Recently, the Arizona Corporation Commission (ACC) approved important changes to your rates.
An increase in the Residential Customer Delivery Charge requested by UNS Gas on April 8, 2011, was approved by the ACC on April 24, 2012. Beginning May 1, 2012 this charge will increase to $0.3434 per therm from $0.3270 per therm. The adjustment will help UNS Gas pay for increases in capital and for costs associated with operating a safe and reliable gas distribution system.
Lost Fixed Cost Recovery (LFCR)
The ACC also approved a Lost Fixed Cost Recovery (LFCR) mechanism that will allow UNS Gas to recover fixed costs not otherwise recovered as the result of implementing energy efficiency programs, which help customers to use less energy. The LFCR, which will be charged to customers using a per therm rate, has not yet been determined and will not become effective until 2013.
Purchased Gas Adjustor (PGA)
On April 24, 2012, the ACC approved the use of a temporary credit adjustment to the Purchased Gas Adjustor (PGA), a usage-based charge that allows UNS Gas to recover natural gas costs while helping to shield customers from the volatility of natural gas prices. UNS Gas earns no profit from the PGA, which passes through actual natural gas commodity costs to customers with no mark-up. This temporary credit, set at a rate of $0.045 per therm, will be applied to customer bills beginning on May 1, 2012 and continuing through April 2014.
Most UniSource Energy Services (UES) customers will see lower monthly gas bills. When combined, these changes are expected to decrease the average monthly winter bill of a typical residential customer by about $2.12, or about 2.65 percent.
Customers, including low-income customers enrolled in the CARES program, who choose to opt out of the LFCR per-therm mechanism instead, must pay a higher fixed monthly Customer Charge of $11.50 instead of $10. For customers who choose the LFCR “opt out” option, these changes are expected to decrease the average monthly winter bill of a typical residential customer by about $0.62, or 0.77 percent (which is less than one percent).
During the LFCR's first year, customers may switch between the LFCR mechanism and the opt-out rate every three months. Beginning in May 2013, customers may switch between the two options once every 12 months.
In short, it's so that UES can recover the costs of providing safe, reliable service. The rate case application, filed in April 2011, is based on costs we incurred during the “test year,” which is Jan. 1-Dec. 31, 2010.
From June 30, 2008 (the end of the test year used in the Company's last completed rate case) through the end of Dec. 31, 2010 (the end of the test year), UES invested more than $30 million in its gas distribution system and other assets required to provide service to customers. That includes system reinforcement, public and capital improvement projects and general plant costs.
The PGA mechanism allows UNS Gas to recover actual commodity costs, including transportation, through a price adjustor. The difference between UNS Gas' actual monthly gas and transportation costs and the rolling 12-month average cost of gas and transportation is deferred and recovered or returned to customers through the PGA mechanism.