BEFORE THE MINNESOTA PUBLIC UTILITIES COMMISSION. Beverly Jones Heydinger

Transcription

1 BEFORE THE MINNESOTA PUBLIC UTILITIES COMMISSION Beverly Jones Heydinger Nancy Lange Dan Lipschultz John A. Tuma Betsy Wergin Chair Commissioner Commissioner Commissioner Commissioner In the Matter of the Review of the Annual Automatic Adjustment Reports and Annual Purchased Gas Adjustment True-up Filings In the Matter of the Review of Greater Minnesota Gas Inc. s AAA and True-Up Filing In the Matter of the Review of Xcel Energy s AAA Report and True-Up Filing In the Matter of the Review of Interstate Power and Light s AAA Report and True-Up Filing In the Matter of the Review of Great Plain s Natural Gas Company s AAA Report and True-Up Filing In the Matter of the Review of CenterPoint Energy s AAA and True-Up Filing ISSUE DATE: August 24, 2015 DOCKET NO. G-999/AA DOCKET NO. G-022/AA DOCKET NO. G-002/AA DOCKET NO. G-001/AA DOCKET NO. G-004/AA DOCKET NO. G-008/AA DOCKET NO. G-011/AA DOCKET NO. G-011/AA ORDER ACCEPTING GAS UTILITIES ANNUAL AUTOMATIC ADJUSTMENT REPORTS AND TRUE-UP PROPOSALS AND SETTING FURTHER REQUIREMENTS In the Matter of the Review of Minnesota Energy Resources Corp. Consolidated PGA System AAA Report and True-Up Filing In the Matter of the Review of Minnesota Energy Resources Corp. Northern Natural Gas PGA System AAA Report and True-Up Filing 1

2 PROCEDURAL HISTORY I. Introduction Under Minn. R through , rate-regulated gas and electric utilities may adjust their rates between general rate cases to reflect fluctuations in the prices they pay for gas or electricity purchased for delivery to ratepayers, or for fuel purchased to generate electricity for ratepayers. These adjustments are called automatic adjustments, since they normally take effect without prior Commission approval. The rules require utilities to make detailed filings supporting each automatic adjustment. They also require utilities to make comprehensive annual filings reporting on all automatic adjustments made during the twelve-month period between July 1 of the previous year and June 30 of the reporting year. And they require gas utilities to determine, by customer class, discrepancies between gas costs actually incurred and gas costs collected, and to file a proposed plan to true-up this difference over the coming twelve-month billing cycle. At its meeting of August 6, 2015, the Commission took up the annual reports filed by all rateregulated gas utilities for the reporting year. II. The Parties The natural gas utilities listed below were required to file, and did file, annual automatic adjustment (AAA) reports and annual true-up filings for the reporting year. Greater Minnesota Gas, Inc. Great Plains Natural Gas Company Interstate Power and Light Company Minnesota Energy Resources Corporation-Northern Natural Gas PGA System Minnesota Energy Resources Corporation-Consolidated PGA System CenterPoint Energy Northern States Power Company, dba Xcel Energy (Xcel) The Minnesota Department of Commerce (the Department) examined the companies filings in detail and filed both company-specific and broad-based policy comments and recommendations. Several companies revised or supplemented their filings based on the Department s comments, and the Department revised its recommendations based on the companies reply filings. The Office of the Attorney General Residential Utilities and Antitrust Division filed comments on June 24, There were no contested issues by the time the filings came before the Commission on August 6,

3 I. The Filing Requirements FINDINGS AND CONCLUSIONS The automatic adjustment rules require that each AAA report include at least the information set forth below. A. Minn. R Annual Reports; Policies and Actions The utility s procurement policies A summary of actions B. Minn. R Annual Reports; Automatic Adjustment Charges Detailed information on all automatic adjustments made during each month of the reporting year for each customer class Total cost of gas delivered to customers during the reporting year Total revenues collected from customers for energy delivered Detailed information on all billing adjustments, supplier refunds, and any refunds credited to customers A list of all Purchased Gas Adjustment rule variances requested or in effect during the reporting year, together with an explanation of why they were necessary A list of changes in contract demand which occurred during the reporting year and the reasons for those changes Disclosure of the levels of customer-owned gas volumes delivered through the utility s distribution system under retail transportation tariffs during the reporting year An explanation of deviations between gas cost recovery and actual gas costs during the reporting year C. Minn. R Annual Auditor s Report An independent auditor s report evaluating the utility s accounting for automatic adjustments for the reporting year D. Minn. R Annual Five-Year Projection A brief statement of the utility s opinion on the impact of market forces on gas costs for the coming year E. Minn. R , subp. 7 and , subp. 4 True-up Amount and Filings A plan to true-up, over the course of the next twelve months, discrepancies between gas costs actually incurred for each customer class and revenues collected from each customer class. 3

4 II. Summary of Commission Action Finding that the proposed AAA reports as supplemented and true-up proposals demonstrate compliance with the applicable statute and rules, the Commission accepts and approves the reports and filings as supplemented. The Commission also imposes additional requirements regarding future AAA reports, and grants variances to MERC and Great Plains as set forth below. III. Annual Automatic Adjustment Reports and True-Up Proposals The Commission has reviewed the utilities filings and the Department s filings and recommendations with regard thereto. The Commission will accept and approve the automatic adjustment reports and true-up proposals of all gas utilities as supplemented. The Commission concurs with the Department that the approved filings demonstrate substantive compliance with the automatic adjustment statute and the automatic adjustment rules. The Commission will therefore accept and approve these utilities filings, and approve their true-up proposals as presented in the Department s May 5, 2015 Review of the Annual Automatic Adjustment Report. IV. Minnesota Energy Resources Corporation s Variance Request As part of its evaluation of the filings of MERC-NNG and MERC-Consolidated, 1 the Department made certain recommendations related to errors MERC discovered after filing and implementing its September 1, 2014 true-up factors. A. Deer River Error MERC discovered that it had incorrectly assigned certain gas customer accounts in the Deer River area to the MERC-NNG PGA system from July 2013 to October The Deer River customers were incorrectly billed MERC-NNG PGA system monthly gas cost rate factors but should have been billed MERC-Consolidated PGA system gas cost rate factors. The incorrect assignment of PGA systems caused these customers in Deer River to be overcharged for the cost of gas. This also caused revenues associated with approximately 843,100 therms of gas to be incorrectly included in the 2014 true-up for the MERC-NNG system, and incorrectly excluded from the 2014 true-up for the MERC-Consolidated PGA system. MERC proposed to correct the overstatement of gas cost revenues applied to the MERC-NNG system and the understatement of gas cost revenues applied to the MERC-Consolidated PGA system by adjusting the FY 2015 true-up beginning balances used in the calculation of the FY 2015 gas cost true-up factors. In its comments, the Department agreed that a variance to Minn. R , subp.7 and Minn. R , subp. 2 was necessary to adjust the September 1, 2015 true-up balance, and recommended that the Commission: 1 In December 2012, the Commission approved consolidation of MERC s four purchased gas adjustment system (PGA) into two PGA systems MERC-NNG and MERC-Consolidated. 4

5 Allow MERC to adjust the September 1, 2015 true-up balance for its MERC- NNG classes that were undercharged due to the system assignment error by MERC; Allow MERC to adjust the September 1, 2015 true-up balance for its MERC- Consolidated classes that were overcharged due to the system assignment error by MERC; and Grant MERC a variance to Minn. R , subp. 7 and , subp. 2. B. Farm Tap Error In its July 6, 2015 comments, MERC stated that after submission of its 2014 true-up reports, it was notified by Northern Natural Gas (NNG) that there was an error in the amount of gas MERC had consumed and the amount paid by MERC s farm tap customers. MERC stated it had resolved its obligation to NNG through a swap of the imbalance out of MERC s available storage capacity. MERC proposed to account for the settlement transaction in its 2015 annual true-up. MERC stated that its proposal would also require a variance to Minn. R , subp. 7. The Department agreed that the storage swap was a reasonable way to settle the issue, and likened the situation to a similar situation that had occurred in MERC s FY 2013 AAA filing, in which case the Commission had granted variances to Minn. R , subp. 7, Minn. R , subp. 2, and Minn. R The Department recommended that MERC request a variance to all three rules to enable the Company to make the correction to its 2015 FY Report. At the Commission meeting on August 6, MERC confirmed that it was requesting a variance to Minn. R , subp. 7, Minn. R , subp. 2, and Minn. R to address the above Deer River and Farm Tap issues. C. The Legal Standard Minn. R provides that the Commission shall grant a variance to its rules when it determines that the following requirements are met: A. enforcement of the rule would impose an excessive burden upon the applicant or others affected by the rule; B. granting the variance would not adversely affect the public interest; and C. granting the variance would not conflict with standards imposed by law. D. Commission Action The Commission agrees that MERC s request for a variance from the rules is reasonable and in the best interest of MERC s ratepayers. Accordingly, the Commission will grant a variance to Minn. R , subp. 2, Minn. R , subp. 7, and Minn. R to allow MERC to adjust the September 1, 2015 true-up balance for MERC-NNG s customer classes that were undercharged due to the system assignment 5

6 error and the farm tap customer error, and adjust the September 1, 2015 true-up balance for its MERC-Consolidated classes that were overcharged the system assignment error by MERC. The Commission will grant the variance, making the following findings: Strict enforcement of Minn. R , subp. 7 would impose an excessive burden on customers on MERC s Northern Natural Gas PGA system because these customers would pay more for their gas than they should have. MERC s proposal to adjust the September 1, 2015 true-up balances alleviates an unjust burden to its ratepayers by correcting the allocation error. The proposal is also consistent with the public interest by correcting the error and more appropriately allocating costs between customers. The proposal does not conflict with other standards imposed by law. The Commission also finds it reasonable to grant a variance to Minn. R , subp. 2 and Minn. R for the same reasons and based on the same findings as the variance to Minn. R , subp. 7 granted above. V. Great Plains FY 2014 True-up Corrections and Need for a Variance Great Plains Natural Gas Company (Great Plains) has two PGA systems, the North District and the South District, which have separate true-up calculations. As part of its evaluation of Great Plains filings, the Department made certain recommendations related to errors discovered in the filings. The Department stated that Great Plains North and South Districts true-up factors for firm customers do not reflect the correct gas costs. The Department recommended that for both systems, the Commission require Great Plains to report the corrections to its demand costs as a separate line item to the beginning balance of the demand cost of gas in its September 1, 2015 true-up. Great Plains agreed with this recommendation. The Commission agrees with this recommendation and will so order. To allow Great Plains to adjust its beginning balances in its FY 2015 filing for errors made in this year s calculations, the Commission will also grant the utility a variance to Minn. R , subp. 7 (for the FY 2015 true-up) and (for the FY 2014 true-up, making the following findings: Strict enforcement of Minn. R , subp. 7 and Minn. R would impose an excessive burden on customers in Great Plains system. Adjusting the FY 2015 true-up balances alleviates an unjust burden to its ratepayers by correcting the assignment of costs to its PGA systems. The proposal is consistent with the public interest by correcting the errors and more appropriately allocating costs between customers. The proposal does not conflict with other standards imposed by law. 6

7 VI. Curtailment Requirements and Penalties During the 2015 AAA review process, the Department raised certain questions regarding the effectiveness of imposing curtailment penalties to curb the unauthorized consumption of gas by interruptible customers after a utility has alerted them to a gas curtailment period. The Department requested information from each gas utility. In its June 24, 2015 comments, the Department discussed the responses provided by the utilities, and further requested the submission of the following information for the next three AAA Reports, for each customer that did not comply with an announced curtailment period interruption during the heating season: the volume of gas consumed by the non-compliant customer during the curtailment period; the specific commodity rate charged for the unauthorized gas used and how that rate is determined; the financial penalty, if any, assessed by the company on the customer, including calculations in determining the penalty or penalties; and a discussion about utility communication with each customer regarding noncompliance with interruptions (excluding invoices). The Commission agrees that this information would be helpful when this issue is revisited, and will order its submission for the next three AAA Reports ( , , and ). Further, in its May 5, 2015 AAA Report, the Department suggested that the unauthorized gas use penalty for interruptible utilities using gas during a curtailment period be raised to $5.00 per therm. In furtherance of this suggestion, the Department recommended that Greater Minnesota Gas make a miscellaneous filing, in a new docket, to update its tariff to include a $5.00 per therm curtailment penalty. The Department also recommended that MERC be required, in its next general rate case, to update its tariff from a $20.00 per dekatherm curtailment penalty to a $50.00 per dekatherm penalty. The Commission agrees that implementing a more consistent penalty for unauthorized gas use by interruptible customers during curtailment periods is reasonable and advisable and will so order. 2 VII. Xcel s Capacity Utilization Program On February 18, 2010, the Commission approved, as a three-year pilot program, Xcel Energy s natural gas capacity utilization plan for its gas distribution and electric generation business units. 3 The capacity utilization program allows for capacity sharing between Xcel s gas distribution and electric generation business units. The Commission s order required Xcel to 2 The Commission will make no change at this time to CenterPoint s tariff, which includes a two-part penalty structure charging the customer $1 per therm (first occurrence) and $2 per therm (thereafter) for unauthorized gas use, plus the highest incremental cost of gas during the day. 3 In the Matter of the Petition of Northern States Power Company, a Minnesota Corporation, for Approval of a Proposed Accounting Treatment for a Natural Gas Capacity Use Plan for Xcel's Gas Distribution and Electric Generation Business Units, Docket No, E,G-002/M , Order Approving Program with Modifications and Requiring Report (February 18, 2010). 7

8 include in its AAA Reports a listing of each individual transaction showing quantities and cost, the specific accounting entries, and a brief explanation of the transaction. The three-year pilot program ended on February 18, The Company, however, continued to use the pilot program mechanisms on five occasions after the expiration date. Xcel subsequently filed a request for approval of a permanent extension of the accounting treatment for the natural gas capacity utilization plan in Docket No. E,G-002/M The Department filed reply comments in this docket on July 16, 2015, suggesting that the Commission address the capacity utilization program in the AAA docket, require Xcel to include both electric and gas transactions in its annual reports, and approve Xcel s request to extend use of the accounting treatment for the five instances occurring after expiration of the program. The Commission will defer consideration of Xcel Energy s Capacity Utilization Program as a permanent program to Docket No. E,G-002/M The Commission will, however, grant Xcel an extension of time in which to use the accounting treatment under the Capacity Utilization Program from the date the pilot project ended through the date of a Commission order in Docket No. E,G-002/M addressing the extension of the pilot program on a permanent basis. ORDER 1. The Commission hereby accepts the gas utilities annual automatic adjustment reports as complete under Minn. R., parts through The Commission requires each utility that engages in physical and financial hedging practices in the procurement of gas supplies to continue to provide in subsequent annual automatic adjustment filings a post-mortem analysis, in a format similar to what was provided in this docket. 3. For the next three AAA reports ( , , and ), all Minnesota regulated natural gas utilities shall provide the following information on unauthorized gas use for each customer that did not comply with a called interruption during the heating season: A. The volume of gas consumed by the non-compliant customer during the curtailment period. B. The specific commodity rate charged for the unauthorized gas used and how that rate is determined. C. The financial penalty, if any, assessed by the company to the customer, including calculations in determining the penalty or penalties. D. A discussion about utility communication with each customer regarding noncompliance with interruptions (excluding invoices). 8

9 4. Greater Minnesota Gas shall make a miscellaneous compliance filing in a new docket within 30 days of this order to update its tariff to include a $5.00 per therm curtailment penalty. 5. MERC shall, in its next general rate case, update its tariff from a $20 per dekatherm curtailment penalty to a $50 per dekatherm penalty. 6. MERC shall, in its next general rate case, update its Transportation-for-Resale tariff to clarify that the end-use customers for this service are firm customers and cannot be interrupted. 7. The Commission hereby accepts the Fiscal Year 2014 true-up proposal as filed by Greater Minnesota Gas, Inc., in Docket No. G-022/AA , and authorizes the Company to implement its true-up, as shown in attachment G5 of the Department s May 5, 2015 Review of the Annual Automatic Adjustment Reports. 8. The Commission hereby grants Great Plains Natural Gas Company a variance to Minn. R , and Minn. R to allow making the corrections in the FY 2015 true-ups as set forth above as necessary and justified. 9. The Commission hereby accepts the Fiscal Year 2014 true-up proposal as filed by Great Plains Natural Gas Company, in Docket No. G-004/AA , and authorizes the Company to implement its true-up, as shown in attachment G6a and G6b of the Department s May 5, 2015 Review of the Annual Automatic Adjustment Reports. 10. Great Plains Natural Gas Company shall describe and report each of the Fiscal Year 2014 corrections as a separate line item to the beginning balance of the demand cost of gas in its September 1, 2015 true-up. 11. The Commission hereby accepts the Fiscal Year 2014 true-up proposal as filed by Interstate Power and Light Company, in Docket No. G-001/AA , and authorizes the Company to implement its true-up, as shown in attachment G7 of the Department s May 5, 2015 Review of the Annual Automatic Adjustment Reports. 12. The Commission hereby accepts the Fiscal Year 2014 true-up proposal as filed by Minnesota Energy Resources Corporation - NNG, in Docket No. G-011/AA , and authorizes the Company to implement its true-up, as shown in attachment G8 of the Department s May 5, 2015 Review of the Annual Automatic Adjustment Reports. 13. The Commission hereby accepts the Fiscal Year 2014 true-up proposal as filed by Minnesota Energy Resources Corporation - Consolidated, in Docket No. G-011/AA , and authorizes the Company to implement its true-up, as shown in attachment G9 of the Department s May 5, 2015 Review of the Annual Automatic Adjustment Reports. 14. Minnesota Energy Resources Corporation may adjust the September 1, 2015 true-up balance for its MERC-NNG classes that were undercharged due to the system assignment error, and the farm tap customer error in payments to NNG. 9

10 15. Minnesota Energy Resources Corporation may adjust the September 1, 2015 true-up balance for its MERC-Consolidated classes that were overcharged due to the system assignment error by MERC. 16. The Commission hereby grants Minnesota Energy Resources Corporation a variance to Minn. R , subp. 7, Minn. R , subp. 2, and Minn. R to allow for the correction in the FY 2015 true-ups as set forth above as necessary and justified. 17. The Commission hereby accepts the true-up proposal as filed by CenterPoint Energy, in Docket No. G-008/AA , and authorizes the Company to implement its true-up, as shown in attachment G10 of the Department s May 5, 2014 Review of the Annual Automatic Adjustment Reports. 18. The Commission hereby accepts the true-up proposal as filed by Xcel Energy in Docket No. G-002/AA , and authorizes the Company to implement its true-up, as shown in attachment G11 of the Department s May 5, 2014 Review of the Annual Automatic Adjustment Reports. 19. The Commission will defer consideration of Xcel Energy s Capacity Utilization Program as a permanent program to Docket No. E,G-002/M The Commission grants an extension of time to Xcel Energy to use the accounting treatment under the Capacity Utilization Program from the date the pilot program ended through the date of the Commission order in Docket No. E,G-002/M This order shall become effective immediately. BY ORDER OF THE COMMISSION Daniel P. Wolf Executive Secretary This document can be made available in alternative formats (e.g., large print or audio) by calling (voice). Persons with hearing loss or speech disabilities may call us through their preferred Telecommunications Relay Service. 10