Direct Testimony Mr. Burl M. Drews Before the Public ... Rate … · 5 calculated by Company witness Mr. Matthew A. Troxle in his recommended 6 Class Cost of Service Study (“CCOSS”)

Direct Testimony Mr. Burl M. Drews

Before the Public Utilities Commission of The State of Minnesota

In the Matter of the Application of CenterPoint Energy Resources Corp., d/b/a

CenterPoint Energy Minnesota Gas For Authority to Increase Rates for Natural Gas Utility

Service in Minnesota

Docket No. G-008/GR-15-424 Exhibit____(BMD-D)

Rate Design and Tariff Changes

August 3, 2015

MR. BURL M. DREWS Docket No. G-008/GR-15-424

TABLE OF CONTENTS Page I. Introduction ......................................................................................................... 1 II. Test-Year Non-Gas Revenues ............................................................................ 3 III. Proposed Rate Design ........................................................................................ 7 IV. New Market Development Agreement ............................................................... 13 V. Minimum Volume Agreement ............................................................................ 16 V. Other Tariff Changes ......................................................................................... 20

Mr. Burl M. Drews Direct Testimony Rate Design Docket No. G-008/GR-15-424

1

I. INTRODUCTION 1

Q. What are your name, business address, position, and background? 2

A. My name is Burl M. Drews. I am a Manager of Rates in Rates and Regulatory for 3

CenterPoint Energy Service Company, LLC. My business address is 1111 4

Louisiana St., Houston, TX 77002. 5

6

I received Bachelor of Science and Master of Arts degrees in Economics from 7

the University of Houston in 1985 and 1987, respectively. 8

9

I have held numerous positions in various areas within CenterPoint Energy 10

Service Company, LLC, including its predecessors and affiliates from 1988 to 11

2002, in Corporate Planning, Strategic Management, Strategic Planning, and 12

Regulatory Planning. From 2002-2004, I was the Manager, Financial Planning 13

and Analysis at Reliant Energy, Inc., in the Retail Group’s Planning and 14

Accounting Department. From 2004-2005 and then from 2006-2007, I worked as 15

a contractor assisting CenterPoint Energy Service Company, LLC, in various 16

regulatory proceedings for CenterPoint Energy Houston Electric, LLC. I rejoined 17

CenterPoint Energy Service Company, LLC, in September 2007 as an Economic 18

Research Coordinator and was promoted to Administrator – Regulatory Activities 19

in 2011. I assumed my current title in 2013 and am responsible for research 20

regarding economic, regulatory, legislative, and rate issues, conducting financial 21

analysis, class cost of service studies, billing determinant studies, and 22

determining rate design. 23


2

In addition, please see Exhibit _____ (BMD-D) Schedule 1 for a résumé of my 1

educational and professional backgrounds. 2

3

Q. On whose behalf are you testifying? 4

A. I am testifying on behalf of CenterPoint Energy Resources Corp. d/b/a 5

CenterPoint Energy Minnesota Gas (“CenterPoint Energy” or “Company”). 6

7

Q. What is the purpose of your testimony in this proceeding? 8

A. My testimony (1) presents CenterPoint Energy’s proposed test-year non-gas 9

revenue surplus or deficiency by rate class, (2) presents the proposed rate 10

design and the resulting rates by rate class, and (3) proposes changes and 11

additions to the Company’s tariff. 12

13

Q. Was your testimony including associated schedules and exhibits prepared by you 14

or under your control and direction? 15

A. Yes. 16

17

Q. Are you sponsoring any schedules as part of your testimony? 18

A. Yes. I am sponsoring Exhibit ____(BMD-D) Schedules 1-6. 19

20


3

II. TEST-YEAR NON-GAS REVENUES 1

Q. What is CenterPoint Energy’s non-gas revenue deficiency for the test year? 2

A. CenterPoint Energy’s non-gas revenue deficiency for the test year, as discussed 3

in the direct testimony of Company witness Mr. Joseph J. Vortherms and as 4

calculated by Company witness Mr. Matthew A. Troxle in his recommended 5

Class Cost of Service Study (“CCOSS”) in the Cost Allocation and Rate Design 6

(“CARD”) Model, is approximately $54.1 million. This represents the difference 7

between the non-gas revenues generated under present rates and the 8

Company’s costs of providing sales, transportation and other services to its 9

natural gas service customers for the forecasted test-year, which is the twelve 10

months ending September 30, 2016. 11

12

Q. Is this deficiency attributable to all customer classes? 13

A. No. The deficiencies and the proposed increase or decrease in non-gas 14

revenues including Conservation Cost Recovery Charge (“CCRC”) and Gas 15

Affordability Plan (“GAP”) revenues by class are summarized below in Table 1. 16

A summary of the test year operating revenues under present and proposed 17

rates and the proposed change in operating revenues by class is in Schedule E-18

2. 19

20


4

Table 1 – Non-Gas Revenue Surplus / Deficiency 1

and Proposed Change ($ Millions) 2

Class

Current Surplus /

(Deficiency)

Proposed Increase / (Decrease)

Proposed Surplus /

(Deficiency)

Residential ($60.9) $47.5 ($13.7)

Commercial A ($6.2) $3.01 ($3.1)

Commercial/Industrial B ($2.6) $2.6 $0

Commercial/Industrial C $6.2 $0.1 $6.4

Small Volume Dual Fuel A Sales

and Transportation Services $5.9 $0.1 $6.0

Small Volume Dual Fuel B Sales

and Transportation Services $4.0 $0.1 $4.1

Large Volume Firm and Dual Fuel

Sales and Transportation Services ($0.6) $0.6 $0

Total ($54.1) $54.1 ($0.0)

3

Q. Does your proposed revenue apportionment strictly adhere to the class cost of 4

service study and eliminate the existing interclass subsidies? 5

A. No, it does not. I firmly believe the interclass subsidies in CenterPoint Energy’s 6

rates should be eliminated. For fairness, each class should pay the costs caused 7

by that class; however, out of deference to past Commission decisions and in 8

order to reduce controversy, I am not proposing the elimination of interclass 9

subsidies at this time. However, this does not preclude the Company or me 10

advocating for the elimination of these subsidies in the future. 11

12

Q. What criteria did you use to determine your proposed revenue changes by class? 13


5

A. My goal is to reduce, but not necessarily eliminate, the level of interclass 1

subsidies and to more closely match a class’ revenue responsibility with their 2

class cost of service as calculated by the CCOSS contained in the CARD Model 3

recommended by Company witness Mr. Matthew A. Troxle. 4

5

Therefore, the Commercial/Industrial (“C/I”) and Small Volume Dual Fuel 6

(“SVDF”) classes that have a revenue surplus at present rates have a revenue 7

increase due only to the change in their CCRC rate. This accounts for the 8

proposed small increases in revenue for the C/I C, SVDF A, and SVDF B 9

classes. 10

11

I target a revenue increase for the C/I B and the combined Large Volume Firm 12

and Dual Fuel classes to eliminate the total class deficiencies. 13

14

I target a revenue increase for the Commercial A class to eliminate one-half or 15

50% of the class’ revenue deficiency. 16

17

The remaining deficiency after making these adjustments was apportioned to the 18

Residential class. This resulted in an 9.2% increase in total rate revenue for the 19

Residential class. For rate design and revenue apportionment purposes, I 20

combined the Large General Firm Sales 21

22


6

Service (“LGS”), Large Firm Transportation Service (“LFT”), Large Volume Dual 1

Fuel (“LVDF”) Sales Service, and Large Volume Dual Fuel Transportation 2

Service classes because historically they have been combined for rate design 3

purposes and because there are only a total of five customers in the LGS and 4

LFT classes. 5

6

Q. What are the percent changes in operating revenues by class resulting from your 7

proposed revenue apportionment and rate design? 8

A. The percent change in test-year operating revenues by class, inclusive of CCRC 9

and GAP revenues, are summarized below in Table 2. 10

Table 2 – Percent Change in Test-Year Operating Revenues 11

Residential 9.2%

Commercial – A 17.2%

Commercial/Industrial B 7.0%

Commercial/Industrial C 0.1%

SVDF A Sales and Transportation 0.2%

SVDF B Sales and Transportation 0.3%

LV Firm and Dual Fuel Sales and

Transportation 1.4%

Total System 6.4%

12

Exhibit____(BMD-D) Schedule 2 provides the impact of the proposed revenue 13

apportionment and rate design by rate class on a typical customer. 14


7

Q. What is the non-gas revenue apportionment resulting from your proposed 1

revenue changes? 2

A. The proposed revenue apportionment is summarized below in Table 3. 3

Table 31 – Proposed Non-Gas Revenue by Class ($ Millions) 4

Residential $268.7 . 68.7%

Commercial – A $11.5 2.9%

Commercial/Industrial B $15.6 .0%

Commercial/Industrial C $50.8 13.0 %

SVDF A Sales & Transportation $11.7 3.0%

SVDF B Sales & Transportation $7.0 1.8%

LV Firm and Dual Fuel Sales and Transportation $25.9 6.6%

Total $391.2 100%

5

Q. What revenue apportionment should the Commission use if it authorizes a 6

different overall revenue increase than the $54.1 million increase proposed by 7

the Company? 8

A. The Commission should apportion the authorized increase using the percentages 9

shown above in Table 3. 10

11

III. PROPOSED RATE DESIGN 12

Q. What are the goals of your proposed rate design? 13

A. The goals of my proposed rate design are to: 14 1 Includes applicable customer charge, volumetric delivery margin, CCRC and GAP.


8

1. fairly and reasonably allocate the cost of service to the rate classes; 1

2. be easy to understand; 2

3. send more economically efficient pricing; 3

4. provide rate and revenue stability from year to year; 4

5. avoid undue discrimination among customers or customer classes; and 5

6. effectively yield the authorized total revenue requirements. 6

7

Q. Which billing determinants did you use to calculate the proposed rates? 8

A. I used the test-year forecast billing determinants discussed in the direct 9

testimony of Mr. George L. Fitzpatrick testifying on behalf of the Company. 10

11

Q. What are the monthly basic charges by class as calculated by the CCOSS, as 12

well as the current and proposed monthly basic charges for the small firm service 13

rate classes with revenue deficiencies at present rates? 14

A. Table 4 shows the current, proposed, and CCOSS calculated monthly basic 15

charges for the small firm service classes with deficiencies at present rates. 16

Table 4 - Comparison of Monthly Basic Charges 17

CCOSS Present Proposed

Residential $23.32 $9.50 $11.75

Commercial A $26.08 $15.00 $17.25

C/I B $30.25 $21.00 $26.25


9

Q. Why are you proposing to increase the monthly basic charges for the Residential, 1

Commercial A, and C/I B rate classes since the Company’s RD Rider full 2

decoupling mechanism became effective July 1 of this year? 3

A. Setting the monthly basic charges closer to the amounts calculated by the 4

CCOSS results in several benefits. First, by resulting in lower variable 5

commodity rates, it will result in lower decoupling adjustments and thereby act to 6

stabilize customer bills, while the RD Rider is in effect for a pilot period of three 7

years. Second, it will decrease the intra-class subsidy from high usage 8

customers to low usage customers in a given class. Third, it will act to stabilize 9

revenues for the Company and costs for the customers. Fourth, the vast majority 10

of the Company’s costs are fixed and do not vary with the volumes of gas 11

delivered, so modestly increasing the monthly basic charges will better match 12

how the revenue is collected to the fixed costs of the Company. 13

14

Q. How did you arrive at your proposed monthly basic charges by class? 15

A. I propose changes to the monthly basic charges only for those classes with base 16

revenue deficiencies at the present rates. These are the Residential, 17

Commercial A, C/I B, and the combined Large Volume Firm and Dual Fuel 18

classes. 19

20

Since the current monthly basic charges for the small firm service customer 21

classes are significantly below those calculated by the CCOSS, I propose 22

increasing the monthly basic charge for these classes with a current base 23


10

revenue deficiency by the amount necessary to maintain the ratio of basic charge 1

revenues to non-gas revenues by class resulting from the final rates authorized 2

in Docket No. G-008/GR-13-316. The Commercial A class is an exemption to 3

this rule. The Commercial A basic charge would need to increase to 4

approximately $21 in order to maintain the ratio of basic charge revenues to total 5

non-gas revenues resulting from the final rates authorized in Docket No. G-6

008/GR-13-316. Since the customers in the Commercial A class are small and 7

have an average usage slightly below the usage of an average Residential 8

customer, I propose the Commercial A basic charge to increase by the same 9

$2.25 per month as the proposed Residential basic charge. This results in 10

modest increases to the monthly basic charges on a dollar basis when compared 11

to their current levels. It also results in monthly basic charges still significantly 12

below those calculated by the CCOSS. 13

14

The proposed monthly basic charges for C/I and SVDF classes with revenue 15

surpluses remain unchanged from their current levels, as are the delivery 16

charges except for changes in the CCRC or GAP rates. 17

18

As discussed earlier in my testimony, the Large Volume Firm and Large Volume 19

Dual Fuel classes were combined for rate design and revenue apportionment 20

purposes. The monthly basic charges for these classes are proposed to 21

increase by $100. 22


11

The monthly basic charges for transportation service customers will continue to 1

be set $100 higher than the sales service monthly basic charges for the 2

respective classes. The proposed delivery charges for transportation service 3

customers will equal the proposed delivery charges for the respective sales 4

service customers in order to keep the Company indifferent as to whether the 5

customer chooses sales or transportation service. 6

7

Q. How do your proposed Residential and Commercial A basic charges compare to 8

the monthly customer or fixed charges of the utilities in the West North Central 9

Census Region? 10

A. The proposed Residential and Commercial A basic charges are lower than the 11

median monthly customer or fixed charges. In the West North Central Census 12

Region, the 2015 median monthly Residential fixed charge is $13.16 and the 13

small commercial charge is $24.40 as reported by the American Gas Association 14

in the report of May 28, 2015, “Natural Gas Utility Rate Structure: The Customer 15

Charge Component – 2015 Update”. This report is being provided as 16

Exhibit___(BMD-D) Schedule 3. 17

18

Q. Would you please summarize the proposed rates by class? 19

A. Yes. Table 5 shows the current and proposed monthly basic charges and the 20

non-gas delivery charges including the CCRC and GAP costs for the non-market 21

rate customers. The proposed class rates are uniform throughout the 22

Company’s service territory. 23


12

Table 52 - Comparison of Current to Proposed Rates 1

Basic Charges Current Proposed

Residential $9.50 $11.75

Commercial A $15.00 $17.25

Commercial/Industrial B $21.00 $26.25

Commercial/Industrial C $43.00 $43.00

SVDF A Sales Service $50.00 $50.00

SVDF A Transportation Service $150.00 $150.00

SVDF B Sales Service $80.00 $80.00

SVDF B Transportation Service $180.00 $180.00

LVDF Sales Service $800.00 $900.00

LVDF Transportation Service $900.00 $1,000.00

Large General Firm Sales Service $800.00 $900.00

LV Firm Transportation Service $900.00 $1,000.00

Delivery Charges – ($ per Therm)

Residential $0.18977 $0.22782

Commercial A $0.14648 $0.25023

Commercial/Industrial B $0.13848 $0.16249

Commercial/Industrial C $0.14488 $0.14540

SVDF A Sales Service $0.11409 $0.11510

SVDF A Transportation Service $0.11409 $0.11510

SVDF B Sales Service $0.10697 $0.10798

SVDF B Transportation Service $0.10697 $0.10798

LVDF Sales Service $0.05034 $0.05162

LVDF Transportation Service $0.05034 $0.05162

Large General Firm Sales Service $0.05553 $0.05632

2

3 2 Delivery charge includes applicable volumetric delivery charge, CCRC and GAP.


13

I have also updated the Market Rates to reflect the proposed margins for the 1

eligible classes. See Exhibit ___ (BMD-D) Schedule 6 for the calculations of the 2

minimum and maximum market rates. The transportation service delivery 3

charges in the table above are for the non-market rate customers. Note that all 4

LVF transport customers are market rate customers. 5

6

Q. Does the proposed rate design satisfy the traditionally recognized goals and 7

principles of utility rate design? 8

A. Yes. The proposed modest basic charge changes and single block volumetric 9

delivery charges encourage economically efficient use of natural gas. The 10

resulting proposed rates are practical and easy to implement and understand. 11

The proposed rate design provides bill, rate, and revenue stability. The proposed 12

rate design does not unduly discriminate between the rate classes, nor does it 13

unduly discriminate between customers of different usages within the same 14

class. 15

16

IV. NEW MARKET DEVELOPMENT AGREEMENT 17

Q. Why is the Company proposing to include a New Market Development 18

Agreement in Section VII. STANDARD GAS SERVICE AGREEMENTS of its Gas 19

Rate Book? 20

A. The Company frequently pursues opportunities to provide natural gas service to 21

new development(s) or commercial project(s). The New Market Development 22

Agreement is intended to set forth the terms and conditions of the arrangement 23


14

between the Company and the Developer. The terms of this agreement are 1

intended to make sure the Company obtains the benefit intended by its 2

investment and does not result in a burden to existing ratepayers. This 3

agreement is also beneficial because it clearly communicates the duties and 4

rights of both parties and applies the terms of the Company’s tariff to a particular 5

situation, which will help reduce the likelihood of future disputes. It is intended 6

that this new agreement would be included along with the other standard gas 7

service agreements used by the Company. 8

9

Q. Is the New Market Development Agreement consistent with the Company’s 10

currently approved natural gas tariffs? 11

A. Yes, all of the Company’s currently approved extension tariff(s) will be applied 12

through the New Market Development Agreement. 13

14

Q. When would the New Market Development Agreement be used? 15

A. The New Market Development Agreement would be used to document the 16

relationship between the Company and the developer. 17

18

Q. Why does the New Market Development Agreement allow for additional items to 19

be added? 20

A. To write in specific conditions, including any incentives to be paid to the 21

developer, to reiterate the commitment, and/or to highlight any specific sections 22


15

of our tariff utilized in the agreement between CenterPoint Energy and the 1

Developer. 2

3

Q. Why would an incentive to be paid? 4

A. In order to successfully gain business, the Company may decide that it is 5

appropriate and mutually beneficial to provide an incentive to a developer. The 6

developer benefits because the incentive reduces their cost of development. The 7

Company and existing ratepayers benefit because expansion of service provides 8

a broader customer base upon which to recover fixed costs. Not every New 9

Market Development Agreement will contain an incentive; an incentive will only 10

be paid where it is necessary to obtain the business. 11

12

Q. Will the Company seek to recover the costs of any incentive from ratepayers? 13

A. No. The Company will not request to recover the cost of any incentive paid 14

under a New Market Development Agreement from ratepayers. 15

16

Q. Will this new agreement benefit the Company and its ratepayers? 17

A. Yes. Expansion of service is beneficial, in that it provides the Company with 18

additional revenues, and benefits existing ratepayers by providing a broader 19

customer base upon which to recover fixed costs. As stated previously, The 20

Company will not see to recovery any incentives paid from ratepayers. 21

22

Q. Is this proposed agreement similar to any other approved utility agreements? 23


16

A. Yes. It is my understanding that Xcel Energy has a similar agreement. Xcel’s is 1

called a Natural Gas Competitive Agreement, in Section 7, Sheet No. 36 of its 2

tariff, and it seeks to accomplish the same objective as our proposed New Market 3

Development Agreement. Since Xcel’s agreement has been previously 4

approved by the Commission, CenterPoint Energy modeled the New Market 5

Development Agreement on Xcel’s similar agreement. 6

7

Q. Are you providing the language for the proposed New Market Development 8

Agreement? 9

A. Yes, it is provided as Exhibit____(BMD-D) Schedule 4. 10

11

V. MINIMUM VOLUME AGREEMENT 12

Q. Why is the Company proposing to include a Minimum Volume Agreement in 13

Section VII. STANDARD GAS SERVICE AGREEMENTS of its Gas Rate Book? 14

A. CenterPoint Energy requests permission to add this agreement to its Rate Book 15

in order to fairly extend services to new and expanding commercial and industrial 16

(C&I) customers that require significant capital investments to serve them. 17

18

Q. Please describe the proposed Minimum Volume Agreement. 19

A. The Minimum Volume Agreement (“MVA”) will be used when extending gas 20

service to new or expanding C&I customers where the estimated margin from the 21

customer is difficult to predict. In such circumstances, CenterPoint Energy and 22

the C&I customer will collaborate to determine an appropriate annual minimum 23


17

volume and term that the C&I customer will commit to under the MVA. This 1

minimum volume and term will be used to compute the allowable investment 2

under CenterPoint Energy’s tariff Section 4.04, Economic Feasibility. 3

4

Q. What is the primary objective of the MVA? 5

A. The primary objective of the MVA is to ensure that the C&I customer is getting 6

credit for all of the gas volumes that they expect to use and thereby prevent the 7

C&I customer from paying a Contribution-in-aid-of-Construction (CIAC) larger 8

than what they otherwise would have to pay. 9

10

Q. Why is it necessary for CenterPoint Energy to work with C&I customers on 11

determining the amount of their expected consumption? 12

A. C&I customers use a wide variety of equipment sizes and usage patterns. For 13

instance, a poultry barn may be designed to be used at a as a brooder barn 14

(raising chicks) which may be heated to 90° year-round. Alternatively, the barn 15

may be used as a finishing facility and only heated to 50° during the winter. 16

Industrial dryers may operate several hundred hours to over 8,000 hours per 17

year. One dryer may run at very different loading rates depending upon moisture 18

contents and temperatures throughout that schedule. A good example is an 19

agricultural grain dryer that will use minimal consumption in a year with a modest, 20

dry, early (warm weather) harvest. The following year, an abundant, wet, late 21

(cold weather) harvest will produce much greater consumption. Due to this 22


18

variability, CenterPoint Energy conservatively estimates natural gas consumption 1

to ensure that it appropriately recovers its costs. 2

3

Q. What is the concern with conservatively estimating C&I customer gas 4

consumption? 5

A. Conservatively estimating C&I customer gas consumption can result in the C&I 6

customer paying a CIAC that is higher than what would otherwise be necessary if 7

the customer were able commit to a higher volume of gas usage. Large CIACs 8

may unnecessarily discourage C&I customer growth and in some cases serve as 9

a barrier to the C&I customer’s connection to the natural gas system. 10

11

Q. How often does CenterPoint Energy expect to use the MVA? 12

A. The MVA will be an alternative offered to C&I customers who are otherwise 13

required to pay a CIAC and who believe that their gas consumption will be higher 14

than CenterPoint Energy’s estimate for the purpose of calculating allowable 15

investment. There are very few instances of this each year. As construction 16

costs and CIACs can reach into the millions of dollars, prudent financial practices 17

are sensible for both the C&I customer and CenterPoint Energy. 18

19

Q. Will CNP require an MVA from all C&I customers that are new or expanding? 20

A. No, CenterPoint Energy only expects to use the MVA when the C&I customer is 21

faced with a CIAC and disagrees with CenterPoint Energy’s estimate of the C&I 22

customer’s projected energy consumption. 23


19

Q. Are there any other tariff changes you are proposing related to this issue? 1

A. Yes, we are also proposing to change the language in Tariff Section VI. 2

Paragraph 4.05, to reflect that in addition to the current language about 3

customers paying for a CIAC, the customer is given alternative methods of 4

payment such as a special monthly charge or annual charge. 5

6

Q. Is this proposed tariff similar to any other approved utility tariffs? 7

A. Yes. It is my understanding that Xcel Energy and Greater Minnesota Gas 8

(“GMG”) have similar agreements. Xcel’s is called a Minimum Burn Agreement, 9

Section 7, Sheet No. 41 of its tariff, and GMG’s is called a Minimum Use 10

Agreement, Section VII-9 of its tariff, and both agreements accomplish the same 11

objective as our proposed MVA. Since these are previously approved utility 12

tariffs, CenterPoint Energy has modeled the MVA on Xcel’s and GMG’s similar 13

agreements. In addition, the proposed change to section 4.05 described above 14

is also taken verbatim from Xcel’s tariffs. 15

16

Q. Will the MVA discourage customers from conserving gas? 17

A. No. First, CenterPoint Energy works closely with C&I customers during the 18

project development phase to implement conservation measures into the initial 19

design, so most conservation measures will be known to C&I customers before 20

committing to a minimum volume. Second, CenterPoint Energy’s commitment to 21

supporting conservation is included in the MVA, as a provision to reduce the 22


20

minimum volume requirement for each qualifying CIP project that the customer 1

implements. 2

Q. Why should the MVA be approved? 3

A. The MVA will benefit C&I customers and encourage economic development by 4

helping C&I customers minimize any required CIAC. 5

6

Q. Are you providing the proposed language for the Minimum Volume Agreement? 7

A. Yes, it is provided as Exhibit____(BMD-D) Schedule 5. 8

9

VI. OTHER TARIFF CHANGES 10

Q. Are you also sponsoring testimony regarding other tariff changes? 11

A. Yes. CenterPoint Energy has reviewed its tariffs and determined that certain 12

changes are needed to clarify some tariffs and reflect current conditions. The 13

proposed miscellaneous tariff changes follow. 14

15

Transportation Service Tariffs 16

Q. What changes are being proposed for CenterPoint Energy’s Transportation 17

tariffs? 18

A. CenterPoint Energy proposes adding language clarifying that customers 19

transporting gas supplies on the Viking Pipeline into the Company’s distribution 20

system, as opposed to on the Northern Natural Gas Pipeline, will be charged 21

imbalance and cash-out rates related to Viking Tariffs. 22

23


21

Q. Where are these proposed changes to CenterPoint Energy’s Transportation 1

Service Tariffs found in this Filing? 2

A. Proposed Transportation Service tariffs are found in the summary of proposed 3

tariff changes in Volume I of the required information section of this rate case 4

filing, detailed in Section V. pages 14.b, 15.b, 16.b – 16.c, and 18.c. Changes 5

include language to assure consistency in language on all transportation tariffs. 6

7

Standard Gas Service Agreements 8

Q. What changes are being proposed to Standard Gas Service Agreements? 9

A. The proposed changes to The Standard Gas Service Agreements found in 10

Section VII of CenterPoint Energy’s Gas Rate book are all administrative. For 11

example, current agreements list the Company’s old address. The current 12

address should reference the Company’s new location at 505 Nicollet Mall. 13

14

Q. Where are these proposed changes to CenterPoint Energy’s Standard Service 15

Agreement Tariffs found in this Filing? 16

A. Proposed Standard Service Agreement tariffs are found in Volume I of the 17

required information section of this rate case filing, Section VII. pages 1, 1.a, 1.b, 18

2, 3, 4, 5, 5.a, 5.b, 5.c, 6, 7, and 7.a. 19

20

Q. Does this conclude your testimony? 21

A. Yes. 22

Docket No. G-008/GR-15-424 Exhibit____(BMD-D), Schedule 1

Page 1 of 2

Burl M. Drews Manager - Rates

1111 Louisiana Street, Houston, Texas 77002

CURRENT RESPONSIBILITIES (2011 – Present) Overall duties include responsibility for research regarding economic, regulatory, legislative, and rate issues, and conducting financial analysis, class cost of service studies, billing determinant studies, and determining rate design. PREVIOUS PROFESSIONAL EMPLOYMENT CenterPoint Energy Manager – Rates 2013-Present Administrator – Regulatory Activities 2011-2013 Economic Research Coordinator 2007-2011 Kelly Services Contractor to CenterPoint Energy Service Company LLC 2006-2007 2004-2005 Reliant Energy, Inc. Manager, Financial Planning & Analysis – Retail Group 1999-2004 Houston Lighting & Power Company / Houston Industries, Inc. Lead Staff Planner – Regulatory Planning Department 1998-1999 Corporate Strategist – Planning and Pricing Department 1996-1998 Staff Planner / Sr. Analyst – Corporate / Strategic Planning Depts. 1992-1996 Staff Planner – Strategic Management Department 1990-1992 Staff Planner – Corporate Planning Department 1988-1990 EDUCATION University of Houston, Master of Arts, Economics, 1987 University of Houston, B.S., Economics with a minor in Geography, 1985

Docket No. G-008/GR-15-424 Exhibit____(BMD-D), Schedule 1

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Resources Corp., D/B/A CenterPoint Energy Oklahoma Gas, for Approval of its Performance Based Rate Change Plan Calculations for the Twelve Months Ended December 31, 2014

Arkansas Public Service Commission Docket No. 10-108-U In the Matter of Interim Rate Schedules of CenterPoint

Energy Resources Corp., D/B/A CenterPoint Energy Arkansas Gas, Imposing a Surcharge to Recover Costs and Expenses Required by Law Relating to the Protection of the Public Health, Safety and the Environment, and Application for Approval of a Related Tariff Provision

CenterPoint Energy Docket No. G-008/GR-15-424Exhibit_____(BMD-D)

Schedule 2, Page 1 of 10

Therm Per Present Proposed Proposed ProposedLine Month Customer Rate Rate $ Change % ChangeNo. (a) (b) (c) (d) (e) (f)1 Oct-15 26 $25.50 $28.73 $3.242 Nov-15 59 $45.80 $50.29 $4.493 Dec-15 122 $84.55 $91.45 $6.894 Jan-16 166 $111.62 $120.19 $8.575 Feb-16 166 $111.62 $120.19 $8.576 Mar-16 140 $95.63 $103.20 $7.587 Apr-16 86 $62.41 $67.93 $5.528 May-16 53 $42.11 $46.37 $4.279 Jun-16 29 $27.34 $30.69 $3.3510 Jul-16 22 $23.03 $26.12 $3.0911 Aug-16 19 $21.19 $24.16 $2.9712 Sep-16 19 $21.19 $24.16 $2.9713 Total 907 $671.99 $733.50 $61.51 9.2%

Billing Rate ($/Therm)Present Proposed

14 Basic Charge $9.50 $11.7515 Demand $0.07646 $0.0764616 Commodity $0.34897 $0.3489717 Cost of Gas $0.42543 $0.4254318 Delivery Charge w/o CIP $0.16609 $0.2036219 CCRC $0.01849 $0.0195020 Delivery Charge Total $0.18458 $0.2231221 GAP $0.00519 $0.0047022 Total Billing Rate $0.61520 $0.65325

Monthly Present Proposed ProposedTherms Rate Rate $ Change

(a) (b) (c) (d)23 25 $24.88 $28.08 $3.2024 50 $40.26 $44.41 $4.1525 75 $55.64 $60.74 $5.1026 100 $71.02 $77.08 $6.0627 150 $101.78 $109.74 $7.9628 175 $117.16 $126.07 $8.9129 200 $132.54 $142.40 $9.8630 225 $147.92 $158.73 $10.8131 250 $163.30 $175.06 $11.7632 275 $178.68 $191.39 $12.7133 300 $194.06 $207.73 $13.6734 325 $209.44 $224.06 $14.62

Comparison of Monthly Bills : Residential

Comparison of Present Rate and Proposed RateResidential



Therm Per Present Proposed Proposed ProposedLine Month Customer Rate Rate $ Change % ChangeNo. (a) (b) (c) (d) (e) (f)1 Oct-15 11 $21.31 $24.70 $3.392 Nov-15 35 $35.06 $40.94 $5.883 Dec-15 100 $72.31 $84.94 $12.634 Jan-16 159 $106.12 $124.86 $18.745 Feb-16 167 $110.71 $130.29 $19.586 Mar-16 131 $90.07 $105.91 $15.847 Apr-16 76 $58.57 $68.70 $10.148 May-16 36 $35.63 $41.62 $5.989 Jun-16 17 $24.74 $28.76 $4.0110 Jul-16 11 $21.31 $24.70 $3.3911 Aug-16 11 $21.30 $24.69 $3.3912 Sep-16 11 $21.31 $24.70 $3.3913 Total 765 $618.44 $724.81 $106.37 17.2%




(a) (b) (c) (d)23 10 $20.73 $24.02 $3.2924 25 $29.33 $34.17 $4.8425 50 $43.66 $51.09 $7.4426 75 $57.98 $68.02 $10.0327 100 $72.31 $84.94 $12.6328 125 $86.64 $101.86 $15.2229 150 $100.97 $118.78 $17.8130 175 $115.30 $135.70 $20.4131 200 $129.63 $152.63 $23.0032 225 $143.95 $169.55 $25.5933 250 $158.28 $186.47 $28.1934 275 $172.61 $203.39 $30.78

Comparison of Present Rate and Proposed RateCommercial- A (less than 1,500 Therms per year)

Comparison of Monthly Bills : Commercial - A



Therm Per Present Proposed Proposed ProposedLine Month Customer* Rate Rate $ Change % ChangeNo. (a) (b) (c) (d) (e) (f)1 Oct-15 72 $61.88 $68.87 $6.992 Nov-15 161 $112.15 $121.27 $9.123 Dec-15 381 $236.45 $250.86 $14.404 Jan-16 576 $346.70 $365.79 $19.095 Feb-16 576 $346.63 $365.71 $19.086 Mar-16 473 $288.46 $305.07 $16.617 Apr-16 285 $182.21 $194.31 $12.108 May-16 163 $113.25 $122.42 $9.179 Jun-16 89 $71.33 $78.72 $7.3910 Jul-16 67 $58.90 $65.76 $6.8611 Aug-16 58 $53.83 $60.47 $6.6412 Sep-16 59 $54.40 $61.06 $6.6713 Total 2,962 $1,926.17 $2,060.30 $134.13 7.0%

* - Combined Commercial/Industrial B customer projection




(a) (b) (c) (d)23 50 $49.26 $55.71 $6.4524 100 $77.51 $85.16 $7.6525 150 $105.77 $114.62 $8.8526 200 $134.03 $144.08 $10.0527 300 $190.54 $202.99 $12.4528 350 $218.80 $232.45 $13.6529 400 $247.05 $261.91 $14.8530 450 $275.31 $291.36 $16.0531 500 $303.57 $320.82 $17.2632 550 $331.82 $350.28 $18.4633 600 $360.08 $379.73 $19.6634 650 $388.33 $409.19 $20.86

Commercial / Industrial-B (1,500 to 4,999 Therms per year)

Comparison of Monthly Bills: Com / Ind - B

Comparison of Present Rate and Proposed Rate



Therm Per Present Proposed Proposed ProposedLine Month Customer * Rate Rate $ Change % ChangeNo. (a) (b) (c) (d) (e) (f)1 Oct-15 536 $347.64 $347.92 $0.282 Nov-15 982 $600.76 $601.27 $0.513 Dec-15 1,823 $1,078.90 $1,079.85 $0.954 Jan-16 2,479 $1,451.61 $1,452.90 $1.295 Feb-16 2,501 $1,464.25 $1,465.55 $1.306 Mar-16 2,245 $1,318.77 $1,319.94 $1.177 Apr-16 1,470 $878.49 $879.26 $0.768 May-16 987 $603.70 $604.21 $0.519 Jun-16 608 $388.48 $388.80 $0.3210 Jul-16 491 $321.99 $322.24 $0.2611 Aug-16 450 $298.57 $298.81 $0.2312 Sep-16 474 $312.48 $312.72 $0.2513 Total 15,046 $9,065.65 $9,073.47 $7.82 0.1%

* - Combined Commercial/Industrial C customer projection


14 Basic Charge $43.00 $43.0015 Demand $0.07646 $0.0764616 Commodity $0.34688 $0.3468817 Cost of Gas $0.42334 $0.4233418 Delivery Charge w/o CIP $0.12120 $0.12120 no change19 CCRC $0.01849 $0.0195020 Delivery Charge Total $0.13969 $0.1407021 GAP $0.00519 $0.0047022 Total Billing Rate $0.56822 $0.56874


(a) (b) (c) (d)23 250 $185.06 $185.19 $0.1324 500 $327.11 $327.37 $0.2625 750 $469.17 $469.56 $0.3926 1,000 $611.22 $611.74 $0.5227 2,000 $1,179.44 $1,180.48 $1.0428 3,000 $1,747.66 $1,749.22 $1.5629 4,000 $2,315.88 $2,317.96 $2.0830 5,000 $2,884.10 $2,886.70 $2.6031 10,000 $5,725.20 $5,730.40 $5.2032 15,000 $8,566.30 $8,574.10 $7.8033 20,000 $11,407.40 $11,417.80 $10.4034 25,000 $14,248.50 $14,261.50 $13.00

Comparison of Present Rate and Proposed RateCommercial / Industrial-C (5,000 Therms or more per year)

Comparison of Monthly Bills : Com / Ind - C



Therm Per Present Proposed Proposed ProposedLine Month Customer Rate Rate $ Change % ChangeNo. (a) (b) (c) (d) (e) (f)1 Oct-15 2,934 $1,442.66 $1,445.63 $2.962 Nov-15 5,252 $2,542.79 $2,548.10 $5.303 Dec-15 6,652 $3,207.72 $3,214.44 $6.724 Jan-16 9,015 $4,329.47 $4,338.57 $9.115 Feb-16 6,672 $3,217.11 $3,223.85 $6.746 Mar-16 5,101 $2,471.42 $2,476.57 $5.157 Apr-16 3,102 $1,522.31 $1,525.44 $3.138 May-16 1,661 $838.63 $840.31 $1.689 Jun-16 1,077 $561.42 $562.50 $1.0910 Jul-16 914 $484.02 $484.95 $0.9211 Aug-16 929 $491.07 $492.00 $0.9412 Sep-16 1,178 $609.09 $610.28 $1.1913 Total 44,488 $21,717.70 $21,762.64 $44.93 0.2%




(a) (b) (c) (d)23 500 $287.34 $287.85 $0.5024 1,000 $524.68 $525.69 $1.0125 1,500 $762.02 $763.54 $1.5226 3,000 $1,474.04 $1,477.07 $3.0327 5,000 $2,423.40 $2,428.45 $5.0528 7,500 $3,610.10 $3,617.68 $7.5829 10,000 $4,796.80 $4,806.90 $10.1030 15,000 $7,170.20 $7,185.35 $15.1531 20,000 $9,543.60 $9,563.80 $20.20

Comparison of Present Rate and Proposed RateSmall Dual Fuel-A - Sales Service

Comparison of Monthly Bills : Small Dual Fuel - A - Sales Service



Therm Per Present Proposed Proposed ProposedLine Month Customer Rate Rate $ Change % ChangeNo. (a) (b) (c) (d) (e) (f)1 Oct-15 4,025 $609.16 $613.23 $4.062 Nov-15 7,529 $1,008.98 $1,016.58 $7.603 Dec-15 12,588 $1,586.14 $1,598.85 $12.714 Jan-16 4,775 $694.80 $699.62 $4.825 Feb-16 10,803 $1,382.46 $1,393.37 $10.916 Mar-16 7,941 $1,055.99 $1,064.01 $8.027 Apr-16 5,167 $739.52 $744.74 $5.228 May-16 2,162 $396.66 $398.85 $2.189 Jun-16 1,700 $343.90 $345.61 $1.7210 Jul-16 1,696 $343.46 $345.17 $1.7111 Aug-16 1,959 $373.49 $375.47 $1.9812 Sep-16 2,879 $478.51 $481.41 $2.9113 Total 63,223 $9,013.06 $9,076.91 $63.85 0.7%




(a) (b) (c) (d)23 500 $207.05 $207.55 $0.5024 1,000 $264.09 $265.10 $1.0125 3,000 $492.27 $495.30 $3.0326 5,000 $720.45 $725.50 $5.0527 7,500 $1,005.68 $1,013.25 $7.5828 10,000 $1,290.90 $1,301.00 $10.1029 15,000 $1,861.35 $1,876.50 $15.1530 20,000 $2,431.80 $2,452.00 $20.2031 25,000 $3,002.25 $3,027.50 $25.25

Comparison of Present Rate and Proposed RateSmall Dual Fuel-A - Transportation Service

Comparison of Monthly Bills : Small Dual Fuel - A - Transportation Service



Therm Per Present Proposed Proposed ProposedLine Month Customer Rate Rate $ Change % ChangeNo. (a) (b) (c) (d) (e) (f)1 Oct-15 9,180 $4,372.17 $4,381.44 $9.272 Nov-15 15,986 $7,554.41 $7,570.55 $16.153 Dec-15 20,299 $9,571.14 $9,591.64 $20.504 Jan-16 31,522 $14,818.20 $14,850.04 $31.845 Feb-16 21,254 $10,017.69 $10,039.15 $21.476 Mar-16 18,481 $8,721.16 $8,739.82 $18.677 Apr-16 11,184 $5,308.99 $5,320.28 $11.308 May-16 7,188 $3,441.04 $3,448.30 $7.269 Jun-16 4,182 $2,035.54 $2,039.77 $4.2210 Jul-16 4,063 $1,979.52 $1,983.62 $4.1011 Aug-16 4,168 $2,029.00 $2,033.21 $4.2112 Sep-16 4,596 $2,229.06 $2,233.70 $4.6413 Total 152,104 $72,077.91 $72,231.53 $153.63 0.2%




(a) (b) (c) (d)23 1,000 $547.56 $548.57 $1.0124 5,000 $2,417.80 $2,422.85 $5.0525 7,500 $3,586.70 $3,594.28 $7.5726 10,000 $4,755.60 $4,765.70 $10.1027 15,000 $7,093.40 $7,108.55 $15.1528 20,000 $9,431.20 $9,451.40 $20.2029 30,000 $14,106.80 $14,137.10 $30.3030 40,000 $18,782.40 $18,822.80 $40.4031 50,000 $23,458.00 $23,508.50 $50.50

Small Dual Fuel-B - Sales Service

Comparison of Monthly Bills : Small Dual Fuel - B - Sales Service




Therm Per Present Proposed Proposed ProposedLine Month Customer Rate Rate $ Change % ChangeNo. (a) (b) (c) (d) (e) (f)1 Oct-15 12,010 $1,464.75 $1,476.88 $12.132 Nov-15 17,173 $2,016.99 $2,034.34 $17.343 Dec-15 42,018 $4,674.67 $4,717.11 $42.444 Jan-16 16,090 $1,901.17 $1,917.42 $16.255 Feb-16 24,714 $2,823.69 $2,848.65 $24.966 Mar-16 18,391 $2,147.28 $2,165.86 $18.577 Apr-16 13,472 $1,621.15 $1,634.76 $13.618 May-16 10,452 $1,298.01 $1,308.57 $10.569 Jun-16 8,977 $1,140.26 $1,149.33 $9.0710 Jul-16 8,684 $1,108.95 $1,117.72 $8.7711 Aug-16 9,398 $1,185.35 $1,194.84 $9.4912 Sep-16 8,845 $1,126.13 $1,135.06 $8.9313 Total 190,225 $22,508.41 $22,700.54 $192.13 0.9%




(a) (b) (c) (d)23 1,000 $547.56 $548.57 $1.0124 5,000 $2,417.80 $2,422.85 $5.0525 7,500 $3,586.70 $3,594.28 $7.5726 10,000 $4,755.60 $4,765.70 $10.1027 15,000 $7,093.40 $7,108.55 $15.1528 20,000 $9,431.20 $9,451.40 $20.2029 30,000 $14,106.80 $14,137.10 $30.3030 40,000 $18,782.40 $18,822.80 $40.4031 50,000 $23,458.00 $23,508.50 $50.50

Comparison of Present Rate and Proposed RateSmall Dual Fuel-B - Transportation Service

Comparison of Monthly Bills : Small Dual Fuel - B - Transportation Service



Therm Per Present Proposed Proposed ProposedLine Month Customer Rate Rate $ Change % ChangeNo. (a) (b) (c) (d) (e) (f)1 Oct-15 46,000 $18,840.28 $18,999.16 $158.882 Nov-15 56,590 $22,993.61 $23,166.04 $172.443 Dec-15 54,398 $22,133.65 $22,303.28 $169.634 Jan-16 56,434 $22,932.18 $23,104.42 $172.245 Feb-16 59,229 $24,028.40 $24,204.21 $175.816 Mar-16 48,265 $19,728.59 $19,890.37 $161.787 Apr-16 37,663 $15,570.54 $15,718.75 $148.218 May-16 28,675 $12,045.64 $12,182.35 $136.709 Jun-16 27,373 $11,535.34 $11,670.37 $135.0410 Jul-16 28,843 $12,111.79 $12,248.71 $136.9211 Aug-16 33,205 $13,822.27 $13,964.77 $142.5012 Sep-16 36,458 $15,098.03 $15,244.70 $146.6713 Total 513,133 $210,840.32 $212,697.13 $1,856.81 0.9%




(a) (b) (c) (d)23 25,000 $10,604.50 $10,736.50 $132.0024 30,000 $12,565.40 $12,703.80 $138.4025 35,000 $14,526.30 $14,671.10 $144.8026 40,000 $16,487.20 $16,638.40 $151.2027 45,000 $18,448.10 $18,605.70 $157.6028 50,000 $20,409.00 $20,573.00 $164.0029 55,000 $22,369.90 $22,540.30 $170.4030 60,000 $24,330.80 $24,507.60 $176.80

Comparison of Present Rate and Proposed RateLarge Volume Dual Fuel - Sales Service

Comparison of Monthly Bills: Large Volume Dual Fuel - System



Therm Per Present Proposed Proposed ProposedLine Month Customer * Rate Rate $ Change % ChangeNo. (a) (b) (c) (d) (e) (f)1 Oct-15 96,421 $5,753.82 $5,977.24 $223.422 Nov-15 121,186 $7,000.51 $7,255.63 $255.123 Dec-15 120,034 $6,942.54 $7,196.18 $253.644 Jan-16 121,572 $7,019.96 $7,275.57 $255.615 Feb-16 126,152 $7,250.48 $7,511.95 $261.476 Mar-16 113,814 $6,629.39 $6,875.07 $245.687 Apr-16 94,193 $5,641.68 $5,862.25 $220.578 May-16 84,434 $5,150.43 $5,358.51 $208.089 Jun-16 76,110 $4,731.39 $4,928.82 $197.4210 Jul-16 79,772 $4,915.74 $5,117.85 $202.1111 Aug-16 80,034 $4,928.94 $5,131.38 $202.4412 Sep-16 84,407 $5,149.04 $5,357.08 $208.0413 Total 1,198,131 $71,113.92 $73,847.52 $2,733.61 3.8%

* - Prior to forecast curtailment


14 Basic Charge $900.00 $1,000.0015 Demand $0.00000 $0.0000016 Commodity $0.00000 $0.0000017 Cost of Gas $0.00000 $0.0000018 Delivery Charge w/o CIP $0.03185 $0.0321219 CCRC $0.01849 $0.0195020 Delivery Charge Total $0.05034 $0.0516221 GAP $0.00000 $0.0000022 Total Billing Rate $0.05034 $0.05162


(a) (b) (c) (d)23 50,000 $3,417.00 $3,581.00 $164.0024 75,000 $4,675.50 $4,871.50 $196.0025 100,000 $5,934.00 $6,162.00 $228.0026 125,000 $7,192.50 $7,452.50 $260.0027 150,000 $8,451.00 $8,743.00 $292.0028 175,000 $9,709.50 $10,033.50 $324.0029 200,000 $10,968.00 $11,324.00 $356.0030 225,000 $12,226.50 $12,614.50 $388.00

Large Volume Dual Fuel - Transportation Service

Comparison of Monthly Bills: Large Volume Dual Fuel - Transport


EA 2015-03 May 28, 2015

NATURAL GAS UTILITY RATE STRUCTURE:

THE CUSTOMER CHARGE COMPONENT – 2015 UPDATE I. Introduction The largest part of a natural gas customer’s bill is the cost of the gas itself, over which the utility has little control. This cost accounts for about 41 cents of every dollar of revenue received by a distribution utility.1 The bill amount for the gas portion varies with price as well as amount consumed. Natural gas utilities also incur costs that are not dependent on a customer’s consumption. These “fixed” costs may include:

Meter reading Billing Fixed costs on plant and equipment

o Depreciation and taxes o Distribution mains, meters, and service lines

Most administrative and general expenses o Wages o Buildings, energy, etc.

Natural gas storage Customer and service O&M

Most utilities recover at least a portion of these costs through a fixed charge on a customer’s bill. This is most often called the “customer charge”, but is also called minimum bill, facility charge, service charge, fixed charge, and access fee. In addition to recovering some of the fixed costs, the customer charge also represents a fee for “readiness to

1 2011-2013 Performance Benchmarks for Natural Gas Utilities, American Gas Association, January 31, 2015

Docket No. G-008/GR-15-424 Exhibit___(BMD-D), Schedule 3

Page 1 of 13

serve”, even if the customer does not use any gas for that billing period.2 This charge is typically determined between the utility and its government regulators through a rate case. In the past few years the customer charge has increased in prominence in gas utility rate cases. In some cases utilities are finding it difficult to achieve authorized rates of return in an unpredictable gas market due in part to:

declining use per customer; significant swings in the commodity cost of natural gas; increased costs from recent legal and regulatory mandates (pipeline safety,

pension, etc.); and, growing bad debt costs.

Some companies have sought to increase their customer charges to better capture the actual fixed costs of serving these customers, citing the following benefits:

moderates volatility in customer bills; encourages utilities to promote customer conservation; makes utility earnings less dependent on sales volumes; improves cash flow, mitigating need for working capital; reduces winter bills for high use customers; reduces the need for future rate cases; and; Is a more appropriate way to recover fixed costs.

This analysis updates a report done five years ago.3 The purpose of this analysis is to illustrate the current levels of customer charges, estimate the portion of fixed costs that these charges cover, and track their historical growth. II. Executive Summary The customer charge is a part of the natural gas utility customer’s bill that does not vary with consumption. Based on Internet searches and AGA surveys, this charge:

is typically $11.25 per month for residential customers and $22 for small commercial customers (median values represent about 237 rate jurisdictions);

represents approximately 19 percent of a residential customer’s annual bill; typically recovers only 46 percent of a utility’s actual fixed costs; and, would be about $24 per month for the residential sector, on average, in order

to recover all of a utility’s typical fixed costs. III. Current Customer Charge Levels A February 2015 internet search of natural gas utility tariffs provided data on customer charges for 197 rate jurisdictions in all states and the District of Columbia (see Appendix

2 Gas Rate Fundamentals, American Gas Association, 1987 3 Natural Gas Utility Rate Structure: The Customer Charge Component – 2010 Update American Gas Association April 9, 2010.


Page 2 of 13

1). Residential (excluding master metered apartments) and small commercial4 rates were examined. The median customer charge for the residential sector was $11.25 per month, with 75 percent of the companies having a residential customer charge of $15.38 or less. The highest charge was $45.06. The commercial customer charges showed a wider variation. For the small commercial customer, the median monthly customer charge was $22.00, with 75 percent at or below $30.31. The high for this sector was $304.945.

Table 1 2015 Natural Gas Utility Monthly Customer Charges

First Quartile Median Third Quartile Residential $9.00 $11.25 $15.38 Commercial $15.00 $22.00 $30.31

Based on that $11.25 monthly figure, the customer charge comprises 19 percent of the typical residential customer’s annual natural gas bill.6 The utilities were grouped by Census region to determine if charges varied by location. The median residential charge was highest in the Middle Atlantic region at $14.60 per month, compared to the lowest charge of $4.95 in the Pacific region. (See Appendix 2 for a map of the Census regions.) The highest median monthly commercial customer charge ($28.41) occurred in the New England region, while the Pacific region again had the lowest ($14.90 – see Table 2).

Table 2 2015 Natural Gas Utility Median Monthly Customer Charges by Census Region

Census Region Residential Commercial New England $ 13.50 $ 28.41 Middle Atlantic $ 14.60 $ 23.60 East North Central $ 11.38 $ 24.00 West North Central $ 13.16 $ 24.40 South Atlantic $ 10.00 $ 22.00 East South Central $ 14.00 $ 16.96 West South Central $ 13.24 $ 18.51 Mountain $ 10.80 $ 20.00 Pacific $ 4.95 $ 14.90

It should be noted that these variations in customer charges are caused by a number of factors, such as:

the company itself – age of system, number of customers, employee wages and benefits, etc.;

4 For tariffs with more than one commercial category, the lowest level of consumption was selected. 5 One tariff had a commercial customer charge in excess of $1,000, which was not included in the sample 6 Based on a total bill of $718 per customer calculated from Gas Facts 2013 Data


Page 3 of 13

local regulatory environment – regulatory philosophy (particularly in California), intervenor activity, etc.;

geographic location – climate, cost to install mains (e.g. rocky ground = higher cost, so proportionally more fixed costs compared to sandy soils), etc.; and,

rate case frequency – companies that have not had a rate case in a relatively long time tend to have a relatively lower fixed charge.

IV. Customer Charges Relative to Utility Fixed Costs The customer charge recovers only a percentage of the utility’s actual fixed costs, with the remainder of the fixed costs allocated to volumetric charges. In the spring of 2015, the American Gas Association asked its members,

What percentage of the utility's fixed costs for the residential sector do you estimate is recovered in the residential monthly customer/service charge?

Companies representing more than 62 rate jurisdictions in 32 states and the District of Columbia responded. The median recovery value of responders was 46 percent of actual fixed costs on a monthly basis. Only five responders estimated that they recovered 25 percent or less of the fixed costs through the customer charge (Table 3). Based on an $11.25 median monthly charge, on average the customer charge would be about $24 in order to recover all of a utility’s fixed costs on a monthly basis.7

Table 3 Portion of Fixed Costs Recovered by Customer Charge – Monthly Basis

At Most 25% 5 Companies At Most 50% 22 Companies At Most 75% 8 Companies

Source: AGA Survey, 2015 On a monthly basis, the percentage of fixed costs recovered by the customer charge varied by geographic area (Table 4). The highest reported recovery portion is in the West South Central section of the country, while the lowest occurred in the Pacific region.

Table 4 Regional Breakout of Portion of Fixed Costs

Recovered by Customer Charge (Medians) – Monthly Basis

New England 31% Middle Atlantic 34% East North Central 64% West North Central 55% South Atlantic 48% East South Central 48% West South Central 85% Mountain 42% Pacific 16%

Source: AGA Survey, 2015

7 Median charge of $11.25/month divided by 0.46 (portion of fixed costs recovered)


Page 4 of 13

V. Comparison to Previous Report This report updates an analysis from 2010. Of the 133 gas utility rate jurisdictions in both samples, 83, or 62 percent, increased their residential customer charge since 2010. For these companies, the average increase was $1.25 for the residential class. There was no change for 41 companies and six had a decline in their residential customer charge. For the commercial sector, the median increased $2.93 (Table 5). Regionally the largest increase in residential customer charge occurred in the East South Central ($4.00), and the lowest was a negative value (-$1.05) in the Pacific.

Table 5 Natural Gas Utility Median Monthly Customer Charges 2010 vs. 2015

2010 2015 Census Region Residential Commercial Residential Commercial

New England $ 10.94 $ 18.60 $ 13.50 $ 28.41 Middle Atlantic $ 12.57 $ 19.89 $ 14.60 $ 23.60 East North Central $ 10.38 $ 17.65 $ 11.38 $ 24.00 West North Central $ 12.13 $ 20.10 $ 13.16 $ 24.40 South Atlantic $ 9.31 $ 19.00 $ 10.00 $ 22.00 East South Central $ 10.00 $ 25.00 $ 14.00 $ 16.96 West South Central $ 10.85 $ 20.70 $ 13.24 $ 18.51 Mountain $ 9.50 $ 21.00 $ 10.80 $ 20.00 Pacific $ 6.00 $ 11.50 $ 4.95 $ 14.90 United States $ 10.00 $ 19.07 $ 11.25 $ 22.00

Source: AGA Surveys, 2010 & 2015 Five years ago, AGA had surveyed its members, asking utilities to estimate what portion of their fixed costs were recovered by the customer charge. The results show that utilities today recover slightly more of their fixed costs through the fixed charge, but still less than 50 percent on average (Table 6). The largest relative increase in this proportion occurred in the South Atlantic region. Four of the nine Census regions exhibited a reduction in the portion of fixed costs recovered by the fixed charge.

Table 6 Regional Breakout of Portion of Monthly Fixed Costs

Recovered by Customer Charge (Medians), 2010 vs. 2015

2010 2015 New England 36% 31% Middle Atlantic 40% 34% East North Central 47% 64% West North Central 47% 55% South Atlantic 22% 48% East South Central 46% 48% West South Central 88% 85% Mountain 30% 42% Pacific 23% 16% United States 40% 46%

Source: AGA Surveys, 2010 & 2015


Page 5 of 13

VI. Trends in Customer Charges AGA surveys its members regarding customer bills on a quarterly basis. Results are available back to December 1985. While the survey does not specifically cover customer charges, it does ask what a customer’s bill would be if the customer did not use any gas that month (“zero use”). The historical values for “zero use” should be a good indicator of trends in customer charges. Table 7 shows the historical average values for residential “zero use” bills for the month of December for various years. The average value started out at $4.91 in 1985. By 2014, the average value had risen to $13.95.

Table 7 Trends in Average Residential Customer Charge Levels, 1985-2014

12/85 12/90 12/95 12/01* 12/05 12/10 12/14 $4.91 $5.47 $6.73 $8.04 $8.91 $12.49 $13.95

Source – AGA Surveys * December 2000 data not available

NOTICE

In issuing and making this publication available, AGA is not undertaking to render professional or other services for or on behalf of any person or entity. Nor is AGA undertaking to perform any duty owed by any person or entity to someone else. Anyone using this document should rely on his or her own independent judgment or, as appropriate, seek the advice of a competent professional in determining the exercise of reasonable care in any given circumstances. The statements in this publication are for general information and represent an unaudited compilation of statistical information that could contain coding or processing errors. AGA makes no warranties, express or implied, nor representations about the accuracy of the information in the publication or its appropriateness for any given purpose or situation.

This publication shall not be construed as including, advice, guidance, or recommendations to take, or not to take, any actions or decisions in relation to any matter, including without limitation relating to investments or the purchase or sale of any securities, shares or other assets of any kind. Should you take any such action or decision; you do so at your own risk. Information on the topics covered by this publication may be available from other sources, which the user may wish to consult for additional views or information not covered by this publication.

Copyright © 2015 American Gas Association. All rights reserved. www.aga.org


Page 6 of 13

Small

Company State Residential Commercial

CONTINENTAL ENERGY - ENSTAR NATURAL GAS CO AK 14.00$ 30.00$

SEMPRA - MOBILE GAS SERVICE AL 8.50$ 16.30$

ARKANSAS OKLAHOMA GAS CORP - AR AR 10.70$ 15.95$

CENTERPOINT ARKLA AR AR 9.75$ 13.00$

SOURCEGAS LLC AR AR 10.20$ 18.51$

SOUTHWEST GAS CORP AZ AZ 10.70$ 27.50$

UNISOURCE ENERGY SERVICES AZ 10.00$ 20.00$

PACIFIC GAS & ELECTRIC CO CA -$ 8.10$

SEMPRA - SAN DIEGO GAS & ELECTRIC CO CA -$ 10.00$

SEMPRA - SOUTHERN CALIFORNIA GAS CO CA 4.90$ 14.80$

SOUTHWEST GAS CORP CA CA 5.00$ 11.00$

ATMOS ENERGY CORPORATION CO CO 11.00$ 26.28$

BLACK HILLS ENERGY - CO CO 10.08$ 15.12$

COLORADO SPRINGS, CITY OF CO 11.79$ 23.58$

SOURCEGAS LLC CO CO 10.00$ 20.00$

XCEL - PUBLIC SERVICE CO OF COLORADO CO 11.50$ 32.08$

UIL - CONNECTICUT NATURAL GAS CORP CT 16.50$ 47.50$

UIL - SOUTHERN CONNECTICUT GAS CO CT 14.00$ 35.00$

YANKEE GAS SERVICES CO CT 18.50$ 46.00$

WASHINGTON GAS LIGHT CO DC DC 9.90$ 17.10$

CHESAPEAKE UTILITY CORP DE DE 10.50$ 26.00$

DELMARVA POWER & LIGHT COMPANY DE 11.41$ 34.37$

AGL - FLORIDA CITY GAS FL 8.00$ 9.50$

CHESAPEAKE UTILITY CORP FL FL 11.00$ 20.00$

GAINESVILLE REGIONAL UTIL GAS DEPT FL 9.75$

TECO PEOPLES GAS SYSTEM INC FL 12.00$ 25.00$

AGL - ATLANTA GAS LIGHT CO GA 11.00$ 45.00$

LIBERTY UTILITIES GA GA 26.31$ 55.60$

Appendix 1

NATURAL GAS CUSTOMER CHARGE


Page 7 of 13

Small


THE GAS COMPANY HI 8.50$ 62.00$

ALLIANT - INTERSTATE P&L IA IA 12.82$

BLACK HILLS ENERGY - IA IA 18.25$ 29.00$

LIBERTY UTILITIES IA IA 7.95$ 13.00$

MIDAMERICAN ENERGY COMPANY IA IA 10.00$

AVISTA CORP - ID ID 8.00$ 12.00$

MONTANA - DAKOTA UTILITIES INTERMOUNTAN ID 6.50$ 9.50$

AGL - NICOR IL 13.55$ 20.80$

AMEREN - ILLINOIS IL 22.31$ 39.77$

INTEGRYS - NORTH SHORE GAS CO IL 24.48$ 29.56$

INTEGRYS - PEOPLES GAS LIGHT & COKE CO IL 30.83$ 38.24$

LIBERTY UTILITIES IL IL 9.90$ 25.00$

MIDAMERICAN ENERGY COMPANY IL IL 12.69$ 93.18$

MT CARMEL PUBLIC UTILITY CO IL 15.00$ 15.00$

CITIZENS GAS & COKE UTILITY IN 9.00$ 22.00$

NISOURCE - NIPSCO IN 11.00$ 30.00$

VECTREN - INDIANA GAS CO INC IN 11.25$ 17.00$

VECTREN - SOUTHERN INDIANA GAS & ELECTRIC CO IN 11.00$ 22.00$

ATMOS ENERGY CORPORATION KS KS 18.19$ 40.88$

BLACK HILLS ENERGY - KS KS 17.25$ 26.45$

ONEOK - KANSAS GAS SERVICE KS 15.35$ 28.65$

ATMOS ENERGY CORPORATION - KY KY 16.00$ 40.00$

DELTA NATURAL GAS CO INC KY 20.90$ 31.30$

DUKE ENERGY KENTUCKY KY 16.00$ 47.50$

EQUITABLE RESOURCES KY KY 7.50$ 7.50$

LOUISVILLE GAS & ELECTRIC CO KY 13.50$ 35.00$

NISOURCE - COLUMBIA GAS OF KENTUCKY INC KY 15.00$ 37.50$

RICHMOND NATURAL GAS & SEWAGE WKS KY 15.49$ 15.49$

ATMOS ENERGY CORPORATION LA LA 13.96$ 23.24$

ATMOS ENERGY CORPORATION TRANS LA LA 14.00$ 14.00$

CENTERPOINT ARKLA LA LA 10.00$ 16.00$

CENTERPOINT ENTEX LA LA 11.25$ 16.00$

ENTERGY NEW ORLEANS, INC LA 20.40$ 112.58$


Appendix 1 - Continued


Page 8 of 13

Small


HOLYOKE GAS & ELECTRIC DEPT, CITY OF MA 6.00$ 10.00$

LIBERTY UTILITIES MA MA 9.90$ 22.00$

NATIONAL GRID - BOSTON GAS CO MA 10.00$ 21.00$

NATIONAL GRID - COLONIAL GAS CO MA 6.00$

NATIONAL GRID - ESSEX COUNTY GAS CO MA 21.00$ 39.00$

NISOURCE - COLUMBIA GAS OF MASSACHUSETS INC MA 12.20$ 19.80$

UIL - BERKSHIRE GAS CO MA 11.42$ 12.51$

UNITIL - FITCHBURG GAS & ELECTRIC LIGHT CO MA 8.50$ 24.00$

AGL - ELKTON GAS SERVICE MD 5.75$ 11.00$

BALTIMORE GAS & ELECTRIC CO MD 13.00$ 35.00$

CHESAPEAKE UTILITY CORP MD MD 8.75$ 17.25$

EASTON UTILITIES COMMISSION MD 9.65$ 33.25$

NISOURCE - COLUMBIA GAS OF MARYLAND INC MD 13.62$ 36.68$

UGI - CENTRAL PENN GAS, INC MD MD 9.68$

WASHINGTON GAS LIGHT CO MD MD 10.20$ 18.50$

ENERGY EAST - MAINE NATURAL GAS ME 24.34$ 34.77$

GAS NATURAL - BANGOR GAS CO LLC ME 14.29$

UNITIL - NORTHERN UTILITIES INC (ME) ME 23.06$ 54.77$

CONSUMERS ENERGY CO MI 11.50$ 12.50$

CONTINENTAL ENERGY - SEMCO MI 11.50$ 11.50$

DTE - CITIZENS GAS FUEL CO MI 10.50$ 20.00$

DTE - MICHIGAN CONSOLIDATED MI 10.50$ 26.20$

INTEGRYS - MICHIGAN GAS UTILITIES CO MI 12.00$ 33.00$

INTEGRYS - WISCONSIN PUBLIC SERVICE CORP MI MI 5.00$ 7.50$

XCEL - NORTHERN STATES POWER CO OF MICHIGAN MI 7.25$ 16.00$

ALLIANT - INTERSTATE P&L MN MN 5.00$

CENTERPOINT ENERGY MN MN 9.50$ 15.00$

INTEGRYS - MERC MN MN 8.50$ 14.50$

MONTANA - DAKOTA UTILITIES GREAT PLAINS MN MN 6.50$ 20.00$

XCEL - NORTHERN STATES POWER CO OF MINNESOTA MN 9.00$ 25.00$

AMEREN - UNION ELECTRIC CO MO 15.00$ 28.83$

LACLEDE GAS CO MO 20.70$ 25.50$

LIBERTY UTILITIES MO MO 20.00$ 23.80$

SOUTHERN UNION - MISSOURI GAS ENERGY MO 27.87$ 40.74$

THE EMPIRE DISTRICT GAS COMPANY MO 16.50$ 25.00$

ATMOS ENERGY CORPORATION MS MS 6.95$ 11.27$

CENTERPOINT ENTEX MS MS 11.29$ 16.96$




Page 9 of 13

Small


MONTANA - DAKOTA UTILITIES CO MT MT 6.90$ 12.00$

NORTHWESTERN ENERGY LLC MT MT 7.30$ 19.00$

GREENVILLE UTILITIES COMMISSION NC 8.00$ 22.00$

PIEDMONT NATURAL GAS CO INC NC NC 10.00$ 22.00$

SCANA - PUBLIC SERVICE CO OF NORTH CAROLINA NC 10.00$ 17.50$

MONTANA - DAKOTA UTILITIES CO ND ND 14.81$ 20.10$

MONTANA - DAKOTA UTILITIES GREAT PLAINS ND ND 3.50$ 3.50$

XCEL - NORTHERN STATES POWER CO OF NORTH DAKOTA ND 18.48$ 30.00$

BLACK HILLS ENERGY - NE NE 13.50$ 18.50$

METROPOLITAN UTILITIES DISTRICT NE 13.72$

MIDAMERICAN ENERGY COMPANY NE NE 10.00$ 135.10$

NORTHWESTERN ENERGY LLC NE NE 8.00$ 9.00$

SOURCEGAS LLC NE NE 15.00$ 23.05$

LIBERTY UTILITIES NH NH 19.85$ 46.71$

NATIONAL GRID - ENERGY NORTH NATURAL GAS INC NH 8.00$ 11.00$

UNITIL - NORTHERN UTILITIES, INC. (NH) NH 20.01$ 63.18$

AGL - ELIZABETHTOWN GAS CO NJ 8.00$ 16.50$

NEW JERSEY NATURAL GAS CO NJ 8.25$ 25.00$

PUBLIC SERVICE ELECTRIC & GAS CO NJ 5.46$ 10.44$

SOUTH JERSEY GAS CO NJ 9.63$ 29.16$

CONTINENTAL ENERGY - NEW MEXICO GAS NM 11.50$ 20.00$

NATURAL GAS PROCESSING - ZIA NATURAL GAS CO NM 10.96$ 300.00$

NV ENERGY NV 14.00$ 18.00$

SOUTHWEST GAS CORP NV NV 10.80$ 25.80$

CENTRAL HUDSON GAS & ELECTRIC CORP NY 17.03$ 24.33$

CONSOLIDATED EDISON - ORANGE & ROCKLAND UTILITY INC NY 18.63$ 29.08$

CONSOLIDATED EDISON CO OF NEW YORK NY 18.60$ 30.45$

CORNING NATURAL GAS CORP NY 19.75$ 1,220.00$

ENERGY EAST - NYSEG NY 16.30$ 23.60$

ENERGY EAST - ROCHESTER GAS & ELECTRIC NY 16.30$

NATIONAL FUEL GAS DISTRIBUTION CORP - NEW YORK NY 15.54$ 7.10$

NATIONAL GRID - LONG ISLAND NY 21.66$ 17.60$

NATIONAL GRID - NIAGARA MOHAWK NY 20.35$ 24.22$

NATIONAL GRID - NY CITY NY 45.06$ 76.91$

ST LAWRENCE GAS CO INC NY 15.00$ 25.00$

VALLEY ENERGY, INC. NY 7.62$ 7.62$




Page 10 of 13

Small


DOMINION EAST OHIO OH 23.58$ 26.00$

DUKE ENERGY OHIO OH 33.03$ 91.64$

NISOURCE - COLUMBIA GAS OF OHIO INC OH 24.69$ 24.69$

VECTREN ENERGY DELIVERY OF OHIO OH 18.37$ 20.00$

ARKANSAS OKLAHOMA GAS CORP - OK OK 15.65$ 30.15$

CENTERPOINT ARKLA OK OK 13.24$ 43.59$

ONEOK - OKLAHOMA NATURAL GAS CO OK 14.73$ 30.28$

AVISTA CORP - OR OR 4.25$ 95.00$

MONTANA - DAKOTA UTILITIES CASCADE OR OR 3.00$ 3.00$

NORTHWEST NATURAL GAS CO OR OR 8.00$ 15.00$

EQUITABLE RESOURCES PA PA 13.25$ 17.00$

NATIONAL FUEL GAS DISTRIBUTION CORP PA PA 12.00$

NISOURCE - COLUMBIA GAS OF PENNSYLVANIA PA 16.75$ 21.25$

PECO ENERGY CO PA 11.75$ 28.55$

PEOPLES NATURAL GAS COMPANY PA 13.95$ 14.88$

PHILADELPHIA GAS WORKS PA 12.00$ 18.00$

UGI - CENTRAL PENN GAS, INC PA PA 14.60$ 30.40$

UGI - PENN NATURAL GAS PA PA 2.19$ 2.80$

UGI - UGI UTILITIES, INC PA PA 8.55$ 8.55$

NATIONAL GRID - RI RI 13.00$ 22.00$

GREENWOOD COMMISSION OF PUBLIC WORKS SC 10.00$ 16.25$

PIEDMONT NATURAL GAS CO INC SC SC 17.45$ 44.00$

SCANA - SOUTH CAROLINA ELECTRIC & GAS CO SC 10.90$ 21.54$

MIDAMERICAN ENERGY COMPANY SD SD 8.87$ 304.94$

MONTANA - DAKOTA UTILITIES CO SD SD 8.40$ 10.50$

NORTHWESTERN ENERGY LLC SD SD 8.00$ 10.00$

AGL - CHATTANOOGA GAS CO TN 13/16 25/29

ATMOS ENERGY CORPORATION TN TN 15.40$ 13.85$

KNOXVILLE UTILITIES BOARD TN 6.65$ 13.00$

MEMPHIS LIGHT GAS & WATER DIVISION TN 10.00$

MIDDLE TENNESSEE NATURAL GAS UTIL DIST TN 7.00$ 16.00$

PIEDMONT NATURAL GAS CO INC TN TN 17.45$ 44.00$

ATMOS ENERGY CORPORATION TX TX 18.20$ 38.50$

CENTERPOINT ENTEX TX TX 15.29$ 17.24$

CORPUS CHRISTI, CITY OF - GAS DIV TX 11.44$ 26.30$

COSERV GAS, LTD TX 7.00$ 13.30$

QUESTAR GAS COMPANY UT UT 6.75$ 18.25$




Page 11 of 13

Source: Spring 2015 Internet Search of Natural Gas Utility Tariffs

Small


AGL - VIRGINIA NATURAL GAS VA 11.00$ 14.10$

ATMOS ENERGY CORPORATION VA VA 10.98$ 22.00$

CHARLOTTESVILLE, CITY OF VA 10.00$ 10.00$

NISOURCE - COLUMBIA GAS OF VIRGINIA INC VA 18.00$ 22.00$

RICHMOND, CITY OF VA 11.70$ 13.83$

SOUTHWESTERN VIRGINIA GAS CO VA 9.55$ 12.75$

WASHINGTON GAS LIGHT CO VA VA 11.25$ 20.45$

VERMONT GAS SYSTEMS INC VT 19.80$ 32.82$

AVISTA CORP - WA WA 9.00$ 87.40$

MONTANA - DAKOTA UTILITIES CASCADE WA WA 4.00$ 10.00$

NORTHWEST NATURAL GAS CO WA WA 7.00$ 15.00$

PUGET SOUND ENERGY WA 10.29$ 33.42$

ALLETE - SUPERIOR WATER LIGHT & POWER CO WI 7.25$ 15.00$

ALLIANT - WISCONSIN POWER & LIGHT CO WI 1.51$

CITY GAS CO WI 8.50$ 12.75$

INTEGRYS - WISCONSIN PUBLIC SERVICE CORP WI WI 17.00$ 30.00$

MADISON GAS & ELECTRIC CO WI 21.60$ 24.00$

WE ENERGIES WI 9.90$ 25.50$

WISCONSIN GAS CO WI 9.90$ 25.50$

XCEL - NORTHERN STATES POWER CO OF WISCONSIN WI 10.25$ 20.00$

DOMINION HOPE WV 8.99$ 17.97$

EQUITABLE RESOURCES - Peoples WV WV 8.50$ 12.50$

MOUNTAINEER GAS CO WV 10.10$ 31.75$

MONTANA - DAKOTA UTILITIES CO WY WY 12.00$ 27.00$

QUESTAR GAS COMPANY WY WY 11.00$ 32.50$

SOURCEGAS LLC WY WY 15.00$ 70.00$




Page 12 of 13

APPENDIX 2 U.S. CENSUS REGIONS

Source: U.S. Dept. of Energy http://www.eia.doe.gov/emeu/cbecs/census_maps.html


Page 13 of 13

Section VII Proposed Original Page 9

Date Filed: August 3, 2015 Effective Date:____________ Docket No: G-008/GR-15-424 Issued by: Jeffrey Daugherty, Director, Regulatory and Legislative Activities

New Market Development Agreement

This New Market Development Agreement (“Agreement”) is entered into between , a (Proprietorship, Partnership or Corporation) hereinafter called “Developer”, and CenterPoint Energy Resources Corp., d/b/a CenterPoint Energy Minnesota Gas, 505 Nicollet Mall, Minneapolis MN 55402, hereinafter called “Company”. Based on mutual consideration, which is hereby acknowledged, the Developer and the Company agree as follows:

Section 1. OBLIGATIONS 1.1. Company is a natural gas distribution utility that will serve the hereinafter described

Project. 1.2. Developer is developing said Project and agrees that Company has the exclusive right

to be the sole natural gas provider and install natural gas mains and service lines to all residential single family unit(s) (condo, apartment, townhome or home), and commercial and industrial structures of any kind in said Project hereinafter called “Customer”; and Developer will contractually require all builders within the Project to adhere to the terms set forth herein; and, if Developer sells any or all of the land within the Project, it agrees to include the terms of this Agreement in the purchase contract(s) to ensure the new owner(s) abide by these terms.

1.3. Developer recognizes that the requested gas mains and service lines will necessitate a capital investment on the part of the Developer by way of contribution in aid of construction or on the part of the Company or both.

1.4. Company and Developer agree to the terms of this agreement, as specified in Exhibit A for the requested natural gas main and service line extension(s) and; Developer understands that the terms of Exhibit A are contingent upon the number and type of natural gas customer(s) and respective natural gas equipment/load requirements the Developer has represented to Company will exist in the Project as described in Exhibit A and Exhibit B. Any change in the number of Customer(s) or type of Customer may constitute a revised Exhibit A of this Agreement between the Company and the Developer.

1.5. Company reserves the right to verify that Developer has complied with all the requirements of this Agreement. Such verification will include, but is not limited to, Developer or builder provided documentation or site check by Company to confirm installation of primary natural gas space heating system for each Customer in the Project. The Developer acknowledges that any type of heat pump is not considered to be a “primary natural gas heating system” and therefore is not allowed.

1.6. If either party breaches this Agreement and the breach is not cured within thirty (30) days after receiving written notice from the other party within such longer period as is reasonably necessary to cure the breach, in no event to exceed an additional ninety (90) days, then breaching party will be liable for the other party’s reasonable attorneys’ fees and for damages directly caused by such breach.


Page 1 of 5

Section VII Proposed Original Page 9.a


Section 2. APPLICABLE LAW AND REGULATION

2.1. The obligations of Company and Developer under this Agreement are subject to laws of the State of Minnesota, and;

2.2. The Company’s currently effective and applicable Tariffs and Riders on file with the Minnesota Public Utilities Commission (“Tariff”) except as specifically provided herein.

Section 3. AUTHORITY The persons signing this Agreement have the real and apparent authority to bind the respective parties. Developer represents and warrants that it has sole authority for selecting the natural gas supplier for the Project(s).

Section 4. TERM This Agreement is effective when signed by both parties and remains in effect for ( ) years or until the construction of all customer structures in this project are complete.

Section 5. COMPLETE AGREEMENT

This Agreement and the Exhibits, attached and made a part of this Agreement, constitute the parties’ complete agreement. With the exception of changes to the Company’s Tariffs, this Agreement cannot be changed except in a writing signed by both parties.


Page 2 of 5

Section VII Proposed Original Page 9.b


CENTERPOINT ENERGY RESOURCES CORP., DEVELOPER

d/b/a CenterPoint Energy Minnesota Gas

(COMPANY)

(NAME) (NAME)

505 Nicollet Mall (ADDRESS)

(ADDRESS)

Minneapolis, MN 55402

(CITY, STATE, ZIP CODE)

(CITY, STATE, ZIP CODE)

(SIGNATURE)

(SIGNATURE)

(TITLE) (TITLE)

(DATE) (DATE)


Page 3 of 5

Section VII Proposed Original Page 9.c


Exhibit A

Agreement Specifications;

Both parties agree that the terms of this Exhibit are confidential and may not be disclosed without the other Party’s prior written consent.

Developer warrants the following customer types, numbers, and primary natural gas space heating equipment/load specifications for this project.

Customer Type Customer Count Equipment/Load Requirements

CenterPoint Energy, in consideration of being granted exclusive rights to deliver natural gas to each customer described above will design and install natural gas main and/or services, and;

Will (insert any additional conditions here),


Page 4 of 5

Section VII Proposed Original Page 9.d


EXHIBIT B

Plat Map identifying Project scope and Customer type


Page 5 of 5

Section VII Proposed Original Page 8


MINIMUM VOLUME AGREEMENT This Minimum Volume Agreement (“Agreement”) is made this ____ day of ____________, 20__, between CenterPoint Energy, a Minnesota corporation (“CenterPoint Energy”) 505 Nicollet Mall, Minneapolis, Minnesota 55459-0038, and ____________________, (the “Customer”) (collectively, the “Parties”). The Customer owns the property located at________________________________ (the “Project”) and desires to have natural gas service installed. CenterPoint Energy is a natural gas public utility and desires to serve the Project. Therefore, the Parties agree as follows:

Section 1. SERVICE. CenterPoint Energy agrees to serve natural gas to the Project at a flow rate of _________MCFH and a delivery pressure of ___________PSIG. The Customer represents and warrants to CenterPoint Energy that it is the owner, or authorized agent of the same, of all property within the Project.

Section 2, OWNERSHIP AND EASEMENTS. All natural gas mains and/or services installed by CenterPoint Energy shall be and remain the property of CenterPoint Energy, and neither Customer nor its contractors shall acquire any right, title or interest in any gas main and/or services installed under this Agreement. The Customer hereby grants to CenterPoint Energy all easements necessary or desirable on Customer’s Property for the installation and operation of all natural gas mains and other facilities as needed by CenterPoint Energy.

Section 3. AUTHORITY AND CONFIDENTIALITY. Each Party warrants that it has full right, power and authority, and has received all required approvals to enter into this Agreement and to perform fully its obligation hereunder. Each Party Agrees that the terms of this Agreement are confidential and may not be disclosed without the other Party’s prior written consent. Notwithstanding the foregoing, CenterPoint Energy may disclose confidential information if required to do so by a government regulatory agency.

Section 4. ASSIGNMENT OF AGREEMENT. This Agreement cannot be assigned without CenterPoint Energy's prior written approval. If Customer does not obtain approval, Customer will remain liable for payment of gas service. The Customer may not assign this Agreement without CenterPoint Energy’s prior written consent. This Agreement, any applicable Service Agreement(s) and the Tariff constitute the parties' complete agreement. With the exception of changes to the Tariff, this Agreement cannot be changed except in a writing signed by both parties.

Section 5. MINIMUM VOLUME COMMITMENT. CenterPoint Energy agrees to serve the Project, as described in Paragraph 1 above, based upon the anticipated revenue from serving the Project. To justify service to the Project the Customer agrees to purchase an Annual Minimum Volume (AMV) of _____ Therms per year for the term of the Agreement. Beginning on the nearest billing cycle to_________ and for each subsequent 12 month period (“AMV Year”), in the event of an annual shortfall, the Customer shall be billed the difference between the AMV and the actual delivered volume at a rate consistent with the then current price for the ____________ rate class, rate code______________, on the last month of the applicable AMV Year. The AMV shall be reduced by the quantity of Therms associated with all of Customer’s qualifying Conservation Improvement Program (“CIP”) projects on a pro-rata basis for the first AMV Year and in full for all subsequent AMV Years. Rate information is available in the Rate Schedules of CenterPoint Energy’s Gas Rate Book, which can be accessed on CenterPoint Energy’s website, www.centerpointenergy.com and are on file with the state regulatory commission.

Section 6. ADDITIONAL TERMS. Additional terms, if any, are included in Attachment B, which is incorporated herein by reference.

Section 7. NOTICES. Notices, except as otherwise specified, will be sent to: CenterPoint Energy, Energy Sales

Customer___________________________________________ 505 Nicollet Mall

___________________________________________________ Minneapolis, MN 55459-0038 Phone: 612.321.4330

___________________________________________________ Section 6. TERM.

This Agreement is effective when signed by both parties and remains in effect until _____________ or until terminated by CenterPoint Energy upon 30 days written notice. This Agreement supersedes all prior written or oral agreements.

CENTERPOINT ENERGY CUSTOMER(S) By: ________________________ By: ______________________________ Title: _______________________ Title: _____________________________ Dated:______________________ Dated: ____________________________


Page 1 of 1

Docket No. G-008/GR-15-424Exhibit _____ (BMD-D), Schedule 6

Page 1 of 2CenterPoint Energy

COMPUTATION OF MAXIMUM AND MINIMUM MARKET RATEFull Tariff Rate Minimum Flexed Maximum

Line Description ($/Therm) Rate Amount RateNo. (a) (b) (c) (d=b-c) (e=b+d)

1 Sales Service and Transportation Services2 Commercial/Industrial - C3 Annual usage greater than 5000 Therms4 0.14070 0.00500 0.13570 0.2764056 Large General Service7 Demand (Peak Day) 0.42539 0.00000 0.42539 0.850788 Commodity 0.05162 0.00500 0.04662 0.09824910 Small Volume Dual Fuel11 Annual usage less than 120,000 therms12 A 0.11510 0.00500 0.11010 0.2252013 Annual usage greater than 120,000 Therms14 B 0.10798 0.00500 0.10298 0.210961516 Large Dual Fuel 0.05162 0.00500 0.04662 0.09824

CenterPoint Energy Docket No. G-008/GR-15-424Exhibit _____ (BMD-D), Schedule 6

Page 2 of 2Large General Service (LGS)

Proposed Large General Service Rate Calculation (Section V, Page 3)LineNo.

One Customer1 There is currently one customers on this rate in the rate case.2 In order to derive cost of gas recovery rates for this class, CenterPoint Energy3 used cost components for active classes with similar characteristics. This general approach4 was used in CenterPoint Energy's last three rate cases, G-008/GR-05-1380, 5 G-008/GR-08-1075, and G-008/GR-13-316.67 Monthly Basic Charge: $900.008 The Large Dual Fuel proposed Monthly Basic Charge is $900. To qualify for either tariff,9 LGS or LVDF, the customer must use 2,000 therms a day. 1011 Demand Delivery Charge: $0.42539 per therm of billing demand12 No change to current rate. This rate was developed in CenterPoint Energy's last rate case 13 The customer's peak day usage is multiplied by the above rate 14 and is billed monthly. The peak day usage is updated annually.1516 Commodity Delivery Charge: $0.05162 per therm used17 Since this class would be similar in size to the Large Volume Dual Fuel (LVDF)18 class, the commodity delivery charge equals the rate for the LVDF class.19

Documents

Direct Testimony Mr. Burl M. Drews Before the Public ... Rate … · 5 calculated by Company witness Mr. Matthew A. Troxle in his recommended 6 Class Cost of Service Study (“CCOSS”)