pgc exhibit no. 6 page 1 of 15 115 detail in last year's pgc exhibit no. 6 (incorporated herein...
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PGC Exhibit No. 6 Page 1 of 15
2 NATIONAL FUEL GAS DISTRIBUTION CORPORATION
3 53.64(c)(4) An annotated listing of Federal Energy Regulatory Commission or other 4 relevant non-Commission proceedings, including legal action necessary to relieve the 5 utility from existing contract terms which are or may be adverse to the interests of its 6 ratepayers, which affect the cost of the utility's gas supply, transportation or storage or 7 which might have an impact on the utility's efforts to provide its customers with 8 reasonable gas service at the lowest price possible. This list shall include docket numbers 9 and shall summarize what has transpired in the cases, and the degree of participation, if
10 any, which the utility has had in the cases. The initial list filed under this paragraph shall 11 include all cases for the past 3 years. Subsequent lists need only update prior lists and add 12 new cases. 13 14 A. Distribution's Participation in FERC Proceedings
15 Distribution has specific capacity on the following interstate pipelines to serve its
16 Pennsylvania end-users: Columbia Gas Transmission, LLC ("Columbia"), National Fuel
17 Gas Supply Corporation ("Supply"), Tennessee Gas Pipeline Company, L.L.C.
18 ("Tennessee"), and Texas Eastern Transmission, LP ("Texas Eastern").
19 Distribution actively participates at the Federal Energy Regulatory Commission
20 ("FERC'') in proceedings involving the individual pipelines on which Distribution
21 transports and/or stores gas, as well as generic industry-wide proceedings that may have
22 an impact on Distribution and its customers.
23 Distribution actively represents its positions at the FERC, asserting its interests as
24 a local distribution company in all cases where such action is appropriate, including
25 FERC rulemakings, generic proceedings and the rate and certificate proceedings of
26 Distribution's upstream pipelines, including Supply. In this regard, Distribution's
27 Assistant Vice President, Assistant General Manager, and Attorney, as well as other
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PGC Exhibit No. 6 Page 2 of 15
1 regulatory and gas supply personnel in the Gas Supply Administration and Rates and
2 Regulatory Affairs Departments, are responsible for identifying and/or reviewing
3 proceedings at FERC that affect or potentially affect Distribution and its customers.
4 When such a proceeding is identified, Distribution intervenes and participates to ensure
5 appropriate representation of Distribution and its customers. Such participation may
6 include attending and participating in customer meetings and public conferences,
7 presenting comments, and/or filing formal pleadings. Set forth at PGC Exhibit No. 6-A
8 is a list of FERC proceedings in which Distribution participated during the historical
9 period of December 1, 2015 to November 30, 2016.
10 1. Individual Pipeline Proceedings at the FERC
11 During the historical period, Distribution participated in individual pipeline
12 proceedings at the FERC. 1 Distribution's participation in these proceedings focuses upon
13 major rate filings, periodic adjustments to trackers/surcharge mechanisms that impact
14 rates paid by Distribution, various refunds/credits, modifications to pipeline tariff
15 provisions impacting service to Distribution, and construction project/abandonment
16 filings for facilities that potentially impact service to Distribution and other matters that
17 may have a generic policy impact beyond the scope of the pipeline's filing. Significant
18 filings during the historic period are detailed below.
19 a. Columbia Gas Transmission, LLC
In addition, Distribution filed its FERC Form No. 552: Annual Report of Natural Gas Transactions on April 14, 2016 and FERC Form No. 549D: Quarterly Transportation and Storage Report of Intrastate Natural Gas and Hinshaw Pipelines on February 10, 2016, April 14, 2016, and August I, 2016 and November I, 2016.
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PGC Exhibit No. 6 Page 3 of 15
2 i. Capital Cost Recovery Mechanism Rate Filings - Docket Nos. 3 RP16-314, RP16-353 and RP16-864. 4 5 In January 2013, the FERC approved a settlement between Columbia and its
6 customers ("Modernization I Settlement") that established a Capital Cost-Recovery
7 Mechanism ("CCRM") that allows Columbia to make annual limited filings under
8 Section 4 of the Natural Gas Act ("NGA") to charge an additive capital demand rate
9 ("CCRM Rate") to recover Columbia's revenue requirement ("Capital Revenue
10 Requirement") related to certain eligible projects constructed as part of the modernization
11 efforts between January 1, 2013 and December 31, 2017. In February 2016, Columbia
12 filed a related settlement between Columbia and its customers ("Modernization II
13 Settlement") that expanded the scope of the CCRM to include storage facilities and
14 additional transmission facilities. The Modernization II Settlement was discussed in
15 detail in last year's PGC Exhibit No. 6 (incorporated herein by reference) and was
16 approved by FERC on March 17, 2016. The Modernization II Settlement also resulted
17 in reductions to base rate reservation charges, from $4.994 to $4.771 for FTS and $4.774
18 to $4.601 for SST, effective May 1, 2016. Additionally, Distribution received a refund of
19 $12,361.12 attributable to implementation of the Modernization II Settlement.
20 Distribution participated in meetings conducted by Columbia during the historical
21 period to provide settlement parties with updates of its progress implementing both the
22 Modernization I Settlement and Modernization II Settlement to seek consensus for
23 proposals to substitute projects as operationally necessary as well as to obtain
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1 construction timing-related efficiencies. Based upon contracted reservation quantities,
2 Distribution's historical period CCRM costs were $213,422.32.
3 ii. Operational Transaction Rate Adjustment Filings - Docket 4 Nos. RP16-770 and RP17-142 5 6 The Operational Transaction Rate Adjustment ("OTRA") mechanism was initially
7 proposed by Columbia in April 2012 to recover the costs of certain operational purchases
8 and sales required to ensure a sufficient amount of gas flowing into its system in northern
9 Ohio. The OTRA mechanism is set forth in Section 49.4 of Columbia's Tariff and
10 provides for Columbia to make filings to adjust its OTRA rates twice annually for a
11 summer season (April 1 to October 31) and a winter season (November 1 to March 1 ).
12 These semiannual filings address both prospective changes in the OTRA rate and prior
13 over or under recoveries. The Modernization II Settlement extended the OTRA
14 mechanism through March 31, 2022.
15 Columbia submitted a filing at the FERC under Docket No. RP16-770 on March
16 31, 2016. The resulting OTRA demand surcharge of $0.073 per Dth, effective May 1,
17 2016, represented a 37 percent decrease from the previous rate of$0.151. On November
18 1, 2016, Columbia filed under Docket No. RP17-142 to adjust the OTRA demand
19 surcharge to $0.019 per Dth, effective December 1, 2016. Both of the aforementioned
20 filings were approved by the FERC. Based upon contracted reservation quantities,
21 Distribution's historical period OTRA costs were $21,899.18.
22 iii. Retainage Adjustment Mechanism Filings - Docket Nos. RP16-23 670 and RP16-1283 24
PGC Exhibit No. 6 Page 5 of 15
1 On March 1, 2016, Columbia submitted its annual Retainage Adjustment
2 Mechanism ("RAM") filing under Docket No. RP16-670 ("2016 RAM Filing") to adjust
3 its retainage percentages taking into account both prospective changes in retainage
4 requirements and unrecovered retainage quantities from the period January 1, 2015
5 through December 31, 2015. The RAM calculation reflects the retainage percentages
6 required to compensate Columbia for company use gas ("CUG") and lost and
7 unaccounted for volumes ("LAUF"). Effective April 1, 2016, transportation retainage
8 increased from 1.885% to 2.042% and Storage Gas Loss Retainage increased from
9 0.130% to 0.150%. On September 30, 2016, Columbia filed an out of period RAM filing
10 to adjust its retainage percentages to minimize an over recovery of CUG and LAUF that
11 otherwise would not have been reflected until it submitted its 2017 annual RAM filing.
12 Both filings were approved by FERC. Effective April 1, 2016, transportation retainage
13 decreased from 2.042% to 1.893% (Storage Gas Loss Retainage was unchanged).
14 iv. Gathering System Retention Factors - Docket No. RP16-1082
15 As an outcome of the Modernization II Settlement, Columbia held discussions
16 with its customers resulting in a phased in reduction of the subsidy provided by
17 Columbia's transmission system in the calculation of retention rates applicable to
18 Columbia's gathering system. Distribution participated in these discussions. On June 30,
19 2016, Columbia filed Petition for Approval of Settlement which was approved by FERC
20 on September 22, 2016. The net effect of the Settlement will be lower fuel retention
21 factors applicable to services utilized by Distribution in prospective RAM filings.
1 v. Other Columbia Tracker Filings
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2 On March 1, 2016, Columbia filed its annual Electric Power Cost Adjustment
3 ("EPCA") tracker filing under Docket No. RP16-669 increasing the EPCA rate effective
4 April 1, 2016 from $0.059 to $0.070. The EPCA rate permits Columbia to recover
5 electric power costs that are incurred for the compression or processing of natural gas and
6 for company use and operations from its customers. On the same date, Columbia filed its
7 annual Transportation Cost Rate Adjustment ("TCRA") tracker filing under Docket No.
8 RP16-704 decreasing the TCRA rate from $0.258 to $0.232; also to be effective April 1,
9 2016. The TRCA rates permits Columbia to recover transportation costs it incurs on
10 other interstate pipelines not otherwise recovered under the OTRA rates discussed above.
11 FERC approved both filings. Based upon contracted reservation quantities,
12 Distribution's historical period EPCA costs were $16,051.32 and historical period TCRA
13 costs were $58,236.52.
14 b. National Fuel Gas Supply Corporation
15 i. Matters pursuant to Settlement of Docket No. RP15-1310
16 On September 29, 2015, Supply filed a settlement of a rate case extension under
17 Docket No. RP15-1310 ("September 2015 Settlement") which was addressed in detail in
18 last year's PGC Exhibit No. 6. The FERC issued a letter order approving the September
19 2015 Settlement on November 13, 2015. Pursuant to this settlement, Distribution has
20 been participating, with other customers, in discussions of proposed winter season firm
21 injection rights applicable to the storage services it holds on Supply's system.
PGC Exhibit No. 6 Page 7 of 15
1 Distribution seeks such rights, which are currently available on an interruptible basis, to
2 help ensure that it is able to inject "must take" gas, i.e. gas it is contractually obligated to
3 purchase, on warm winter days during the withdrawal cycle. The discussions are on-
4 going and there is nothing to report as of the end of the historical period.
5 The September 2015 Settlement also provided for an immediate two percent
6 reduction in Supply's base reservation, capacity, demand and deliverability rates,
7 effective November 1, 2015 and an additional two percent reduction effective on
8 November 1, 2016. Supply filed the second two percent reduction under Docket No.
9 RP17-195.
10 11. Other Supply Filings
11 On February 19, 2016, Supply filed to adjust its Transportation Fuel and
12 Company Use Retention ("TFUR"), Transportation LAUF Retention ("TLAUFR") and
13 Storage Operating and LAUF Retention ("SOLR") pursuant to GT &C Section 41 of its
14 tariff effective April 1, 2016 under Docket No. RP16-619. The filing, which was
15 approved by FERC, increased the TFUR percentage from 0.54% to 0.57% and the
16 TLAUFR percentage from 0.42% to 0.54%. Additionally, the SOLR percentage
17 increased from 0.46% to 0.71 %.
18 c. Tennessee Gas Pipeline Company, L.L.C.
19 On May 15, 2015, Tennessee filed a settlement at the FERC under Docket No.
20 RP15-990 ("2015 Settlement") which was discussed in detail in last year's PGC Exhibit
21 No. 6. The FERC issued a letter order approving the 2015 Settlement on July 1, 2015
PGC Exhibit No. 6 Page 8 of 15
1 which initiated new rates, November 1, 2015, providing an immediate 3 percent
2 reduction from Tennessee's then effective rates. Other than a fuel tracker filing in
3 Docket No. RP16-658 and PS/GHG (Pipeline Safety and Greenhouse Gas) Cost
4 Adjustment Mechanism filing in Docket No. RP16-1251, which were both approved by
5 FERC, there were no other filings that impacted the costs incurred by Distribution for
6 utilizing its capacity on Tennessee. Effective April 1, 2016, Tennessee's retention
7 percentages generally increased for longer hauls but decreased from 0.47% to 0.33% for
8 shorter intra-Zone 4 hauls more typical of Distribution's activity in recent years.
9 Effective November 1, 2016, the Tennessee PS/GHG reservation rate and commodity
10 rate components increased from $0.0198/Dth to $0.0210/Dth and from $0.0007/Dth to
11 $0.0009/Dth, respectively. Distribution's historical period PS/GHG costs, which reflect
12 reservation costs excluding capacity release and commodity costs, were $19 ,263. 98.
13 d. Texas Eastern Transmission, LP.
14 i. Modifications to Control Zone Exemption of Texas Eastern's 15 Gas Quality and Interchangeability Tariff Provisions 16 17 On November 1, 2010, the FERC approved a Stipulation and Agreement
18 submitted by Texas Eastern on August 4, 2010 ("2010 Settlement") in Texas Eastem's gas
19 quality proceeding under Docket No. RPl0-30. The 2010 Settlement served to
20 accommodate increasing natural gas production in the Appalachian basin, where the
21 otherwise-applicable quality limits were regularly exceeded. The 2010 Settlement
22 provided for an exemption from the gas quality standards in order to accept receipts of
PGC Exhibit No. 6 Page 9 of 15
1 gas with higher levels of ethane and heavier hydrocarbons ("C2+"), heating value, and
2 Wobbe Index Number in a certain area of the pipeline ("Control Zone Exemption").
3 On December 26, 2013, the FERC approved a Stipulation and Agreement
4 submitted by Texas Eastern on December 4, 2013 ("2013 Settlement") in Texas Eastern's
5 gas quality proceeding under Docket No. RP13-1015 relocating the western boundary of
6 the Control Zone.
7 During the historical period, Texas Eastern conducted several gas quality meetings
8 with its customers in which Distribution was an active participant. Based upon current
9 gas quality conditions, Texas Eastern filed a settlement under Docket No. RPI 7-256 on
10 December 12, 2016 removing the Control Zone Exemption from its tariff and replacing it
11 with a waiver system. Distribution believes the settlement does not adversely impact gas
12 supplies available to it on the Texas Eastern system so it does not oppose the filing.
13 ii. Closure of Texas Eastern's PCB Tracker Mechanism
14 On March 18, 1992, FERC approved a settlement creating a PCB Cleanup
15 surcharge mechanism ("PCB Tracker") under Docket No. RP88-27 ("PCB Settlement").
16 The PCB Tracker had a 25 year lifetime which expires on March 31, 2017. On October
17 28, 2016, Texas Eastern filed its final adjustment to the PCB Tracker applicable to the
18 period December 1, 2016 to March 31, 2017. Based upon contracted reservation
19 quantities during the historical period, Distribution's historical period PCB costs
20 increased by$ 720.00 relative to the rates in effect at the end of the prior historical period.
PGC Exhibit No. 6 Page 10 of 15
1 The PCB Settlement provided for a true-up of costs collected through the PCB
2 Tracker to the share of Texas Eastern's actual costs for which its shippers were
3 responsible at the conclusion of the tracker. While the amount is not yet determined,
4 Distribution's share of the true-up costs is expected to be relatively small.
5 iii. Other Texas Eastern Tracker Filings
6 On December 30, 2015 and on June 30, 2016, Texas Eastern filed its semi-annual
7 Electric Power Cost Adjustment ("EPCA") tracker filings under Docket Nos. RP16-334
8 and RP16-1069, respectively. These filings adjusted the EPCA rate effective February 1,
9 2016 and August 1, 2016, again respectively. The EPCA rate permits Texas Eastern to
10 recover electric compression costs from its customers. Based upon contracted reservation
11 quantities and usage quantities during the historical period, Distribution's historical
12 period EPCA costs increased by $ 8,970.61 relative to the rates in effect at the end of the
13 prior historical period.
14 On October 30, 2016, Texas Eastern filed its annual Applicable Shrinkage
15 Adjustment ("ASA") filing to be effective December 1, 2016. The ASA calculation
16 reflects the retainage percentages required to compensate Texas Eastern for company use
17 gas, including compression, and lost and unaccounted for volumes.
18 This filing was approved by FERC on November 29, 2016. Comparing the
19 retainage percentages in effect at the end of the historical period to those in effect at the
20 beginning, there will be a 0.21 % decrease in retainage volumes provided by Distribution
PGC Exhibit No. 6 Page 11 of 15
1 when it ships gas on the Texas Eastern system. The ASA also includes a usage-based
2 surcharge which decreases by 1. 9 cents per dekatherm.
3 e. Gas-Electric Communications of Operational Information with 4 PJM Interconnection, L.L.C. ("PJM") 5 6 FERC Orders 787 and 787-A provide explicit authority to interstate natural gas
7 pipelines, LDCs and public utilities that own, operate, or control facilities used for the
8 transmission of electric energy in interstate commerce to share non-public, operational
9 information with each other for the purpose of promoting reliable service or operational
10 planning on either the public utility's or pipeline's system. Order 787-A, in particular,
11 recognizes the important role LDCs play in the delivery of natural gas to electric
12 generators. FERC allows for electric transmission operators to share non-public,
13 operational information with LDCs, subject to various conditions, which are reflected in
14 PJM's tariff. During the historic period, Distribution has had discussions with PJM Staff
15 regarding implementation of Orders 787 and 787-A communications.
16 Otherwise, there were no P JM filings during the historical period that warranted
17 Distribution's regulatory involvement.
18 2. FERC Rulemakings and Generic Federal Proceedings
19 a. American Gas Association
20 Distribution is an active member of the American Gas Association (AGA).
21 Through the AGA, Distribution has participated in recommending positions to the FERC,
22 appellate courts and Congress on issues of importance to Distribution and LDCs as a
23 group. Distribution has found that active participation in AGA is an effective and
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1 efficient way to ensure that its position is heard on the large generic issues facing LDCs.
2 As a member of AGA, Distribution advocates development of LDC positions consistent
3 with its own stance on such issues. Some of the issues addressed through AGA during
4 the historical period, at times jointly with other industry associations, are: Coordination
5 of the Scheduling Processes of Interstate Natural Gas Pipelines and Public Utilities
6 (FERC Docket No. RM14-2), and Collection of Connected Entity Data from Regional
7 Transmission Organizations and Independent System Operators (FERC Docket No.
8 RP15-23). AGA's FERC filings, in which Distribution participates, are listed in PGC
9 Exhibit No. 6-A.
10 The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank
11 Act or Act) was signed into law by the President on July 21, 2010. A component of the
12 Act calls for sweeping reform of the derivatives market, largely under the auspices of the
13 Commodity Futures Trading Commission ("CFTC"). Distribution, independently and
14 through AGA (as noted below), is monitoring rulemakings issued by the CFTC that may
15 have an impact on Distribution. Based on final rulemakings to date and the fact that
16 Distribution currently does not engage in financial hedging activities, Distribution has not
17 been significantly impacted by the Act's requirements. Distribution's physical hedging
18 activities, including peaking supply contracts with volumetric optionality, appear to be
19 exempt forward contracts that are not subject to the onerous regulatory requirements
20 imposed on "swaps". This exemption is based upon CFTC interpretations and rulings
21 that contracts with volumetric optionality are exempt from the definition of swap, and
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1 that these contracts would be considered "trade options" subject to significantly less
2 stringent recordkeeping and reporting requirements than swaps.
3 Distribution will continue to monitor Dodd-Frank Act developments that may
4 affect Distribution. Issues addressed by AGA (at times jointly with other industry
5 associations) relative to matters handled by the CFTC are listed in PGC Exhibit No. 6-A.
6 ii. Gas-Electric Coordination
7 Over the past few years FERC has placed considerable priority on the discussion
8 of Gas-Electric Coordination matters. Several Technical Conferences have been
9 conducted by FERC involving interest from both gas and electric markets and orders
10 addressing Gas-Electric Coordination matters have been issued. In addition to gas
11 day/nomination issues, FERC has been exploring the impacts of natural gas supplies and
12 capacity as they relate to market price formation within organized electric markets.
13 Distribution transports gas to electric generators and has an interest in maintaining
14 service reliability as well as how nomination protocols may change in response to
15 increased gas-fired generation load on the regional pipeline grid. Distribution generally
16 participates through AGA on these matters but will participate directly to the extent a
17 PJM matter has the potential to impact Distribution's system. Distribution also
18 participates in PJM Interconnection's Gas Electric Senior Task Force. However, PJM
19 has placed the task force into hiatus for the near term.
20 B. North American Energy Standards Board
PGC Exhibit No. 6 Page 14 of 15
1 Distribution continues to be a member of the North American Energy Standards
2 Board (NAESB) but has switched its membership from the Retail Markets Quadrant,
3 Retail Gas Market Interests Segment to the Wholesale Gas Quadrant - LDC Segment in
4 response to the issues under consideration at NAESB. NAESB is a broad-based
5 standards organization, which addresses standards/model business practices development
6 for three industry quadrants: Wholesale Gas, Wholesale Electric, and Retail (addressing
7 both gas and electric retail business practices).
8 Distribution's participation in NAESB helps to ensure that the LDC position is
9 recognized in resolving the many issues being addressed by this organization.
10 Distribution has closely monitored the ongoing NAESB compliance filings made by the
11 upstream pipelines, filing substantive comments as warranted.
12 With respect to the Wholesale Gas Quadrant, the primary focus of NAESB's
13 efforts during the past couple of years has almost exclusively been on a FERC Notice of
14 Proposed Rulemaking in FERC Docket RM14-2 which led to changes in industry
15 standard gas nomination deadlines.
16 In contrast, the Retail Markets Quadrant focused its efforts on Demand Side
17 Management, Energy Efficiency and net metering, all of which have service implications
18 for retail electric markets. With regards to customer-choice oriented standards
19 (impacting both retail gas and retail electric markets), NAESB focused on maintenance of
20 technical standards and documentation intended to support business practices concerning
21 various transactions including billing, payment processing and exchange of customer
PGC Exhibit No. 6 Page 15 of 15
1 information. Distribution continues to monitor NAESB's retail efforts to ensure that
2 model business practices reflect, and are consistent with, existing successful business
3 practices that have evolved from gas transportation programs dating back to the mid-
4 l 980's, as well as Pennsylvania's regulations governing specific aspects of customer
5 choice.
6 C. D.C. Circuit Proceedings
7 In addition to its efforts at the FERC, Distribution pursues issues in litigation in
8 other forums where appropriate. Generally, this includes filing petitions for review of
9 FERC orders and/or intervening in cases brought before the United States Court of
10 Appeals for the District of Columbia Circuit (D.C. Circuit). Currently, there are no
11 pending D.C. Circuit actions filed by Distribution.