OAR 860-150-0400: Mechanisms for Recovery of Prudently Incurred Costs by Small Natural Gas Utilities

(1) Before a small natural gas utility makes a qualified investment for the first time, or purchases RNG from a third-party producer with the intent to seek cost recovery in a new or revised tariff schedule, the utility must file a petition to participate in the RNG program with the Commission. In addition to the information required under ORS 757.398, the small natural gas utility’s petition must include: (a) The total volume of RNG to be procured per year over a period concluding at the end of the last month of the test year used in the general rate revision filing, expressed as a percentage of all natural gas expected to be delivered to the utility’s retail customers in Oregon; (b) Identification of qualified investments the small natural gas utility may make during the period specified in the filing, including the expected average cost and timing of those investments, and the average annual quantity of RNG those investments will produce; (c) The expected value of any RTCs to be acquired by the utility during the period specified in the filing; (d) The expected value of any RNG that the small natural gas utility intends to sell to a party who is not a retail utility customer, including the value of any environmental credits that the utility may acquire from the RNG producer and resell; (e) Any expected savings to be achieved through the avoidance of geologic natural gas costs, to be calculated in the manner described in OAR 860-150-0200(3); (f) The costs of the identified annual RNG procurements and the levelized costs of all qualified investments expressed as a percentage of the utility’s total revenue requirement, where this requirement is that approved by the Commission in the utility’s most recently completed general rate revision; (g) An assessment by the small natural gas utility of the relative cost effectiveness of the all qualified investments it intends to make during the period concluding at the end of the last month of the test year used in the general rate revision filing. This assessment must utilize the same formula utilized by a large natural gas utility pursuant to OAR 860-150-0200 or another formula specified by the Commission; (h) The utility’s proposed annual rate cap limiting the cost of RNG purchases and qualified investments. (2) The small natural gas utility may not make RNG purchases or qualified investments in excess of the annual rate cap established by the Commission, except in an instance where the anticipated annual costs would have remained below the cost cap but for an unforeseeable increase on construction costs associated with a qualified investment. (3) After a small natural gas utility has made a complete filing pursuant to section (1), and after the Commission has approved the small natural gas utility’s filing and set a rate cap, the small natural gas utility may file a general rate revision to seek to recover prudently incurred costs associated with qualified investments consistent with its filing made under section (1). (4) If the small natural gas utility wishes to revise its participation in the RNG program at any time, renew it after the end of the time period specified in the petition, make additional RNG purchases or qualified investments beyond those described in the filing, or request that the Commission revise the rate cap described in this section, the small natural gas utility must file a petition to modify or renew its RNG program with the Commission that contains the information required under section (1). (5) The small natural gas utility may, as part of its petition described in section (1), include a request to pass through prudently incurred costs associated with the purchase of RNG from another entity to meet its target volumes as approved by the Commission, excluding qualified investments, by means of its purchased gas adjustment mechanism. Such costs may include the utility’s cost of registration for the RTC tracking system described in OAR 860-150-0050, transaction costs for any RTCs acquired in association with the purchase of RNG from another entity, and transaction costs incurred to retire the RTCs associated with gas delivered to retail utility customers. (6) In filings, annual earnings reviews, and quarterly updates associated with the purchased gas adjustment mechanism, a small natural gas utility must clearly identify costs associated with the purchase of RNG and costs of compliance described in section of this rule. (7) If the Commission has accepted a small natural gas utility’s petition to participate in the RNG program, the small natural gas utility may file a request that the Commission open an investigation to establish an automatic adjustment clause for recovery of prudently incurred costs associated with certain qualified investments.