. The source of the heating degree days (HDDs) used in the utility's weather normalization calculation shall be the state climatologist of Iowa.#

b.The annual expected lost and unaccounted for factors shall be calculated by determining the actual difference between sales and purchase volumes for the 12 months ending May 31 or from the current annual IG-1 filing, but in no case will this factor be less than 0.#

c.The purchases C, D, and Z as necessary to comply with subrule 19.9(1).#

d.The PGAs shall be adjusted prospectively to reflect the final decision issued by the commission in a periodic review proceeding.#

19.9(2) Annual PGA filing. Each rate-regulated utility shall file on or before August 1 of each year, for the commission's approval, a PGA for the 12-month period beginning September 1 of that year.#

The annual filing shall restate each factor of the formula stated in subrule 19.9(1).#

The annual filing shall be based on customer classifications and groupings previously approved by the commission unless new classifications or groupings are proposed.#

The annual filing shall include all worksheets and detailed supporting data used to determine the PGA volumes and factors, along with an explanation of the calculations for each factor. Information already on file with the commission may be incorporated by reference in the filing.#

19.9(3) Periodic changes to PGA clause. Periodic PGA filings shall be based on the PGA customer classifications and groupings previously approved by the commission. Changes in the customer classification and grouping on file are not automatic and require prior approval by the commission.#

Periodic filings shall include all worksheets and detailed supporting data used to determine the amount of the adjustment.#

Changes in factor S or C may not be made in periodic purchased gas filings. A change in factor D or Z may be made in periodic filings and will be deemed approved if it conforms to the annual purchased gas filing or if it conforms to the principles set out in subrule 19.9(5).#

Utilities shall automatically implement all PGA changes that result from changes in Rc, Rd, or Rz and will concurrently notify the commission with adequate information to calculate and support the change. The PGA shall be calculated separately for each customer classification or grouping.#

Unless otherwise ordered by the commission, a rate-regulated utility's PGA rate factors shall be adjusted as purchased gas costs change and shall recover from the customers only the actual costs of purchased gas and other currently incurred charges associated with the delivery, inventory, or reservation of natural gas. Such periodic changes shall become effective with usage on or after the date of change.#

19.9(4) Factor Rb. Each utility has the option of filing an Rb calculation with its October-January PGA filings but shall file an Rb calculation with its February filing and subsequent monthly filings in the PGA year. If the anticipated PGA balance represents costs in excess of revenues, factor Rb shall be assigned a positive value; if the anticipated balance represents revenues in excess of costs, factor Rb shall be assigned a negative value.#

19.9(5) Allocations of changes in contract pipeline transportation capacity obligations. Any change in contractual pipeline transportation capacity obligations to transportation or storage service providers serving Iowa shall be reported to the commission within 30 days of receipt. The change must be applied on a pro-rata basis to all customer classifications or groupings, unless another method has been approved by the commission. Where a change has been granted as a result of the utility's request based on the needs of specified customers, that change may be allocated to the specified customers. Where the commission has approved anticipated sales levels for one or more customer classifications or groupings, those levels may limit the pro-rata reduction for those classifications or groupings.#

19.9(6) Reconciliation of underbillings and overbillings. The utility shall file with the commission on or before October 1 of each year a PGA reconciliation for the 12-month period that began on September 1 of the previous year. This reconciliation will be the actual net invoiced costs of purchased gas and appropriate financial hedging tools costs less the actual revenue billed through its PGA clause net of the prior year's reconciliation dollars for each customer classification or grouping. Actual net costs for purchased gas shall be the applicable invoice costs from all appropriate sources associated with the time period of usage.#

Negative differences in the reconciliation are considered overbilling by the utility, and positive differences are considered underbilling. This reconciliation shall be filed with all worksheets and detailed supporting data for each particular PGA clause. Penalty purchases shall only be includable where the utility clearly demonstrates a net savings.#

a.Annual reconciliation filings will include the following information concerning the hedging tools used by the utility:#

(1)The volume of physical gas being hedged by the utility and the strategies used by the utility for hedging.#

(2)The reason each hedging strategy was undertaken (e.g., to hedge storage gas, a floating price contract).#

(3)A statement as to how each hedging strategy was consistent with the utility's natural gas procurement plan.#

(4)An explanation as to why the utility believes each hedging strategy was in the best interest of general system customers.#

(5)A detailed explanation of the instruments used to implement each hedging strategy (e.g., fixed-price purchases, future contracts, basis swaps, fixed-price swaps, call options, put options, option collars).#

(6)The amount of all commissions paid and to whom those payments were made.#

(7)The amount of money or other collateral held in margin accounts or provided to counterparties as credit support for hedging transactions.#

(8)The amount of all other third-party administrative or contracting costs paid and to whom those costs were paid.#

(9)The name of each hedging counterparty and the amount of money paid to or received from each counterparty with respect to hedging (e.g., option premiums, financial settlement of gains or losses).#

(10)Detailed reports or schedules of each hedging strategy, including the following information for each hedging instrument entered into by the utility:#

1.The type of hedging instrument.#

2.The date on which the hedging instrument was entered into by the utility.#

3.The name of the counterparty with whom the hedging instrument was entered into.#

4.The notional quantity of natural gas associated with the hedging instrument.#

5.The notional delivery period associated with the hedging instrument.#

6.The total amount of gains or losses realized by the utility on the hedging instrument.#

7.For each futures contract or fixed-price purchase or sale, the fixed price paid or received by the utility and the final settlement price for the futures contract.#

8.For each swap contract, the fixed price or index price paid by the utility, the index price or fixed price received by the utility, and the final settlement price of each applicable index referenced in the swap contract.#

9.For each option contract, the underlying futures contract or index price referenced in the option contract, the strike price for the option, the premium paid or received by the utility for the option, and the final settlement price for the futures contract or index price referenced in the option.#

10.For any other hedging instruments, relevant economic terms, conditions, reference prices, and other factors to support calculations of gains or losses associated with such instruments.#

11.For the total natural gas volumes hedged during the PGA year, the fully hedged price of gas and the price if the gas had not been hedged.#

b.Underbillings will be collected through ten-month adjustments to the appropriate PGA. The underbilling generated from each PGA clause shall be divided by the anticipated sales volumes for the prospective ten-month period beginning November 1 (based upon the sales determination in subrule 19.9(1)).#

The quotient, determined on the same basis as the utility's tariff rates, shall be added to the PGA for the prospective ten-month period beginning November 1.#

c.Overbillings will be refunded to the customer classification or grouping from which they were generated. Overbillings will be divided by the annual cost of purchased gas subject to recovery for the 12-month period that began the prior September 1 for each PGA clause and applied as follows:#

(1)If the net overbilling from the PGA reconciliation exceeds the applicable percentage of the annual cost of purchased gas subject to recovery for a specific customer classification or grouping, the utility will file a proposed refund plan that includes its interest calculations, its plan for refunding the overbilling either by bill credit or check, and the date it proposes to implement the refund. The minimum amount to be refunded by check is $10. Interest shall be calculated on amounts exceeding the applicable percentage from the PGA year midpoint to the date of refunding. The interest rate shall be the dealer commercial paper rate (90-day, high-grade unsecured notes) quoted in the "Money Rates" section of the Wall Street Journal on the last working day of August of the current year.#

(2)If the net overbilling from the PGA reconciliation does not exceed the applicable percentage of the annual cost of purchased gas subject to recovery for a specific customer classification or grouping, the utility may refund the overbilling by bill credit or check starting on the first day of billing in the November billing cycle of the current year, or the utility may refund the overbilling through ten-month adjustments to the particular PGA from which they were generated. The minimum amount to be refunded by check is $10. This adjustment shall be determined by dividing the overcollection by the anticipated sales volume for the prospective ten-month period beginning November 1 as determined in subrule 19.9(1) for the applicable PGA clause. The quotient, determined on the same basis as the utility's tariff rates, shall be a reduction to that particular PGA for the prospective ten-month period beginning November 1.#

(3)The overbilling percentage applicable to utilities serving fewer than 10,000 customers is 5 percent. For utilities serving 10,000 or more customers, the applicable percentage is 3 percent.#

d.When a customer has reduced or terminated system supply service and is receiving transportation service, any liability for overcollections and undercollections shall be determined in accordance with the utility's gas transportation tariff.#

19.9(7) Refunds related to gas costs charged through the PGA. The utility shall file a refund plan with the commission within 30 days of the receipt of any refund related to gas costs charged through the PGA.#

a.Refunds will be provided to customers by bill credit or check in an amount equal to any refund, plus accrued interest, if the refund exceeds $20 per average residential customer under the applicable customer classification or grouping. The utility may refund lesser amounts through the applicable customer classification or grouping or retain undistributed refund amounts in special refund retention accounts for each customer classification or grouping under the applicable PGA clause until such time as additional refund obligations or interest cause the average residential customer refund to exceed $20. Any obligations remaining in the retention accounts on September 1 shall become a part of the annual PGA reconciliation.#

b.The utility shall file with the refund plan the following information:#

(1)A statement of reason for the refund.#

(2)The amount of the refund with support for the amount.#

(3)The balance of the appropriate refund retention accounts.#

(4)The amount due under each customer classification or grouping.#

(5)The intended period of the refund distribution.#

(6)The estimated interest accrued for each refund through the proposed refund period, with complete interest calculations and supporting data as determined in paragraph 19.9(7)"d."#

(7)The total amount to be refunded, the amount to be refunded per customer classification or grouping, and the refund per ccf or therm.#

(8)The estimated interest accrued for each refund received and for each amount in the refund retention accounts through the date of the filing with the complete interest calculation and support as determined in paragraph 19.9(7)"d."#

(9)The total amount to be retained, the amount to be retained per customer classification or grouping, and the level per ccf or therm.#

(10)The calculations demonstrating that the retained balance is less than $20 per average residential customer with supporting schedules for all factors used.#

c.The refund to each customer will be determined by dividing the amount in the appropriate refund retention account, including interest, by the total ccf or therm of system gas consumed by affected customers during the period for which the refundable amounts are applicable and multiplying the quotient by the ccf or therms of system supply gas actually consumed by the customer during the appropriate period. The utility may use the last available 12-month period if the use of the actual period generating the refund is impractical. The utility shall file complete support documentation for all figures used.#

d.The interest rate on refunds distributed under this subrule, compounded annually, shall be the dealer commercial paper rate (90-day, high-grade unsecured notes) quoted in the "Money Rates" section of the Wall Street Journal on the day the refund obligation vests. Interest shall accrue from the date the rate-regulated utility receives the refund or billing from the supplier or the midpoint of the first month of overcollection to the date the refund is distributed to customers.#

e.The rate-regulated utility shall make a reasonable effort to forward refunds, by check, to eligible recipients who are no longer customers.#

f.The minimum amount to be refunded by check is $10.#

This rule is intended to implement Iowa Code section 476.6(11).#

Source history[ARC 9351C, IAB 6/11/25, effective 7/16/25]#