Past Gas Cost Adjustment

Past Gas Cost Adjustment

The Past Gas Cost Adjustment is a true-up amount that ensures Customers pay exactly the cost of gas incurred by the utility. The actual costs of gas and the revenue received from Customers are recorded into Gas Cost Balancing Accounts. When the Gas Cost Adjustment is filed, any expected over-under-collected balance in the Gas Cost Balancing Account shall be amortized into rates through the Past Gas Cost Adjustment, such that the balance of the Gas Cost Balancing Account is expected to be zero at the end of the true-up period. These accounts will be interest bearing.

The Past Cost of Gas Adjustment will be expressed in cents per therm, and computed to the nearest one-tenth cents. This charge shall be calculated by taking the estimated amount in the Gas Cost Balancing Account, at the end of the current period, and dividing it by the estimated throughput for all sales customers for the upcoming true-up period.

A. Gas Cost Balancing Accounts
Bangor Gas Company will maintain balancing accounts for each portfolio of gas. These accounts will balance all costs of gas against all revenues received for gas sales for the respective portfolio.

B. Accounting Treatment:
Adjustments will be recorded on a monthly basis to these accounts, respectively, as follows:

1. A debit entry will be made for all costs of gas for the month including:

a. The cost of gas purchased at the city gate. This includes all firm, interruptible, intra-month, spot or other purchases made at the City Gate of the Bangor Gas System from suppliers, marketers, pipelines, traders, or any other entity, including transportation Customers of Bangor Gas who must sell gas to remain in balance.
b. Any gas purchased at a hub or basin for transport to the Bangor Gas System.
c. Any transportation charges on interstate pipelines or collection systems for gas not purchased at the city gate for transportation to the Bangor Gas System. This includes reservation charges, variable charges, in-kind fuel charges, for firm or interruptible transportation and any charges for purchases of capacity on a secondary market.
d. Any storage charges from third parties associated with storing gas for use of the Bangor Gas Customers. This will include any reservation charges for storage inventory capacity, injection capacity or withdrawal capacity, as well as any variable (including in-kind) charges associated with moving the gas into or out of storage.
e. A carrying charge for any gas held in storage. This will be calculated at the utility’s short run interest rate. The carrying charge will be calculated as the utility’s short-run Interest Rate times the average inventory of gas in storage times the monthly average cost of gas, exclusive of any transportation charges.
f. Any balancing fees or charges on non-Bangor Gas transmission systems related to gas that is in the portfolio of Bangor Gas.
g. Any in-kind charges will be evaluated at the monthly average cost of gas in the Bangor Gas Portfolio.
h. Any costs associated with options or futures transactions included in the
Bangor Gas Portfolio.
i. Any taxes or levies on the gas purchased for the Bangor Gas Portfolio.
j. Any other charges for gas buying activities proposed by Bangor Gas and approved by the Maine PUC.

2. A credit entry will be made for:

a. Any refunds received from suppliers, storage providers, or pipelines.
b. Any revenue from off-system sales of gas from the portfolio, or any sales for balancing purposes.
c. All revenue received from Customers under the Current Cost of Gas rate component. This will be the rate component times the sales during the month.
d. All revenue received from Customers under the Past Gas Cost Adjustment rate component. This will be the rate component times the sales during the month.

The current month balance in each account, respectively, shall equal the sum of the adjustments discussed in the previous section.

The accumulated month-ending balance in each account, respectively, shall equal the sum of:


1. The current month balance; plus the account balance at the beginning of the month; plus any adjustments applicable to the account balance at the beginning of
the month; plus

2. The monthly interest rate multiplied by one-half the sum of the account balance a the beginning of the month plus the account balance at the end of the month

C. Interest Rate
In accordance with the MPUC Rules and Regulations, Section 5 of Chapter 430, interest shall accrue on the over/under-collected gas cost in each account. The interest rate used  will be the Company’s average short-term cost of borrowing for the applicable month.

D. Monthly Amortization
The Past Gas Cost Adjustment rate component will be calculated by dividing an estimate of the over-under-collected balance by an estimate of the expected gas throughput for the upcoming true-up period so that any expected over-under-collected balance in the respective GCBA is amortized over the next true-up period.