Iowa Admin. Code r. 199-19.12 - Flexible rates
(1)
Purpose. This subrule is intended to allow gas utility
companies to offer, at their option, incentive or discount rates to their sales
and transportation customers.
(2)
General criteria.
a. Natural
gas utility companies may offer discounts to individual customers, to selected
groups of customers, or to an entire class of customers. However, discounted
rates must be offered to all directly competing customers in the same service
territory. Customers are direct competitors if they make the same end product
(or offer the same service) for the same general group of customers. Customers
that only produce component parts of the same end product are not directly
competing customers.
b. In deciding
whether to offer a specific discount, the utility shall evaluate the individual
customer's, group's, or class's situation and perform a cost-benefit analysis
before offering the discount.
c.
Any discount offered should be such as to significantly affect the customer's
or customers' decision to stay on the system or to increase
consumption.
d. The consequences of
offering the discount should be beneficial to all customers and to the utility.
Other customers should not be at risk of loss as a result of these discounts;
in addition, the offering of discounts shall in no way lead to subsidization of
the discounted rates by other customers in the same or different
classes.
(3)
Tariff requirements. If a company elects to offer flexible
rates, the utility shall file for review and approval tariff sheets specifying
the general conditions for offering discounted rates. The tariff sheets shall
include, at a minimum, the following criteria:
a. The cost-benefit analysis must demonstrate
that offering the discount will be more beneficial than not offering the
discount.
b. The ceiling for all
discounted rates shall be the approved rate on file for the customer's rate
class.
c. The floor for the
discount sales rates shall be equal to the cost of gas. Therefore, the maximum
discount allowed under the sales or transportation tariffs is equal to the
nongas costs of serving the customer.
d. No discount shall be offered for a period
longer than five years, unless the board determines upon good cause shown that
a longer period is warranted.
e.
Discounts should not be offered if they will encourage deterioration in the
load characteristics of the customer receiving the discount.
f. Customer charges may be
discounted.
(4)
Reporting requirements. Each natural gas utility electing to
offer flexible rates shall file annual reports with the commission within 30
days of the end of each 12 months. Reports shall include the following
information:
a. Section 1 of the report
concerns discounts initiated in the last 12 months. For all discounts initiated
in the last 12 months, the report shall include:
(1) The identity of the new customers (by
account number, if necessary);
(2)
The value of the discount offered;
(3) The cost-benefit analysis
results;
(4) The cost of alternate
fuels available to the customer, if relevant;
(5) The volume of gas sold to or transported
for the customer in the preceding 12 months; and
(6) A copy of all new or revised
flexible-rate contracts executed between the utility and its
customers.
b. Section 2
of the report relates to overall program evaluation. For all discounts
currently being offered, the report shall include:
(1) The identity of each customer (by account
number, if necessary);
(2) The
total volume of gas sold or transported in the last 12 months to each customer
at discounted rates, by month;
(3)
The volume of gas sold or transported to each customer in the same 12 months of
the preceding year, by month;
(4)
The dollar value of the discount in the last 12 months to each customer, by
month;
(5) The dollar value of
volumes sold or transported to each customer for each of the previous 12
months; and
(6) If customer charges
are discounted, the dollar value of the discount shall be separately
reported.
c. Section 3 of
the report concerns discounts denied or discounts terminated. For all customers
specifically evaluated and denied or having a discount terminated in the last
12 months, the report shall include:
(1)
Customer identification (by account number, if necessary);
(2) The volume of gas sold or transported in
the last 12 months to each customer, by month;
(3) The volume of gas sold or transported to
each customer in the same 12 months of the preceding year, by month;
and
(4) The dollar value of volumes
sold or transported to each customer for each of the past 12
months.
d. No report is
required if the utility had no customers receiving a discount during the
relevant period and had no customers which were evaluated for the discount and
rejected during the relevant period.
(5)
Rate case treatment. In
a rate case, 50 percent of any identifiable increase in net revenues will be
used to reduce rates for all customers; the remaining 50 percent of the
identifiable increase in net revenues may be kept by the utility. If there is a
decrease in revenues due to the discount, the utility's test year revenues will
be adjusted to remove the effects of the discount by assuming that all sales or
transportation services or customer charges were made at full tariffed rates
for the customer class. Determining the actual amount will be a factual
determination to be made in the rate case.
Notes
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