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A08738
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
107
Session of
2017
INTRODUCED BY GODSHALL, BAKER, BARRAR, CUTLER, FARRY, A. HARRIS,
HEFFLEY, PICKETT, WHEELAND, ZIMMERMAN, D. COSTA AND KAMPF,
JANUARY 23, 2017
AS REPORTED FROM COMMITTEE ON CONSUMER AFFAIRS, HOUSE OF
REPRESENTATIVES, AS AMENDED, JUNE 20, 2018
AN ACT
Amending Title 66 (Public Utilities) of the Pennsylvania
Consolidated Statutes, in rates and distribution systems,
providing for recovery of natural gas distribution system
extension costs.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Title 66 of the Pennsylvania Consolidated
Statutes is amended by adding a section to read:
§ 1330. Recovery of natural gas distribution system extension
costs.
(a) Authority.--
(1) A natural gas distribution company may petition the
commission to approve the establishment of a distribution
system extension charge to provide for the recovery on a full
and current basis through a reconcilable adjustment clause
under section 1307 (relating to sliding scale of rates;
adjustments) of the fixed, which shall consist of
depreciation and pretax return, reasonable and prudent cost
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incurred to extend a facility to serve an unserved or
underserved area.
(2) A natural gas distribution company may seek
authorization from the commission to recover through the
distribution system extension charge the costs of rebates or
buy down expenditures made by the company to reduce upfront
costs of in-house piping and natural gas equipment owned by
the customer.
(b) Petition.--A petition for commission approval of a
distribution system extension charge shall include:
(1) An initial tariff that includes a description of the
types of facility to be constructed, which may include
service lines, and the manner in which the costs will be
recovered through the distribution system extension charge.
(2) Testimony, affidavits, exhibits or other evidence
that demonstrates that a distribution system extension charge
is in the public interest and will facilitate economically
feasible extensions to serve an unserved or underserved area
without unreasonably burdening existing customers of the
natural gas distribution company.
(3) As a part of the initial tariff, a natural gas
distribution company may propose:
(i) The establishment of a customer contribution
amount above which some or all of the costs are to be
recovered through the distribution system extension
charge.
(ii) The establishment of a standard per-mile
extension cost for all extension projects under this
mechanism, with costs in excess of the standard to be
recovered through the distribution system extension
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charge.
(iii) Other mechanisms consistent with the public
interest and the policy of this section.
(4) Following the filing of a petition, the commission
shall, after notice and opportunity to be heard, approve,
modify or reject the distribution system extension charge and
initial tariff. The commission shall hold evidentiary and
public input hearings as necessary to review the petition or
subsequent filings under the approved tariff.
(c) Limitation.--The distribution system extension charge
may not exceed 2.5% of the total amount billed to customers
under the applicable rates of the natural gas distribution
company. Upon petition of the natural gas distribution company,
the commission may grant a waiver of the 2.5% limit if the
commission finds that the waiver is in the public interest.
§ 1330. RECOVERY OF NATURAL GAS DISTRIBUTION SYSTEM EXTENSION
COSTS.
(A) AUTHORITY.--
(1) A NATURAL GAS DISTRIBUTION COMPANY MAY PETITION THE
COMMISSION TO APPROVE THE ESTABLISHMENT OF A DISTRIBUTION
SYSTEM EXTENSION CHARGE TO PROVIDE FOR THE RECOVERY ON A FULL
AND CURRENT BASIS THROUGH A RECONCILABLE ADJUSTMENT CLAUSE
UNDER SECTION 1307 (RELATING TO SLIDING SCALE OF RATES;
ADJUSTMENTS) OF THE FIXED REASONABLE AND PRUDENT COSTS, WHICH
SHALL CONSIST OF DEPRECIATION AND PRETAX RETURN, INCURRED TO
EXTEND A FACILITY TO SERVE AN UNSERVED OR UNDERSERVED AREA.
FOR CITY NATURAL GAS DISTRIBUTION OPERATIONS, RECOVERABLE
COSTS SHALL BE AMOUNTS REASONABLY EXPENDED OR INCURRED TO
EXTEND A FACILITY TO SERVE AN UNSERVED OR UNDERSERVED AREA
AND ASSOCIATED FINANCING COSTS, IF ANY, INCLUDING DEBT
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SERVICE, DEBT SERVICE COVERAGE AND ISSUANCE COSTS.
(2) THE DISTRIBUTION SYSTEM EXTENSION CHARGE MAY RECOVER
ONLY THOSE COSTS TO EXTEND A FACILITY THAT ARE UNECONOMIC
UNDER THE CRITERIA FOR MAIN EXTENSION IN THE TARIFF OF THE
NATURAL GAS DISTRIBUTION COMPANY AS APPROVED BY THE
COMMISSION.
(3) ANY CAPITAL COSTS AND EXPENSES RECOVERED THROUGH THE
DISTRIBUTION SYSTEM EXTENSION CHARGE SHALL BE REASONABLE,
PRUDENT AND USED AND USEFUL IN PROVIDING SERVICE.
(4) THE DISTRIBUTION SYSTEM EXTENSION CHARGE SHALL BE
RESET AT ZERO AS OF THE EFFECTIVE DATE OF NEW BASE RATES THAT
PROVIDE FOR PROSPECTIVE RECOVERY OF THE ANNUAL COSTS
PREVIOUSLY RECOVERED UNDER THE DISTRIBUTION SYSTEM EXTENSION
CHARGE.
(B) PETITION.--A PETITION FOR COMMISSION APPROVAL OF A
DISTRIBUTION SYSTEM EXTENSION CHARGE SHALL INCLUDE ALL OF THE
FOLLOWING:
(1) AN INITIAL TARIFF THAT INCLUDES A DESCRIPTION OF THE
TYPES OF FACILITY TO BE CONSTRUCTED, WHICH MAY INCLUDE
SERVICE LINES, AND THE MANNER IN WHICH THE COSTS WILL BE
RECOVERED THROUGH THE DISTRIBUTION SYSTEM EXTENSION CHARGE.
(2) TESTIMONY, AFFIDAVITS, EXHIBITS OR OTHER EVIDENCE
THAT DEMONSTRATES THAT A DISTRIBUTION SYSTEM EXTENSION CHARGE
IS IN THE PUBLIC INTEREST AND WILL FACILITATE ECONOMICALLY
FEASIBLE EXTENSIONS TO SERVE AN UNSERVED OR UNDERSERVED AREA
WITHOUT UNREASONABLY BURDENING EXISTING CUSTOMERS OF THE
NATURAL GAS DISTRIBUTION COMPANY. A DISTRIBUTION SYSTEM
EXPANSION CHARGE SHALL BE DEEMED TO FACILITATE ECONOMICALLY
FEASIBLE EXTENSIONS WHEN TESTIMONY, AFFIDAVITS, EXHIBITS OR
OTHER EVIDENCE DEMONSTRATE THAT A PROJECT WOULD NOT BE
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CONSTRUCTED WITHOUT THE USE OF THE CHARGE.
(3) THE ESTABLISHMENT OF A CUSTOMER CONTRIBUTION AMOUNT
ABOVE WHICH SOME OR ALL OF THE COSTS ARE TO BE RECOVERED
THROUGH THE DISTRIBUTION SYSTEM EXTENSION CHARGE. THE
FOLLOWING APPLY:
(I) A RESIDENTIAL CUSTOMER WITH A GROSS MONTHLY
HOUSEHOLD INCOME LEVEL AT OR BELOW 250% OF THE FEDERAL
POVERTY LEVEL SHALL NOT BE REQUIRED TO PAY A CUSTOMER
CONTRIBUTION AMOUNT. THE COSTS OTHERWISE PAYABLE BY THE
RESIDENTIAL CUSTOMER SHALL BE DEEMED UNECONOMIC COSTS AND
RECOVERED THROUGH THE DISTRIBUTION SYSTEM EXTENSION
CHARGE.
(II) A CUSTOMER CONTRIBUTION AMOUNT MAY BE PAID BY A
RESIDENTIAL CUSTOMER, AT THE CUSTOMER'S OPTION, THROUGH A
ONE-TIME LUMP SUM PAYMENT OR IN ACCORDANCE WITH A
PROVISION IN A NATURAL GAS COMPANY'S COMMISSION-APPROVED
TARIFF WHICH PROVIDES FOR INCREMENTAL PAYMENTS DESIGNED
TO SPREAD PAYMENT OF A CUSTOMER CONTRIBUTION AMOUNT OVER
A FIXED TIME PERIOD.
(4) A public education plan regarding the distribution
system extension charge and other related issues.
(C) EXTENSIONS COSTS.--AS A PART OF THE INITIAL TARIFF UNDER
SUBSECTION (B), A NATURAL GAS DISTRIBUTION COMPANY MAY PROPOSE
ANY OF THE FOLLOWING:
(1) THE ESTABLISHMENT OF A STANDARD PER-MILE EXTENSION
COST FOR ALL EXTENSION PROJECTS UNDER THIS MECHANISM, WITH
COSTS IN EXCESS OF THE STANDARD TO BE RECOVERED THROUGH THE
DISTRIBUTION SYSTEM EXTENSION CHARGE.
(2) OTHER MECHANISMS CONSISTENT WITH THE PUBLIC INTEREST
AND THE POLICIES SPECIFIED UNDER THIS SECTION.
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(D) HEARING.--AFTER THE FILING OF A PETITION UNDER
SUBSECTION (B), THE COMMISSION SHALL, AFTER NOTICE AND
OPPORTUNITY TO BE HEARD, APPROVE, MODIFY OR REJECT THE
DISTRIBUTION SYSTEM EXTENSION CHARGE AND INITIAL TARIFF. THE
COMMISSION SHALL HOLD EVIDENTIARY AND PUBLIC INPUT HEARINGS AS
NECESSARY TO REVIEW THE PETITION OR SUBSEQUENT FILINGS UNDER THE
APPROVED TARIFF.
(E) LIMITATION.--THE DISTRIBUTION SYSTEM EXTENSION CHARGE
MAY NOT EXCEED 1.5% OF THE AMOUNT BILLED TO CUSTOMERS UNDER THE
APPLICABLE DISTRIBUTION RATES OF THE NATURAL GAS DISTRIBUTION
COMPANY.
(F) EXPIRATION.--THIS SECTION SHALL EXPIRE DECEMBER 31,
2028.
(G) DEFINITIONS.-- AS USED IN THIS SECTION, THE FOLLOWING
WORDS AND PHRASES SHALL HAVE THE MEANINGS GIVEN TO THEM IN THIS
SUBSECTION:
"UNDERSERVED AREA." AN AREA IN WHICH NATURAL GAS SERVICE IS
ALREADY AVAILABLE IN A PORTION OF A COMMUNITY OR MUNICIPALITY
AND THE NATURAL GAS DISTRIBUTION COMPANY HAS IDENTIFIED
SIGNIFICANT POTENTIAL FOR NATURAL GAS DEMAND IN PORTIONS OF THE
COMMUNITY OR MUNICIPALITY WHERE SERVICE IS NOT CURRENTLY
AVAILABLE.
"UNSERVED AREA." AN AREA IN WHICH A GROUP OF POTENTIAL
CUSTOMERS ARE LOCATED IN CLOSE PROXIMITY TO AN EXISTING NATURAL
GAS DISTRIBUTION MAIN.
Section 2. This act shall take effect in 60 days.
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