Conn. Agencies Regs. § 16-47a-7 - Pricing of transfers of assets, goods and services

(a) Except as otherwise provided by any federal law or state statute or approved by the Department, all transfer prices charged for assets, goods or services, including the use or transfer of personnel, exchanged or shared between and among a gas company and its affiliates, shall be consistent with the Cost Allocation Manual submitted to the Department pursuant to section 16-47a-9(b)(3) of this Gas Code of Conduct, and shall meet the following requirements:

(1) Purchases from CSCs and regulated public service companies. If a gas company buys goods or services from a CSC or another regulated public service company, the gas company shall not pay more than the fully allocated cost of the selling affiliate and shall have the burden of proving, if required by the Department, that all goods and services procured from the selling affiliate have been procured on terms and conditions comparable to the most favorable terms and conditions reasonably available in the relevant market. Such fully allocated cost shall be entitled to a rebuttable presumption of reasonableness where reasonableness is typically measured by fair market value;

(2) Purchases from unregulated affiliates. If a gas company buys goods or services from an unregulated affiliate, the gas company shall pay the lower of the fair market value or the unregulated affiliate's fully allocated cost, and shall have the burden of proving that all goods or services procured from the unregulated affiliate have been procured on terms and conditions comparable to the most favorable terms and conditions reasonably available in the relevant market. At a minimum, a gas company shall be prepared to show that comparable goods or services could not reasonably have been procured at a lower price from other qualified sources or that a gas company could not have provided the services or goods itself on the same basis at a lower cost; and

(3) Sales. If a gas company sells goods or services to any affiliate, the gas company shall be compensated not less than the fair market value of such goods or services. A gas company shall obtain the Department's approval prior to selling to any affiliate any goods or services where the total proceeds of such sale are $150,000 or more and where the sale price is less than the fair market value of the good or service.

(b) For purposes of this section, the fair market value of any asset, good or service shall be based on the highest price that the asset, good or service could have been reasonably realized after an open and competitive sale. If a gas company does not engage in competitive solicitation and instead obtains the assets, goods or services from an affiliate, the gas company shall implement adequate processes to comply with the requirements of subsection (a) of this section and ensure that in each case the gas company's customers receive service at the lowest reasonable cost. Under appropriate circumstances, prices may be based on incremental cost or other appropriate pricing mechanisms.

(c) Tariffed goods and services provided by a gas company to an affiliate shall be provided at the same prices and terms authorized by the applicable tariff and made available to similarly situated customers under the applicable tariff.

(d) Costs that a gas company incurs in assembling, compiling, preparing or furnishing requested customer information or confidential systems operation information for or to an affiliate, to the extent permitted under this Gas Code of Conduct, shall be recovered from the requesting party.

Notes

Conn. Agencies Regs. § 16-47a-7

Adopted effective February 8, 2011