APPENDIX B - puc.state.pa.us Fabrics, Inc. Frank Oese, Sr. Margaret M. McLaughlin Alma M. Sunyak...

APPENDIX B

BEFORE THE PENNSYLVANIA PUBLIC UTILITY COMMISSION

Pennsylvania P u b l i c U t i l i t y Commission

C h r i s t i n e M. S t o t t Dorothea Sandbrook I r w i n A. Popowsky, Consumer Advocate

Bernard S. Ryan, J r . , Small Business Advocate

Charles H. and Pauline H. A l b e r t , Sr. James R. Brokenshire John Vidoni Excel Fabrics, I n c . Frank Oese, Sr. Margaret M. McLaughlin Alma M. Sunyak Lar r y K i l l o Mr. and Mrs. L. G. Kessinger Theresa L. Spiess Mr. and Mrs. Fred D. Hrubenak, Sr.

Helen A. Loper M i l t o n D. Harte Mr. and Mrs. Bernard P a v l i k Mrs. Tekla H. Barron Debra Minotto UGI I n d u s t r i a l I n t e r v e n o r s Thomas Heck UGI T r a n s p o r t a t i o n Customer Group Stanley Rabzak Irene K. Pierce Township of Exeter,

Complainants

Alumax M i l l Products, I n c . , I n t e r v e n o r

v.

UGI U t i l i t i e s , I n c . Gas - D i v i s i o n

"$bcket b0953

Nos. 297

Anc 9 1 iqos; ^ 0 0 9 5 3 - - R _ 0 0 9 5 3

OFFICE CF R-00953

CONSUMER ADVOCATE R-00953297C0004

297C0001 297C0002 297C0003

R-00953 R-00953 R-00953 R-00953 R-00953 R-00953 R-00953 R-00953 R-00953 R-00953 R-00953

R-00953 R-00953 R-00953 R-00953 R-00953 R-00953 R-00953 R-00953 R-00953 R-00953 R-00953

297C0005 297C0006 297C0007 297C0008 297C0009 297C0010 297C0011 297C0012 297C0013 297C0014 297C0015

297C0016 297C0017 297C0018 297C0019 297C0020 297C0021 297C0022 297C0023 297C0024 297C0025 297C0026

RECOMMENDED DECISION

Before Louis G. Cocheres Wayne L. Weismandel

Adm i n i s t r a t i v e Law Judges

August 17, 1995

TABLE OF CONTENTS Page

O I . H i s t o r y Of The Proceeding ' 1

I I . S t i p u l a t i o n I n Settlement 4

A. Settlement Provisions 4

^ 1. T o t a l Annual Increase 4 2. Volumes And Revenues 5 3. Customer Charges 6 4. Competitive Adjustment 7 5. OPEB's 7 6. State Taxes 12

4 7. Stay Out P r o v i s i o n 12 8. Low Income Usage Reduction Program (LIURP). 13

a. Commissioner Questions 13 b. Settlement Terms 15 c. E x p i r a t i o n 15

9. Depreciation . . . . . 15 10. 1994 Storm Damage 16 11. Rate Design Consultant 16 12. T a r i f f Changes and Revised Rules 17

# a. T a r i f f Changes 17 b. Revised Rules 18

13. Hourly Service Rates 19 14. Environmental Clean-Up Costs 20 15. Capacity Assignments and Costs 20

a. Extended D e l i v e r y Customers 21 b. Business Development Customers . . . . 23 c. Large Firm D e l i v e r y Customers 25 d. D e l i v e r y Service Customers 2 7 e. Purchased Gas Cost Credits 3 0

16. Conditions Of Settlement 3 0

I I I . Proposed S t i p u l a t i o n Between OCA and UGI 32

A. Provisi o n s 32

B. Conditions 35

1. Other A c t i v e P a r t i e s 35 2. OCA and UGI Conditions 35

* IV. Pending Complaints 36

1. C h r i s t i n e M. S t o t t R-00953297C0001 . 36 2. Dorothea Sandbrook R-00953297C0002 . 37

3 . I r w i n A. Popowsky, Consumer Advocate R-•00953297C0003 . 37

4. Bernard S. Ryan, Small Business Advocate R--00953297C0004 . 38

5. Charles H. and Pauline H. A l b e r t , Sr. R-•00953297C0005 . 38

6. James R. Brokenshire R-•00953297C0006 . 38 7. John Vidoni R-•00953297C0007 . 39 8. Excel Fabrics, I n c . R-•00953297C0008 . 39 9. Frank Oese, Sr. R-•00953297C0009 . 39

10. Margaret M. McLaughlin R-•00953297C0010 . 40 11. Alma M. Sunyak R-•00953297C0011 . 40 12. Larry K i l l o R-•00953297C0012 . 41 13. Mr. and Mrs. L. G. Kessinger R-•00953297C0013 . 41 14. Theresa L. Spiess R-•00953297C0014 . 41 15. Mr. and Mrs. Fred D. Hrubenak,

Sr. R-•00953297C0015 . 42 16. Helen A. Loper R-•00953297C0016 . 42 17. M i l t o n D. Harte R-•00953297C0017 . 42 18. Mr. and Mrs. Bernard P a v l i k R-•00953297C0018 . 43 19. Tekla H. Barron R-•00953297C0019 . 43 20. Debra Minotto R-•00953297C0020 . 44 21. UGI I n d u s t r i a l I n t e r v e n o r s R- 00953297C0021 . 44 22. Thomas Heck R-•00953297C0022 . 44 23. UGI T r a n s p o r t a t i o n Customer

Group R- 00953297C0023 . 45 24. Stanley Rabzak R-•00953297C0024 . 45 25. Irene K. Pierce R- 00953297C0025 . 45 26. Township of Exeter R- 0095329700026 . 46

46

52

Tables - UGI U t i l i t i e s , Inc. - Gas Division Estimated Rate of Return on Settlement 61

Attachments A-l

S t i p u l a t i o n i n Settlement

Appendices

A-l

A.

B. c.

D. E.

F.

T a r i f f - Rates and Rules Governing the Furnishing of Gas Service . A-25

Proof of Revenue A-83 Computation of Weighted Average Cost of Transportation A-97 Computation of Rate DS System Access Fee . . . . A-99 UGI U t i l i t i e s , Inc. - Gas Division Statement i n Support of the S t i p u l a t i o n i n Settlement i n Rate Investigation A-101

Office of T r i a l Staff Statement i n Support of Stipulation i n Settlement . . . . A-105

G. Statement of the Office of Consumer Advocate i n Support of Stip u l a t i o n i n Settlement A-112

H. Office of Small Business Advocate Statement i n Support of S t i p u l a t i o n i n Settlement A-123

J. UGI Transportation Customer Group Statement i n Support of s t i p u l a t i o n i n Settlement A-128

L. July 20, 1995 Letter of Michael W. Hassell A-133

Proposed S t i p u l a t i o n Between Office of Consumer Advocate and UGI U t i l i t i e s , Inc. Concerning Extension of F a c i l i t i e s A-136

Appendix

A. Revised T a r i f f Pages A-144

July 19, 1995 Letter of Carol F. Pennington A-151 July 25, 1995 Letter of Karen O i l l Moury A-154 July 25, 1995 Letter of David M. Kleppinger A-155 July 24, 1995 Letter of Kenneth Zielonis A-158 August 1, 1995 Letter of Stephen K. Gardner A-159 August 10, 1995 Letter of Michael W. Hassell . . . . A-160

T a r i f f Page No. 10A A-161 T a r i f f Page No. 15 A-162 T a r i f f Page No. 16 A-163 T a r i f f Page No. 36 A-164 T a r i f f Addendum - Hourly Service Rates A-165

I . HISTORY OF THE PROCEEDING

On January 27, 1995, UGI U t i l i t i e s , Inc. - Gas Division

(UGI or Company) f i l e d with the Commission Supplement No. 103 to

T a r i f f Gas - Pa. P.U.C. No. 4, together with supporting data,

proposing a general increase of $41.3 m i l l i o n i n base rates

pursuant t o Section 1308(d) of the Public U t i l i t y Code, 66 Pa.C.S.

§ 1308(d), t o become e f f e c t i v e on March 28, 1995.1 At proposed

rates, the t o t a l b i l l f o r the t y p i c a l r e s i d e n t i a l heating customer

using about 101 Mcf per year would have increased from $698.37 to

$862.10 or by $163.73 annually, or by 23%.

Supplement No. 103 was suspended by operation of Section

1308(d) of the Public U t i l i t y Code, 66 Pa.C.S. § 1308(d), f o r up to

seven months or u n t i l October 28, 1995. By Opinion and Order

entered February 28, 1995, the Commission i n i t i a t e d an

inv e s t i g a t i o n of UGI's proposed increase i n base rates. I n i t i a l l y ,

the case was assigned t o Administrative Law Judge (ALJ) Weismandel.

However, due to ALJ Weismandel' s surgery, the case was also

assigned to.ALJ Cocheres.

Complaints against the proposed increase i n base rates

were f i l e d by the Office of Consumer Advocate (OCA), the Office of

Small Business Advocate (OSBA), the UGI I n d u s t r i a l Intervenors

1 On July 20, 1995, the active p a r t i e s f i l e d a St i p u l a t i o n In Settlement which contained a summary of the proceeding. That summary wit h some e d i t i n g by the undersigned has been set f o r t h as the History of the Proceeding.

(UGI I I ) 2 , the UGI Transportation Customer Group (UGI TCG)3 and

various other customers of UGI. UGI f i l e d timely answers t o a l l

complaints. A P e t i t i o n t o Intervene also was f i l e d by Alumax M i l l

Products, Inc. (Alumax). The Office of T r i a l Staff (OTS) f i l e d a

notice of appearance.

A prehearing conference was held on A p r i l 7, 1995.

Prehearing memoranda i d e n t i f y i n g p o t e n t i a l issues and witnesses

were f i l e d by a l l parties p a r t i c i p a t i n g i n the prehearing

conference. I n addition, UGI submitted i t s case-in-chief

consisting of eight w r i t t e n statements and numerous schedules.

Evidentiary hearings on UGI's case-in-chief were held on

A p r i l 17-21, 1995. Public input hearings were held on May 9, 10,

17 and 18, 1995, i n Bethlehem, Allentown, Reading, Harrisburg,

Mechanicsburg and Lancaster, respectively. Other parties submitted

t h e i r d i r e c t testimony, and fu r t h e r hearings were held on May 22,

23 and 31, 1995. Subsequently, r e b u t t a l and surrebuttal testimony

was submitted. Four f u r t h e r days of hearings were held on June 20,

22, 23 and 27, 1995.

On July 20, 1995, UGI, OTS, OCA, OSBA, UGI I I , UGI TCG

2UGI I I consists of ALCOA, Appleton Papers Inc., Armstrong World Industries, Bethlehem Steel Corporation, Carpenter Technology Corporation, Dana Corporation, Hershey Foods Corporation and Paxton Creek Cogeneration Associates.

3UGI TCG consists of Ephrata Community Hospital, Kalas Manufacturing, Inc., Sylvin Technologies, Inc., Burnham Corporation, Kunzler & Co., Inc., Elizabethtown College, St. Joseph Hospital of Lancaster, County of Lancaster, Lancaster General Hospital, Community Hospital of Lancaster, Lebanon Valley College, Reading R e h a b i l i t a t i o n Hospital, County of Berks, Reading Tube Company, Hoffman Industries, Berks . Packing Corp. and Arrow I n t e r n a t i o n a l , Inc.

and Alumax submitted a St i p u l a t i o n i n Settlement (Settlement

Stipulation) . Also on July 20, 1995, UGI and OCA submitted a

Proposed S t i p u l a t i o n Between Office Of Consumer Advocate And UGI

U t i l i t i e s ^ Inc. Concerning Extension Of F a c i l i t i e s (Extension

S t i p u l a t i o n ) . By l e t t e r dated July 19, 1995, the OTS indicated i t

would not j o i n or oppose the Extension Stipulation. By l e t t e r

dated July 25, 1995, the OSBA indicated i t would not j o i n or oppose

the Extension S t i p u l a t i o n . By l e t t e r dated July 25, 1995, UGI I I

indicated i t would not j o i n or oppose the Extension s t i p u l a t i o n .

By l e t t e r dated July 24, 1995, UGI TGC indicated i t would not j o i n

or oppose the Extension S t i p u l a t i o n . By l e t t e r dated August 1,

1995, Alumax indicated i t would not j o i n or oppose the Extension

S t i p u l a t i o n . (Copies of a l l settlement documents are attached.)

Copies of both s t i p u l a t i o n s were sent to a l l inactive

p a r t i e s who were given an opportunity t o comment. (Settlement

S t i p u l a t i o n , Appendix L.) No coinments were received.

A hearing on the terms of the settlements was held on

August 9, 1995. As a r e s u l t of the hearing, the Company (with the

approval of the parties) submitted revisions t o T a r i f f Pages 10A,

15, and 36. Also included was a Statement of Service Charges

No. 1, as required by Settlement S t i p u l a t i o n , f I I I . l . o . A copy of

these documents, as we l l as the cover l e t t e r dated August 10, 1995,

i s attached.

I I . STIPULATION IN SETTLEMENT

A. Settlement Provisions

1. Total Annual Increase

UGI's o r i g i n a l f i l i n g , Supplement No. 103 to T a r i f f Gas -

Pa. P.U.C. No. 4, proposed a general increase of $41.3 m i l l i o n i n

base rates, t o become e f f e c t i v e on March 28, 1995. Under the

proposed rates the t o t a l b i l l f o r a t y p i c a l r e s i d e n t i a l heating

customer using approximately 101 Mcf per year would have increased

from $698.37 t o $862.10, or by $163.73 per year, or by 23%.

Under the Settlement S t i p u l a t i o n UGI would be permitted

to increase rates to produce an increase i n operating revenues of

$19.5 m i l l i o n , exclusive of additional charges to customers served

under Rates BD, LFD, and DS. The t y p i c a l r e s i d e n t i a l heating

customer using approximately 101 Mcf per year would experience an

average increase i n h i s b i l l from $698.37 to $767.99, or by $69.62

per year, or by 10%. The rates proposed under the Settlement

S t i p u l a t i o n are requested t o become e f f e c t i v e for service on, and

a f t e r , August 31, 1995, dependent upon Commission approval.

The Settlement S t i p u l a t i o n rates permit UGI to cover a l l

allowable operating costs and to have an opportunity t o earn a f a i r

rate of re t u r n . I n moving closer to a t r u e cost of service rate

structure, the Settlement S t i p u l a t i o n permits UGI t o , at minimum,

cover i t s revenue requirements while avoiding rate shock. The

Settlement S t i p u l a t i o n rates are j u s t and reasonable, with no undue

discrimination. UGI should be able t o provide high q u a l i t y , safe

service t o a maximum number of customers while being able t o

continue to a t t r a c t investment c a p i t a l . The Commission should

approve the Settlement St i p u l a t i o n as submitted by the active

parties.

2. Volumes and Revenues

The parties agreed to u t i l i z e the Company's projected

volumes f o r each customer class. Those projections .are set f o r t h

i n Appendix B to the Settlement St i p u l a t i o n and are s e l f -

explanatory. I l l . l . b . We have reviewed those projections and

f i n d them reasonable. We recommend t h e i r approval.

Since the ove r a l l proposed increase was decreased by a

l i t t l e more than f i f t y percent, the parties agreed to change the

a l l o c a t i o n of sales revenues among the customer classes. When we

compared the settlement revenues to the o r i g i n a l proposals, we

noted t h a t revenue requirements f o r almost a l l classes had been

decreased. Compare. Appendix B, Settlement Stipulation t o UGI Book

3, IV-B-5. Two classes actually received revenue increases from

the settlement, Business Development (BD) and Large Firm Demand

(LFD). Examination of the proof of revenue worksheets f o r each of

those classes revealed the following data:

Rate Proposed Increase Settlement Class Revenues % Revenues %

BD $ 31,465 0.2% $ 397,111 2.7%

LFD $656,605 5.7% $1,122,174 9.8%

Book 3, IV-B-5 (Summary of Rates) and Appendix B, Settlement

S t i p u l a t i o n , Rates BD and LFD worksheets. (Settlement S t i p u l a t i o n ,

f I l l . l . r - s . ) A more detailed explanation of the rate increases

for these classes is provided below.

5

Other than the Delivery Service (DS)4 and LFD classes,

none of the revenues associated with the other transportation

customers deviated from the Company's proposed changes. Most of

these classes represent customers which have alternate fuels or

bypass c a p a b i l i t i e s . The parties have essentially agreed that the

rates and revenues received from t h i s group are market-based and

cannot be increased.

Our review of the l i t i g a t i o n positions of the parties and

the settlement proposals leads us to the conclusion that t h i s

portion of the Settlement S t i p u l a t i o n i s reasonable and i n the

public i n t e r e s t . Accordingly, we recommend adoption of the same.

3. Customer Charqes

Paragraph I l l . l . d . of the Settlement S t i p u l a t i o n

specifies t h a t the customer charges f o r Rates Residential (R) 5,

General Service - Non-Residential (N) and General Service

Comercial and I n d u s t r i a l A i r Conditioning (CIAC) would become nine

do l l a r s per month. Comparison of the monthly customer charges f o r

those three categories i n the settlement rates to current and

proposed rates reveals the following data:

Rate Current Proposed Settlement Class

RG $6,302 $ 8.00 $9.00 RH $6,302 $11.00 $9.00

N $6,302 $11.00 $9.00

4A f u r t h e r explanation of the o v e r a l l rate increase f o r the DS class w i l l be provided i n a l a t e r section of t h i s Decision.

5The r e s i d e n t i a l class i s f u r t h e r subdivided i n t o Residential General (RG) and Residential Heating (RH).

CIAC $6,302 $11.00 $9.00

Compare. Settlement S t i p u l a t i o n , Appendix B, worksheets for Rates

R, N and CIAC to UGI Book 3, IV-B-5(2), (3) and (7). The remaining

customer charges did not vary from the o r i g i n a l proposals.

We note t h a t the purpose of such charges i s to capture

the f i x e d costs of serving each class. Having reviewed the

customer charges for a l l of the classes, we have concluded t h a t the

settlement proposals are moving toward that goal with due deference

to the p r i n c i p l e of gradualism. Accordingly, we recommend adoption

of a l l of the customer charges imposed by the settlement.

4. Competitive Adjustment

Paragraph I I I . I . e . of the Settlement St i p u l a t i o n

withdraws the Competitive Adjustment t a r i f f without prejudice. The

t a r i f f proposed a revenue/loss sharing arrangement between the core

customer group and the Company f o r profits/losses which exceeded a

given band around the rate of return. I n diplomatic terms, the

concept was a strongly contested issue. No decision by these

judges or t h i s Commission would have s a t i s f i e d the parties.

Approval of t h i s provision w i l l save or postpone l i t i g a t i o n costs

u n t i l the issue i s raised again. We recommend approval of the

same.

5. OPEB's

UGI's f i l i n g included a claim f o r recovery of "other

post-employment benefits," or OPEB costs (these are post-retirement

benefits other than pensions), calculated i n accordance wi t h the

Financial Accounting Standards Board's Statement of Financial

Accounting Standard No. 106 (SFAS 106). During the course of the

proceeding t h i s claim was revised based upon the results of a new

ac t u a r i a l study. The revised claim for annual OPEB costs i s

$2,374,000.

UGI adopted SFAS 106 f o r accounting purposes e f f e c t i v e

January 1, 1993. The amount deferred from January 1, 1993 through

September 30, 1995 i s $4,015,000, and the Settlement Stipulation

proposes t o amortize t h i s deferred amount at the rate of

approximately $233,000 per year over a period of 17.25 years.

Under the Settlement S t i p u l a t i o n , UGI's claim f o r t o t a l

annual OPEB costs i s $2,607,000 ($2,374,000 + $233,000 =

$2,607,000).

The Settlement S t i p u l a t i o n f u r t h e r provides t h a t :

(a) For ratemaking purposes i n t h i s proceeding, OPEB's

w i l l be determined i n accordance wi t h the provisions of SFAS 106.

(b) For ratemaking purposes i n t h i s proceeding,

$2,374,000 of annual OPEB costs calculated i n accordance with SFAS

106 w i l l be recognized.

(c) An amount, to amortize over a 17.25 years period

beginning with the effective date of rates established in this

proceeding, of the portion of SFAS 106 costs in excess of pay-as-

you-go costs accrued and deferred for the period January 1, 1993

unt i 1 the ef f ect ive date of rates in this proceeding w i l l be

recognized. By way of example only, i f rates established in this

proceeding became effective October 1, 1995, the amount to be

included in annual operating expense would be approximately

$233,000 ($4,015,000 -r 17.25 years). I f rates become e f f e c t i v e

e a r l i e r than October 1, 1995, the annual amount to be amortized

w i l l be accordingly adjusted ( i . e . , the amount deferred w i l l be

somewhat less than $4,015,000, but w i l l s t i l l be amortized over

17.25 years). However, no modification to the revenue increase set

f o r t h i n the Settlement S t i p u l a t i o n w i l l be made.

(d) UGI w i l l account f o r and fund OPEBs by establishing

irrevocable external t r u s t s , i n t o which would be deposited the f u l l

amount of payments calculated pursuant to SFAS 106. Retiree OPEB's

and administrative costs of maintaining the tr u s t s w i l l be paid

from amounts deposited i n the t r u s t s . UGI wi 11 account f o r the

difference between the net periodic postretirement benefit expense

determined annually by the actuary i n accordance with SFAS 106 and

the amount of SFAS 106 postretirement benefit expense included i n

rates. That difference w i l l be recorded as a regulatory asset (or

l i a b i l i t y ) and w i l l be expensed or credited i n future rate

proceedings i n determining net periodic postretirement benefit

expense.

Deferred costs f o r the period between January 1, 1993 and

the e f f e c t i v e date of rates i n t h i s proceeding w i l l be paid i n t o

the t r u s t s evenly over the same period that such costs are

amortized f o r ratemaking purposes.

(e) While the treatment of OPEB costs comports with

Commission precedent, as upheld i n Pooowskv v. Pa. Public U t i l i t v

Comm'n. 164 Pa.Commw. 600, 643 A.2d 1146 (1994), the active parties

acknowledge th a t OCA has appealed the issue of the legal a u t h o r i t y

of the Commission t o permit rate recovery of amounts calculated

pursuant t o SFAS 106 i n the P e t i t i o n f o r Allowance of Appeal

pending before the Pennsylvania Supreme Court styled Irwin A.

Pooowskv v. Pa. P.U.C. . No. 309 M.D. Allocatur Docket 1994 (the

"Pennsylvania-American Water Company appeal"). I t i s expressly

recognized and agreed that SFAS 106 amounts recovered i n excess of

pay-as-you-go levels included i n rates as a re s u l t of the

Settlement w i l l be subject t o the Court's f i n a l r u l i n g i n that

Appeal, including any furt h e r review by the United States Supreme

Court.

I f i t i s f i n a l l y determined i n I r w i n A. Popowsky v. Pa.

P.U.C. . No. 309 M.D. Allocatur Docket 1994 that the Commission

erred as a matter of law or exceeded i t s discretion i n allowing

recovery of OPEB costs calculated i n accordance with SFAS 106, then

UGI w i l l return t o customers any amounts determined t o be

unlawfully collected i n the following manner. Beginning w i t h the

e f f e c t i v e date of rates established as a r e s u l t of a base-rate

proceeding next fol l o w i n g such f i n a l r e s o l ution, UGI w i l l cease to

contribute amounts t o the t r u s t s . Thereafter, amounts deposited i n

the t r u s t s w i l l be used t o pay OPEB's u n t i l the t r u s t amounts

deposited to UGI's account are exhausted. UGI w i l l eliminate any

claim f o r recovery of ongoing OPEB costs i n that and subsequent

rate proceedings u n t i l the t r u s t amounts less any regulatory asset

or plus any regulatory l i a b i l i t y equals zero. Thereafter, UGI w i l l

claim OPEB costs on the basis authorized by the Commission. This

provision s h a l l not apply i f the appeal at I r w i n A. Popowsky v. Pa.

10

P.U. C. , No. 309 M.D. Allocatur Docket 1994 i s reversed on the

ground that Coimission allowance of OPEB costs i n accordance with

SFAS 106 was not supported by substantial evidence.

(f ) Inclusion i n rates i n t h i s proceeding of an

amortization of amounts r e l a t i n g to deferrals of incremental OPEB

accruals over and above pay-as-you-go amounts with respect to SFAS

106 commencing January 1, 1993 to the e f f e c t i v e date of rates i n

t h i s case i s f o r the purpose of t h i s Settlement only and i s made

without prejudice t o any active party's r i g h t t o challenge the

fur t h e r recovery of such amounts i n any future rate case on any

ground, including the p r i n c i p l e of re t r o a c t i v e ratemaking. In

addition, UGI reserves and retains the r i g h t t o raise a l l arguments

i n response t o such contentions with the exception that UGI w i l l

not 'contend t h a t f u r t h e r recovery of such amounts i s mandated by

the allowance i n t h i s proceeding. Furthermore, the active parties

s p e c i f i c a l l y agree t h a t the Settlement of t h i s issue i n t h i s

proceeding i s made without prejudice t o , and s h a l l not be u t i l i z e d

by or against, any active party and i s made without prejudice t o

the position(s) t h a t any party may assert i n any future Commission

or appellate proceeding.

(Settlement S t i p u l a t i o n , f l l l . l . f )

The provisions of the Settlement St i p u l a t i o n pertaining

t o OPEB's are i n accordance with Commission precedent i n the use of

irrevocable external t r u s t s and the annual recognition of a

regulatory asset or l i a b i l i t y . The Settlement Stipulation also

provides f o r the p o s s i b i l i t y of the Commission approved procedures

11

being disapproved by the Pennsylvania Supreme Court and sets f o r t h

the actions to be taken i n that event. F i n a l l y , the active parties

each preserve t h e i r r i g h t s t o contest the issues surrounding OPEB's

and SFAS 106 accounting (except that UGI w i l l not contend that

f u r t h e r recovery of deferred accruals over and above pay-as-you-go

amounts i s mandated by the allowance i n t h i s proceeding) i n any

future Commission or appellate proceeding.. For a l l these reasons,

t h i s portion of the Settlement S t i p u l a t i o n merits Commission

approval.

6. State Taxes

The Settlement St i p u l a t i o n makes two provisions regarding

Pennsylvania taxes and t h e i r impact on the proposed rates. Both

provisions are j u s t and reasonable and should be approved by the

Commission. These provisions are: (a) The rates proposed i n the

Settlement S t i p u l a t i o n r e f l e c t a f i v e years amortization of

previously deferred state income taxes at an annualized rate of

$958,000 per year; (b) The State Tax Adjustment Surcharge s h a l l

be established at 0% e f f e c t i v e with the e f f e c t i v e date of the rates

proposed i n the Settlement S t i p u l a t i o n . (Settlement S t i p u l a t i o n ,

flIII.1.g. and h.)

7. Stay Out Provision

The Settlement S t i p u l a t i o n provides that UGI w i l l not

f i l e a t a r i f f or t a r i f f supplement wi t h the Commission seeking a

general increase i n base rates p r i o r t o January 25, 1997, other

than i n compliance w i t h Commission orders or i n response t o

fundamental changes i n regulatory p o l i c i e s , accounting p o l i c i e s , or

12

federal tax p o l i c i e s a f f e c t i n g UGI's base rates. (Settlement

S t i p u l a t i o n , flIII.1.i)

This stay out provision, with r a t i o n a l l i m i t a t i o n s f o r

factors t h a t could have a major impact upon UGI's a b i l i t y to cover

allowable operating costs and have an opportunity to earn a f a i r

rate of return but are beyond UGI's c o n t r o l , provides a degree of

desired r a t e s t a b i l i t y . The provision, along with the over a l l

decrease i n proposed rates f o r r e s i d e n t i a l customers between the

o r i g i n a l f i l i n g and the Settlement S t i p u l a t i o n rates, also serves

to prevent, or at least ameliorate, rate shock. For these reasons,

t h i s provision of the Settlement S t i p u l a t i o n merits Commission

approval.

8. Low Income Usage Reduction Program fLIURPl

a. Commissioner Questions

By Memorandum dated March 23, 1995, Commissioner David W.

Rolka addressed the appropriateness of .2% of j u r i s d i c t i o n a l

revenues as a required funding l e v e l f o r UGI's r e s i d e n t i a l low

income usage reduction program set f o r t h i n 52 Pa.Code §58.4(a).

Commissioner Rolka posed questions to be answered i n addressing h i s

concern. By l e t t e r dated A p r i l 3, 1995, enclosing a copy of

Commissioner Rolka's Memorandum, a l l then p a r t i c i p a t i n g parties

were advised of his concern, and UGI was directed t o include

answers t o Commissioner Rolka's questions as a part of i t s case-in-

chief i n t h i s proceeding. The Order dated A p r i l 10, 1995, issued as

a r e s u l t of the prehearing conference i n t h i s case, also included

Commissioner Rolka's questions and directed UGI to answer them as

13

part of i t s case-in-chief (Order paragraph 8).

UGI submitted Statement No. 2A (Supplemental Direct

Testimony of Peter G. Terranova) as i t s response to Commissioner

Rolka's questions. I n summary, these answers are:

(1) Based on LIHEAP (Low Income Home Energy Assistance

Program) s t a t i s t i c s and the d e f i n i t i o n of a LIURP e l i g i b l e customer

found i n 52 Pa.Code §58.2, there are approximately 15,500

p o t e n t i a l l y e l i g i b l e customers i n UGI's service t e r r i t o r y . The

Commission's Bureau of Consumer Services (BCS) has encouraged UGI

t o concentrate i t s e f f o r t s on low income customers with the highest

energy usage. This group i s composed of approximately 3,921

customers i n UGI's service t e r r i t o r y .

(2) LIURP includes more than the weather i z a t i o n of

dwe11ings, BCS has found that educat ion can be e f f e c t i v e i n

reducing usage and UGI incorporates education programs i n i t s

LIURP. The average cost of a l l UGI LIURP services per r e c i p i e n t i s

$1,803. These costs can range from $240 t o $4,590. For 1994, the

average cost was $1,803 and the median cost was $2,079.

(3) I t i s impossible t o determine when every e l i g i b l e

customer could be served by UGI's LIURP as the e l i g i b l e population

can continue to change.

(4) Currently, UGI LIURP i s funded at the l e v e l of .2%

of a l l j u r i s d i c t i o n a l r e t a i l sales.

We t r u s t t h a t these answers are responsive to

Commissioner Rolka's questions and provide information regarding

h i s concerns.

14

b. Settlement Terms

The Settlement Stipulation includes i n the revenue

allowance $315,000 i n administrative costs and approximately

$400,000 f o r current b i l l s h o r t f a l l s associated with UGI's p i l o t

Low Income Self Help Program (LISHP). UGI s h a l l be permitted to

include arrearages forgiven and w r i t t e n o f f under the LISHP p i l o t

i n developing i t s u n c o l l e c t i b l e accounts expense i n future

proceedings i f such w r i t e - o f f s f a l l w i t h i n the period used to

develop u n c o l l e c t i b l e accounts expense. These provisions are i n

the public i n t e r e s t as legitimate expenses of the LISHP program and

should be approved by the Commission. (Settlement S t i p u l a t i o n ,

5 I I I . 1 . j )

c. Expiration

The revised T a r i f f w i l l also contain a provision, i n

accordance w i t h the Commission's approval of UGI's LISHP program,

that the LISHP program w i l l expire automatically at the conclusion

of two years from the e f f e c t i v e date of the revised T a r i f f , unless

extended by order of the commission.

9. Depreciation

In paragraph I l l . l . k . of the Settlement Stipulation, the

Company withdrew i t s claim f o r accelerated depreciation on assets

used t o serve competitive customers. Again i n diplomatic terms,

the concept was a strongly contested issue. No decision by these

judges or t h i s Commission would have s a t i s f i e d the p a r t i e s .

Approval of t h i s provision w i l l save or postpone l i t i g a t i o n costs

u n t i l the issue i s raised again. We recommend approval of the same.

15

10. 1994 Storm Damage

As a part of the Settlement S t i p u l a t i o n UGI has foregone

i t s o r i g i n a l claim f o r the amortization of additional expenses

a t t r i b u t a b l e t o the severe winter storms experienced i n i t s service

t e r r i t o r y during calendar year 1994. UGI has also agreed not to

make a ratemaking claim to recover these 1994 storm expenses i n any

futur e proceeding. As these expenses can be absorbed by UGI

without inclusion i n t h i s rate case, or future proceedings, without

jeopardizing UGI's a b i l i t y t o recover a l l allowable expenses and

have an opportunity t o earn a f a i r rate of return, t h i s part of the

Settlement S t i p u l a t i o n should receive Commission approval.

(Settlement S t i p u l a t i o n , flIII.l.l)

11. Rate Design Consultant

The Company agreed t o h i r e a consultant t o do the

following tasks:

The Company agrees t o engage' an outside consultant, at reasonable expense, to prepare a study of the consequences i f the Company were t o remove competitively situated customers from rate regulation. The study w i l l examine the r a t e e f f e c t s on the remaining regulated customers, the effects on stockholders and the e f f e c t s on p o t e n t i a l l y deregulated competitive customers. The study also would i d e n t i f y rate base, revenues, expenses and i n t e r s t a t e capacity used to serve the competitive customers; and that which would remain with regulated customers. The study also w i l l examine the legal ramifications of removing competitively situated customers from rate regulation. The Company w i l l endeavor t o time the completion of the study so t h a t i t w i l l be completed and submitted t o a l l Parties t h i r t y (30) days p r i o r t o the f i l i n g of UGI's next Section

16

1308(d) base-rate proceeding.

Settlement S t i p u l a t i o n , fl I l l . l . m . The parties also agreed t o

allow recovery of the cost of t h i s report as an amortized expense

in the next base rate case.

We agree with these provisions and recommend t h e i r

adoption. Two of the most controversial issues i n t h i s proceeding

were the Competitive Adjustment ' t a r i f f and the accelerated

depreciation expense. Both were novel proposals which would have

required some departure from t r a d i t i o n a l rate of return regulation.

This Commission should not consider such alternatives without a

careful review of the consequences. I f the consultant provides the

information required by t h i s provision, the parties and the

Commission w i l l be well served by the additional evidence which

could be used t o make a well-reasoned decision.

12. T a r i f f Changes and Revised Rules

a. T a r i f f Changes

A number of changes proposed by UGI to i t s f i l e d t a r i f f

are included i n the Settlement S t i p u l a t i o n . Many of these are

language changes, c l a r i f i c a t i o n s , or modifications to the e x i s t i n g

t a r i f f language. Substantive changes include added c r e d i t standing

c r i t e r i a , increased service charges ( f o r things l i k e payment t o a

co l l e c t o r to avoid termination, dishonored check charge, on-site

high b i l l i nvestigation charge, b i l l i n g h i s t ory i n excess of 3 0

months charge), addition of a Total Space Conditioning Option f o r

Rate R customers, addition of Standby a v a i l a b i l i t y f o r Rate N

customers, withdrawal of Rate TCS, expanded a v a i l a b i l i t y of Rate

17

CIAC, withdrawal of Rate LF, addition of a Customer Charge to Rates

IS and IL, lowered volume requirement for Rate XD customers, and

lowered Daily Firm Requirement requirements f o r Rates LFD and BD

customers. These changes, i n the context of the overall agreement

reached by the active parties as embodied i n the Settlement

S t i p u l a t i o n merit the Commission's approval. (Settlement

S t i p u l a t i o n , flIII.l.n)

b. Revised Rules

A number of UGI's Rules and Regulations were re - w r i t t e n

t o provide greater c l a r i t y . These include:

Rule 9.9 - This Rule as r e - w r i t t e n includes a b r i e f

explanation of what the LIFSO (Landlord I f Shut Off) optional

program i s , as well as the associated fees.

Rule 9.12 - This Rule as r e - w r i t t e n c l a r i f i e s t h a t the

service charge contained therein applies i f the Customer requests

t h a t service be turned-off, r e s u l t i n g i n the Company having to

shut-off the curb valve and the Customer elects not to read his own

meter f o r a f i n a l reading.

Rulie 9.13 - This Rule as r e - w r i t t e n establishes the

service charge f o r s e t t i n g a meter, to include new construction.

Rule 11.3 - This Rule as r e ^ w r i t t e n l i m i t s the s i t u a t i o n s

i n which a non-residential customer may be required t o pay up to

eleven months of minimum b i l l s plus a service charge f o r resumption

of service at the same location. The Rule had previously applied

i f service had been discontinued " f o r any reason."

These rules changes are a l l i n the public i n t e r e s t and

18

are j u s t and reasonable. They should receive the approval of the

Conunission.

13. Hourly Service Rates

UGI has included, as Tariff-Rates Statement No. 1,

service rates to be e f f e c t i v e f o r the f i r s t year, at least, that

the revised T a r i f f i s i n e f f e c t . These service rates, broken down

in quarter-hour increments, equate t o $40 per hour for r e s i d e n t i a l

customers and $48 per hour f o r commercial customers. As a number

of UGI's Rules and Regulations state the charges f o r various

services i n terms of quarter-hour increments, i t i s v i t a l t hat the

equivalent d o l l a r cost information be available t o customers. As

an example, Rule 9.12, Shut Off Charge, provides:

The Company may assess i t s service charge f o r % hour i f the Customer requests that

' natura1 gas service t o the property be discontinued, thereby r e s u l t i n g i n service being shutoff. When requesting a shutoff, i f the Customer elects t o read the meter and the Company accepts the customer's f i n a l meter reading, the foregoing service charge w i l l not apply.

A r e s i d e n t i a l customer must be able t o determine that a

% hour service charge i s $10 to make an informed decision as to

whether or not he should elect t o read the meter. The same

p r i n c i p a l , of course, applies t o a commercial customer (whose h

hour service charge would be $12),

The active p a r t i e s agreed, at the Settlement Hearing held

i n t h i s case, that UGI's a b i l i t y t o annually adjust service rates

did not co n s t i t u t e a general rate increase under 66 Pa.C.S.

§1308(d).

19

This provision of the Settlement Stipulation i s both j u s t

and reasonable and should be approved by the Commission.

14. Environmental Clean-uo Costs

The Settlement S t i p u l a t i o n provides that UGI w i l l be

permitted t o record s i t e s p e c i f i c environmental costs related to

Pennsylvania locations as cost of removal, with related insurance

proceeds and t h i r d - p a r t y payments received being credits t o such

amounts. UGI w i l l recover such actual costs i n future rate

proceedings as part of the five-year average of actual negative net

salvage. The active parties have also provided, however, t h a t any

party may challenge the recovery i n fut u r e rate proceedings on the

bases th a t such costs were not reasonable or were not prudently

incurred. (Settlement S t i p u l a t i o n , f i l l . l . p )

This provision of the Settlement Stipulation s t r i k e s a

f a i r and reasonable balance i n providing f o r clean-up costs of

Pennsylvania s i t e s t o be paid by Pennsylvania customers receiving

service from those s i t e s , and only t o the extent that UGI cannot

recover those costs from others. A d d i t i o n a l l y , the fu r t h e r check

of a fu t u r e challenge as t o reasonableness or prudence i s

preserved. This provision of the Settlement Stipulation should be

approved by the Commission.

15. Capacity Assignments and Costs

H i s t o r i c a l l y , UGI assigned i t s least expensive capacity

to i t s r e t a i l and transportation i n d u s t r i a l customers. Those

assignments occurred chronologically a f t e r the Company's l a s t base

rate case. Since the Purchased Gas Cost (PGC) or core customers

20

f i r s t paid f o r a l l p ipeline capacity used by the transportation and

r e t a i l customers to bring gas to the UGI c i t y gate, the Commission

approved a system of reimbursing the core customers f o r the costs

incurred on behalf of the transportation class. That formula i s

referred t o as the Delivery Service Credit. The v a l i d i t y and

reasonableness of those assignments and the resultant higher costs

to the core customers were l i t i g a t e d i n every subsequent purchased

gas cost proceeding. I n each instance, t h i s issue was s e t t l e d

(with some modification t o the formula) or deferred by the

Commission because i t was c l a s s i f i e d as a base rate issue which

could not be decided i n a 1307(f) proceeding. Public U t i l i t y Code,

66 Pa. C.S. §1307(f). c f . Pennsylvania Public U t i l i t v Commission

et a l v. UGI U t i l i t i e s , Inc. - Gas Division (Purchased Gas Costs 66

Pa. C.S. S1307(f ) ) . Opinion and Order, entered November 30, 1994,

at 'Docket No. R-00943064 et sea. The following provisions of

the Settlement S t i p u l a t i o n made substantial changes to the DS

Credit system and should r e s u l t i n some regulatory peace.

a. Extended Delivery Customers

The parties agreed as follows:

The Parties agree that the Company may continue t o assign t o Rate XD customers up to 50,241/Dth of Columbia/Columbia Gulf capacity, and the c r e d i t t o Purchased Gas Costs w i l l continue t o be determined by reference to the payments by Rate XD customers f o r Columbia/Columbia Gulf capacity assigned to them. Provided, however, that the Parties agree t h a t Rate XD customers have continuing access t o up to 50,241 Dth/day of Columbia/Columbia Gulf capacity. Any XD capacity above 50,241 Dth/day w i l l be credited t o Purchased Gas Costs at the average cost of a l l f i r m p i p e l i n e capacity. The Parties agree

21

t h a t the foregoing provisions w i l l remain i n e f f e c t , without challenge by any Party, u n t i l UGI's next Section 1308(6) base-rate proceeding, at which time any Party w i l l be e n t i t l e d t o challenge such provisions.

Settlement S t i p u l a t i o n , fl I l l . l . g . As noted e a r l i e r , the Extended

Delivery (XD) class comprises UGI's most bypass sensitive

customers. The Columbia/Columbia Gulf capacity i s the cheapest

capacity available t o the Company. Assignment of the Columbia

capacity t o the XD customers gives UGI the a b i l i t y t o f l e x i t s

rates and s t i l l r e t a i n a margin on the sales. This provision

allows UGI t o continue t o provide service t o a customer class which

has a genuine bypass c a p a b i l i t y .

The remaining portions of t h i s provision also enhanced

i t s attractiveness. More s p e c i f i c a l l y , the parties recognized that

occasionally XD customers needed more capacity than was available

on the Columbia/Columbia Gulf system. Previously, UGI continued t o

charge those customers and c r e d i t the PGC customers6 at the

Columbia capacity rates. Frankly, t h i s practice short-changed the

PGC customers who were pay ing a much higher capac i t y rate t o

procure the additional capacity used by the XD customers. The

settlement now requires the Company t o c r e d i t the PGC class f o r

additional XD capacity at the weighted average cost of gas which

increases the reimbursement l e v e l .

60n the UGI system the PGC customers pay f o r a l l p i p e l i n e capacity used by both r e t a i l and transportation customers. The transportation customers then reimburse the PGC class f o r the capacity which they use.

22

Further, the parties agreed t o forego any furt h e r

l i t i g a t i o n over t h i s provision u n t i l the next UGI base rate case.

Given the p r i o r hi-story of continuous l i t i g a t i o n ( i n 1307 ( f )

proceedings) since 1985, t h i s provision can only save l i t i g a t i o n

time and expense i n the future.

In summary, t h i s provision of the Settlement Stipulation

allows UGI the f l e x i b i l i t y to r e t a i n the customer class most

sensitive t o bypass, increases the contribution the XD class w i l l

make t o costs f o r capacity used beyond the Columbia/Columbia Gulf

system and saves l i t i g a t i o n time and expenses f o r the parties and

t h i s commission i n future 1307(f) proceedings. Accordingly, we

endorse t h i s section and recommend Commission approval.

b. Business Development Customers

The parti e s agreed as follows:

The Parties agree that purchased gas demand charges t o Rate BD customers s h a l l be calculated on the basis of the weighted average cost of f i r m transportation on a l l pipelines serving UGI, exclusive of capacity assigned t o Rate XD customers. The procedure fo r such weighted average cost calculation i s fur t h e r detailed i n Appendix "C." Based upon ex i s t i n g pipeline charges and pro forma volumes f o r Rate BD customers, such procedure i s anticipated t o produce an additional $. 7 m i l l i o n i n PGC revenues. The Parties agree th a t the PGC(2) commodity cost s h a l l be priced at the average monthly PGC commodity cost of gas exclus ive of storage i n j ection and withdrawals. The Parties agree that the foregoing provisions w i l l remain i n e f f e c t , without challenge by any Party, u n t i l UGI's next Section 1308(d) base-rate proceeding, at which time any Party w i l l be e n t i t l e d to challenge such provisions.

Settlement S t i p u l a t i o n , fl I l l . l . r . This paragraph also relates to

23

the h i s t o r i c a l assignment of capacity. Previously, the BD

customers had been assigned a low cost capacity. However, the

parties specified that the BD class was no longer e l i g i b l e f o r such

preferred treatment. Evidence i n t h i s proceeding established that

t h i s customer group w i l l continue to pay more than the weighted

average cost of gas. Thus, the settlement makes i t possible f o r

t h i s class t o contribute more to the purchased gas costs and s t i l l

generate a p r o f i t f o r the Company.

While the BD class shows an ov e r a l l base rate decrease,

there has been an approximate $ . 7 m i l l i o n d o l l a r increase i n t h i s

group's contribution t o purchased gas costs. Examination of UGI

Book 3, IV-B-5(1) revealed t h a t the BD class was o r i g i n a l l y

expected t o receive a $31,465 increase i n non-gas costs. Due to a

series of adjustments the o r i g i n a l proposed increase was made i n t o

an approximate $ .3 m i l l i o n non-gas cost decrease. However, at the

same time the BD class received a gas cost increase of appoximately

$ .7 m i l l i o n . These r e s u l t s are demonstrated by comparing Appendix

B, Proof of Revenue Summary (which shows the non-gas decrease) to

Appendix B, BD class worksheet (which shows an o v e r a l l increase of

approximately $ .4 m i l l i o n (a $ .3 m i l l i o n decrease added t o a $ .7

m i l l i o n increase equals a net $ .4 m i l l i o n increase). (Settlement

S t i p u l a t i o n , Appendix B.)

Again, the part i e s agreed t h a t l i t i g a t i o n over t h i s

provision can only take place i n the next base rate case. The

deferred l i t i g a t i o n provision w i l l save time and expense i n future

1307(f) proceedings. Under these circumstances, we endorse t h i s

24

paragraph and recominend i t s approval.

c. Large Firm Deliverv Customers


The Parties agree that UGI s h a l l c r e d i t Purchased Gas Costs of PGC(1) and PGC(2) customers an amount equal to f i r m capacity provided t o Rate LFD customers m u l t i p l i e d by the weighted average cost of f i r m transportation on a l l pipelines serving UGI, exclusive of capacity assigned t o Rate XD customers. The procedure f o r such weighted average cost calculation i s further detailed i n Appendix "C." Such c r e d i t f o r f i r m capacity provided by the Company to LFD customers w i l l be provided without regard to the delivery routes and b i l l i n g s t o Rate LFD customers. The Company w i l l not seek to recover from PGC(1) or PGC(2) customers any difference between the foregoing c r e d i t and amounts ac t u a l l y recovered f o r capacity assigned by the Company to LFD customers. Based upon e x i s t i n g pipeline charges and pro forma volumes f o r Rate LFD customers, such change i n rates i s anticipated t o produce an additional $1.5 m i l l i o n i n revenues above present pro forma revenues. I t i s agreed that UGI may continue t o assign capacity t o Rate LFD customers f o r purposes of providing a delivery route t o such customers, and f o r purposes of the capacity charge b i l l i n g t o such customers. The Company s h a l l charge Rate LFD customers a system access fee, which i s i n addition t o capacity charge b i l l i n g , as described i n Appendices "A", "B" and "C". The Parties agree that the foregoing provisions w i l l remain i n e f f e c t , without challenge by any Party, u n t i l UGI's next Section 1308(d) proceeding, at which time any Party w i l l be e n t i t l e d t o challenge such provisions.

Settlement S t i p u l a t i o n , fl I I I . l . s . This paragraph also relates t o

the h i s t o r i c a l assignment of capacity. Previously, the LFD

customers had been assigned a low cost capacity. The core

customers were reimbursed f o r t h i s capacity as i t was used by the

LFD customers on a volumetric basis. That format short-changed the

25

core customers because they paid f o r a l l capacity (used and unused)

which had been reserved f o r a l l customers, r e t a i l and

transportation. However, the parties specified that the LFD class

was no longer e l i g i b l e f o r such preferred treatment.

Since the evidence i n t h i s proceeding established that

t h i s customer group w i l l continue t o pay more than the weighted

average cost of gas, the parties separated LFD capacity assignments

from LFD reimbursement. The settlement requires the LFD class t o

reimburse the core customers at the weighted average cost of gas.

The settlement also specifies that the Company may assign any

capacity delivery routes t o the LFD customers and b i l l accordingly,

but i t cannot recover any difference between costs b i l l e d t o the

LFD customers and reimbursed t o the PGC customers. Thus, the

settlement makes i t possible f o r t h i s class t o contribute more to

the purchased gas costs and s t i l l generate a return f o r the

Company. (Settlement S t i p u l a t i o n , fl I I I . l . s . )

While the LFD class shows an o v e r a l l base rate decrease,

there has been an approximate $ 1.5 m i l l i o n d o l l a r increase i n t h i s

group's contribution t o purchased gas costs. Examination of UGI

Book 3, IV-B-5 (1) revealed t h a t the LFD class was o r i g i n a l l y

expected t o receive a $656,605 increase i n non-gas costs. Due t o

a series of adjustments the o r i g i n a l proposed increase was made

in t o an approximate $ .4 m i l l i o n non-gas cost decrease. However,

at the same time the LFD class received a gas cost increase of

appoximately $ 1.5 m i l l i o n . These r e s u l t s are demonstrated by

comparing Appendix B, Proof of Revenue Summary (which shows the

26

non-gas decrease) to Appendix B, LFD class worksheet (which shows

an o v e r a l l increase of approximately $ 1.1 m i l l i o n (a $ .4 m i l l i o n

decrease added t o a $ 1.5 m i l l i o n increase equals a net $ 1.1

m i l l i o n increase). The $ 1.5 m i l l i o n increase has been added as a

system access fee. (Settlement S t i p u l a t i o n , Appendix B.)

Again, the parties agreed that l i t i g a t i o n over t h i s

provision can only take place i n the next base-rate case. This

deferred l i t i g a t i o n provision w i l l save time and expense i n future

1307(f) proceedings. Under these circumstances, we also endorse

t h i s paragraph of the settlement and recommend i t s approval.

d. Deliverv Service Customers


The Parties agree t h a t UGI s h a l l , with respect t o Rate DS customers, c r e d i t Purchased Gas Costs of PGC(l) and PGC(2) customers an amount calculated i n accordance w i t h the procedures detailed i n Appendix "D.11 Such c r e d i t f o r f i r m capacity provided by the Company to DS customers w i l l be provided without regard t o the delivery routes and b i l l i n g s t o Rate DS customers. The Company w i l l not seek t o recover from PGC(i) or PGC(2) customers any difference between the foregoing c r e d i t and amounts actually recovered for capacity assigned by the Company to DS customers. Based upon e x i s t i n g pipeline charges and pro forma volumes f o r Rate DS customers, such changes i n rates are anticipated to produce an addi t i o n a l $1.5 m i l l i o n i n PGC revenues. I t i s agreed that UGI may continue t o assign and b i l l capacity on a volumetric basis t o Rate DS customers for purposes of providing a delivery route t o such customers. The Company s h a l l charge Rate DS customers a volumetric system access charge, wh ich i s i n addi t i on t o the vo lume t r i c capacity charge, as described i n Appendices "A", "B" and "D". The Company furt h e r agrees that, i n i t s 1997 Purchased Gas Cost f i l i n g , which i s currently scheduled t o become

27

e f f e c t i v e on December 1, 1997, the Company w i l l calculate and propose rates t o Rate DS customers which r e f l e c t a weighted average cost of f i r m storage and transportation capacity, exclusive of Columbia Gulf capacity assigned t o Rate XD customers. Parties reserve the r i g h t t o challenge such calculation and proposal t o r e f l e c t the weighted average cost to Rate DS customers i n the 1997 Purchased Gas Cost proceeding. No Party w i l l challenge the foregoing procedures i n any non-base rate proceeding p r i o r to UGI's 1997 PGC proceeding.

Settlement S t i p u l a t i o n , fl I l l . l . t . This paragraph also relates t o

the h i s t o r i c a l assignment of capacity. Previously, the DS class

reimbursed the core customers f o r capacity charges which were

calculated using three components. F i r s t , the class was assigned

Texas Eastern capacity on a volumetric basis at a hundred percent

load f a c t o r . Second, a storage charge (based on the t o t a l annual

class throughput) was added. Third, a no notice service charge was

added. Again, the no notice charge was based on a Texas Eastern

one hundred percent load factor. The r e s u l t was that the DS

customers were reimbursing the core customers about $ 0.86 per Mcf.

Tr. 1800-1801. Since the actual load factor was 35 percent for

t h i s class, the DS customers were paying a lower per u n i t charge

than was being experienced on t h e i r behalf.

The Settlement St i p u l a t i o n changed the calculation f o r

the DS class. The parties f i r s t agreed that there would be no

increase i n non-gas costs f o r t h i s class. Thus, i f one examines

Appendix B, Proof of Revenues Summary, i n the S t i p u l a t i o n

Settlement, there i s no increase showing f o r the DS rate class f o r

non-gas costs. The parties also agreed that t h i s class should

28

contribute another $1.5 m i l l i o n to purchased gas costs. To

accomplish t h i s goal, the rate schedule added an access fee on a

volumetric basis. The r e s u l t i s that the DS customers w i l l pay a

capacity charge of $0.58 per Mcf and an access fee of $0.77 per

Mcf. The net increase f o r the DS class i s an overa l l $0.51 per

Mcf. Examination of the worksheet demonstrates that t h i s portion

of the calculation y i e l d s an additional $ 1.4 m i l l i o n i n gas costs.

The remaining $ 0.1 m i l l i o n i n gas costs i s the revenue derived

from the required no notice service. (Settlement S t i p u l a t i o n ,

fl I l l . l . t . and Appendix B, DS worksheet.) Tr. 1870-1874.

The par t i e s also separated DS reimbursement from DS

capacity assignments. The settlement specifies that the Company

may assign any capacity delivery routes t o the DS customers and

b i l l ' accordingly, but i t cannot recover any difference between

costs b i l l e d t o the DS customers and reimbursed to the PGC

customers.

The Company agreed t o propose rates f o r t h i s class which

r e f l e c t a weighted average cost of f i r m storage and capacity i n i t s

1997 purchased gas cost proceeding. I n return, the remaining

parties agreed not t o challenge the settlement formula and

calculations i n any non base-rate proceeding p r i o r to the 1997

purchased gas cost case (when the gas cost formula w i l l be changed

to r e f l e c t the weighted average cost of storage and capacity).

Essentially, the par t i e s again agreed to forego l i t i g a t i o n time and

expense f o r a specified minimum time period. (Settlement

S t i p u l a t i o n , fl I l l . l . t . )

29

Having reviewed these provisions of the settlement, we

f i n d t hat, because they w i l l increase the DS class contribution t o

purchased gas costs and defer l i t i g a t i o n , they are i n the public

i n t e r e s t . Accordingly, we recommend approval of the same.

e. Purchased Gas Cost Credits

The parties recognized that the provisions of paragraphs

r, s and t would change the manner of calculating and amount of

reimbursement f o r the purchased gas costs. They agreed t h a t the

settlement formulas would be used i n subsequent PGC proceedings

(including the current case pending at Docket No. R-00953374) and

adjusted to r e f l e c t changes i n the pipeline rates. (Settlement

S t i p u l a t i o n , fl I I I . l . u . ) We f i n d t h i s paragraph to be consistent

wi t h the provisions of paragraphs r , s and t and recommend i t s

approval.

16. Conditions of Settlement

The Settlement S t i p u l a t i o n contains certain conditions

designed t o protect the interests of the active parties i f t h e i r

agreement i s modified or rejected. I t also contains conditions to

expedite the f i n a l r esolution of the proceeding and the e f f e c t i v e

date of the settlement rates i f Commission approval i s given.

F i n a l l y , the Settlement St i p u l a t i o n provides an opportunity f o r the

inact i v e parties i n t h i s proceeding to comment on the agreement

i t s e l f or t o further pursue t h e i r complaints. A l l of these

conditions are reasonable and represent a j u s t balance among the

competing interests of f i n a l i t y , e f f i c i e n c y , economy,

comprehensiveness, and p a r t i c i p a t i o n . The settlement conditions

30

upon which the active parties agreed are:

1. [The] Settlement i s conditioned upon the Commiss ion's approva1 of [the] terms and conditions contained [ t h e r e i n ] without modification. I f the Commission modifies the Settlement, then any Party may elect t o withdraw from [the] Settlement and may proceed wit h l i t i g a t i o n and, i n such event, [the] Settlement s h a l l be void and of no e f f e c t . Such election t o withdraw must be made i n w r i t i n g , f i l e d with the Secretary of the Commission and served upon a l l Parties w i t h i n f i v e (5) business days a f t e r the entry of an order modifying the Settlement. [The] Settlement i s proposed by the Parties t o s e t t l e certain issues i n the instant proceeding. The Settlement i s made without any admission against, or prejudice t o , any po s i t i o n which any Party t o [the] Settlement may adopt during any subsequent l i t i g a t i o n of t h i s proceeding, or of any other proceeding, w i t h the exception of paragraphs f , g, h, m, p, q, r , s, t and u to the extent required t o effectuate the terms and agreements of [ the] Settlement.

I f the Commission does not approve the Settlement and the proceedings continue t o fu r t h e r hearings, the Parties reserve t h e i r respective r i g h t s to present additional testimony and to conduct f u l l cross-examination, b r i e f i n g and argument.

The Commission's approval of [the] Settlement s h a l l not be construed t o represent approva 1 of any Party' s pos i t i o n on any issue — except as s p e c i f i c a l l y set f o r t h i n the S t i p u l a t i o n at paragraphs f , g, h, m, p, q, r , s, t and u to the extent required to effectuate the terms and agreements of [the] Settlement — i n t h i s and fu t u r e proceedings.

2. UGI, OTS, OCA,.OSBA, UGI I I , UGI TCG and Alumax have prepared and attached to [ the ] Settlement, as Appendices "E", "F", "G," "H," " I , " "J" and "K" respectively, Statements of Position s e t t i n g f o r t h the bases upon which they believe the Settlement i s f a i r , j u s t and reasonable and i s , therefore, i n the public i n t e r e s t . Nothing i n the Statements i n Support shall be construed against any

31

position asserted by any Party i n t h i s or any future proceeding. [*]

3. I f the ALJs adopt the Settlement without modification, the Parties waive t h e i r r i g h t s to f i l e exceptions.

4. The Settlement and the attached Appendices thereto, including any Statements i n Support t h a t are f i l e d at the same time as [the] S t i p u l a t i o n , w i l l be served by U6I on a l l non-active Formal Complainants by overnight express mail on the date of f i l i n g [the] Settlement. The cover l e t t e r attached to the Settlement as Appendix "L", which i s to be served by UGI on a l l Formal Complainants, provides f o r a seven (7) calendar day w r i t t e n response period from service of the Sett lement. I f any of those Forma 1 Complainants comment on t h i s Settlement, the Parties have the r i g h t t o respond to those comments i n w r i t i n g w i t h i n f i v e (5) calendar days.

Settlement S t i p u l a t i o n , f IV.

These conditions, with the exception of the provision

regarding the Commission's approval of spec i f i c positions as set

f o r t h i n the Settlement S t i p u l a t i o n at paragraphs f , g, h, m, p, q,

r, s, t and u (each of which are separately discussed above), are

standard and reasonable. A l l conditions are essential to the

agreement reached and i n the public i n t e r e s t . The Commission

should approve the active p a r t i e s ' Settlement conditions.

I I I . PROPOSED STIPULATION BETWEEN OCA AND UGI CONCERNING EXTENSION OF FACILITIES

A. Provisions

Contemporaneously with the negotiation of the Settlement

7 Despite the quoted language, neither UGI I I nor Alumax submitted Statements of Position. Consequently, Appendices " I " and "K" are blank.

32

S t i p u l a t i o n by a l l active pa r t i e s , OCA and UGI negotiated an

Extension S t i p u l a t i o n modifying UGI's t a r i f f provisions related t o

extension of f a c i l i t i e s . Changes are proposed to T a r i f f Rules 5.2,

5. 3A, 5.4, and 5.6 with the purpose of removing certain

discretionary (d i s c r e t i o n exercised solely by UGI) language having

the p o t e n t i a l of allowing s i m i l a r l y situated customers t o be

treated d i s s i m i l a r l y by UGI. Another purpose of the changes to the

T a r i f f Rules i s to c l a r i f y requirements f o r deposits and refunds

related t o extension of service. I n summary, the T a r i f f Rules

changes are:

(1) Rule 5.2 - Currently included language permitting

UGI to be the sole decision maker regarding whether a requested

extens ion w i l l or w i l l not adversely af f ect a v a i l a b i 1 i t y or

d e l i v e r a b i l i t y of gas to e x i s t i n g customers and whether UGI's

investment i n f a c i l i t i e s i s warranted by anticipated revenue to be

derived from the extension i s deleted.

(2) Rule 5.3A - The determination of annual base rate

revenue from the extension i s changed from "as determined i n the

sole judgment of the Company" t o "as determined by the Company

using consistently applied, then-current standards."

(3) Rule 5.4 - The Extension S t i p u l a t i o n changes 5.4A by

removing the language "up to 75 fe e t " t h a t previously established

the Company's r e s p o n s i b i l i t y f o r , and f o r the cost of, service-

supply pipe (curb t o meter). The Company i s now responsible f o r ,

and f o r the cost of, service-supply pipe up to two times (or where

no supply main extension i s required, up to three times) the

33

anticipated base revenue. The applicant must pay any cost i n

excess of the Company's calculated maximum l i a b i l i t y . This

provision applies t o service t o single dwelling units.

The Extension St i p u l a t i o n changes 5.4B by specifying that

the excess, i f any, of the estimated cost f o r the minimum system of

supply-main needed to service a single dwelling u n i t over an amount

equal t o four times the anticipated base revenue paid by the

applicant s h a l l constitute an extension deposit.

The Extension S t i p u l a t i o n changes 5. 4C by adding that

normal conditions of construction include trenching by the

developer. I t also deletes 5.40 which had provided that f o r

purposes of the f a c i l i t i e s extension policy single dwelling units

using gas space heating as the primary source of heating w i l l be

assumed normally t o have t o t a l annual consumption of 135 MCF.

(4) Rule 5.6 - The Extension St i p u l a t i o n changes 5.6 to

provide that extension deposits required under 5. 4B w i l l be

refunded pro-rata as additional customers are added over a f i v e -

year period. Refunds are non-interest bearing and are based upon

addi t i o n a l gas-only appliance usage by the additional customers.

The T a r i f f Rules changes remove UGI's autho r i t y t o

u n i l a t e r a l l y , and p o t e n t i a l l y a r b i t r a r i l y , decide whether or not

extension requests should be granted. The revised Rules also

comport with recent Commission pronouncements on service extension

ru l e s , fees, and refunds. They deserve the Commission's approval,

as does the e n t i r e Extension S t i p u l a t i o n .

34

B. Conditions

1. Other Active Parties

The active parties other than OCA and UGI ( i . e . ; OTS, UGI

TCG, UGI I I , OSBA, and Alumax), while not j o i n i n g i n or ac t i v e l y

supporting the Extension S t i p u l a t i o n , have each submitted a l e t t e r

s t a t i n g t h a t they do not oppose the Extension Stipulation.

2. OCA and UGI Conditions

As i s . true of the Settlement St i p u l a t i o n , the Extension

S t i p u l a t i o n contains c e r t a i n conditions designed t o protect the

in t e r e s t s of OCA and UGI i f t h e i r agreement i s modified or

rejected. These conditions are:

1. [The Extension S t i p u l a t i o n ] i s conditioned upon the Commission's approval of [the] terms and conditions contained [therein] without modification. I f the Commission modifies the Extension [ S t i p u l a t i o n ] , then either party may el e c t t o withdraw from [the] Extension [ S t i p u l a t i o n ] and may proceed with l i t i g a t i o n by the f i l i n g of a separate complaint and, i n such event, [the Extension St i p u l a t i o n ] s h a l l be void and of no e f f e c t . Such el e c t i o n t o withdraw must be made i n w r i t i n g , f i l e d w i t h the Secretary of the Commission and served upon the other party w i t h i n f i v e (5) business days a f t e r the entry of an order modifying the Extension [ S t i p u l a t i o n ] . Provided, however, that the parties acknowledge th a t any such election to withdraw i s not intended t o e f f e c t or i n any way delay implementation of the [Sett1ement St i p u l a t i o n ] i f such [Settlement Stipulation] i s otherwise approved by the commission i n i t s e n t i r e t y . [The Extension s t i p u l a t i o n ] i s proposed by the parties t o s e t t l e certain issues i n the instant proceeding. [ I t ] i s made without any admission against, or prejudice t o , any pos i t i o n which OCA or [UGI] may adopt during any subsequent l i t i g a t i o n .

I f the Commission does not approve the Extension [ S t i p u l a t i o n ] , the parties reserve

35

t h e i r respective r i g h t s t o present testimony and to conduct f u l l cross-examination, b r i e f i n g and argument.

The Commission's approval of [the] Extension [ S t i p u l a t i o n ] s h a l l not be construed t o represent approval of any party's p o s i t i o n on any issue i n t h i s and future proceedings.

Extension S t i p u l a t i o n , 5 IV, 1.

2. I f the Administrative Law Judges adopt the Extension

S t i p u l a t i o n without modification, OCA and UGI waive t h e i r r i g h t s t o

f i l e exceptions. Extension S t i p u l a t i o n , 5 IV.

[ 3 ] . The Extension [ S t i p u l a t i o n ] , and the attached Appendix thereto, w i l l be served by UGI on a l l non-active Formal Complainants by overnight express mail on the date of f i l i n g [the Extension S t i p u l a t i o n ] . Such non-active Formal Complainants s h a l l have a seven (7) calendar day w r i t t e n response period from service of the Extension [ S t i p u l a t i o n ] . I f any pf those Formal Complainants comment on [the] Extension [ S t i p u l a t i o n ] , the parties have the r i g h t t o respond to those comments i n w r i t i n g w i t h i n f i v e (5) calendar days.

Extension S t i p u l a t i o n , fl IV, 6.

[ 4 ] . Upon approval of [the] Extension [ S t i p u l a t i o n ] , UGI w i l l be permitted to f i l e a t a r i f f supplement containing the . . . r u l e changes, i n the form attached as Appendix "A" [ t o the Extension S t i p u l a t i o n ] .

Extension S t i p u l a t i o n , fl I I I , 3.

These conditions are standard f o r t h i s type of agreement.

They are both j u s t and reasonable and should be approved by the

Commission.

IV. PENDING COMPLAINTS

1. Complaint of Christine M. St o t t at Docket No. R-00953297C0001

The Complaint of Christine M. Stot t was f i l e d on February

36

i

8, 1995. The Complaint alleged that the proposed rate increase was

too high. UGI f i l e d a timely Answer. Ms. Stott was an inactive

party who did not appear at the public input hearings. Ms. Sto t t

did not submit w r i t t e n comments on eit h e r the Settlement

S t i p u l a t i o n or the Extension S t i p u l a t i o n . No party moved the

Complaint in t o evidence. The Complaint i s of record only as a

pleading, not as evidence. 52 Pa.Code §5.405. Therefore, we

recommend that the docket be closed.

2. Complaint of Dorothea Sandbrook at Docket No. R-00953297C0002

The Complaint of Dorothea Sandbrook was f i l e d on February

8, 1995. The Complaint alleged t h a t the proposed rate increase was

too high. UGI f i l e d a timely Answer. Ms. Sandbrook was an

ina c t i v e party who did not appear at the public input hearings.

Ms. Sandbrook did not submit w r i t t e n comments on either the

Settlement S t i p u l a t i o n or the Extension S t i p u l a t i o n . No party

moved the Complaint i n t o evidence. The Complaint i s of record only

as a pleading, not as evidence. 52 Pa.Code §5.4 05. Therefore, we

recommend th a t the docket be closed.

3. Complaint of I r w i n A. Popowsky. Consumer Advocate at Docket No. R-00953297C0003

The Complaint of Irwin A. Popowsky, Consumer Advocate,

was f i l e d on February 9, 1995. The Complaint alleged that the

proposed rate increase was too high and could be unlawful. UGI

f i l e d a timely Answer. OCA was an active party. Accordingly, the

Complaint w i l l be dismissed i n part and sustained i n part i n

accordance w i t h the recommendations made above.

37

4. Complaint of Bernard A. Ryan, Jr. , Small Business Advocate at D o c k e t No. R-00953297CQ004

The Complaint of Bernard A. Ryan, Jr., Small Business

Advocate, was f i l e d on February 10, 1995. The Complaint alleged

that the proposed rate increase was too high and could be unlawful.

UGI f i l e d a timely Answer. OSBA was an active party. Accordingly,

the Complaint w i l l be dismissed i n part and sustained i n part i n

accordance with the recommendations made above.

5. Complaint of Charles H. and Pauline H. Albert. Sr. at Docket No. R-00953297C0Q05

The Complaint of Charles H. and Pauline H. Albert, Sr.

was f i l e d on February 17, 1995. The Complaint alleged that the

proposed rate increase was too high. UGI f i l e d a timely Answer.

Kr. Albert and Ms. Albert were inactive parties who did not appear

at the public input hearings. Mr. Albert and Ms. Albert d i d not

submit w r i t t e n comments on either the Settlement S t i p u l a t i o n or the

Extension S t i p u l a t i o n . No party moved the Complaint i n t o evidence.

The Complaint i s of record only as a pleading, not as evidence. 52

Pa.Code §5.405. Therefore, we recommend th a t the docket be closed.

6. Complaint of James R. Brokenshire at Docket No. R-00953297C0006

The Complaint of James R. Brokenshire was f i l e d on

February 17, 1995. The Complaint alleged that the proposed rate

increase was too high. UGI f i l e d a timely Answer. Mr. Brokenshire

was an in a c t i v e party who appeared at the public input hearings.

Mr. Brokenshire d i d not submit w r i t t e n comments on eit h e r the

Settlement S t i p u l a t i o n or the Extension S t i p u l a t i o n . Accordingly,

38

the Complaint w i l l be dismissed i n part and sustained i n part i n

accordance with t h i s decision.

7. Complaint of John Vidoni at Docket No. R-00953297C0007

The Complaint of John Vidoni was f i l e d on February 21,

1995. The Complaint alleged that the proposed rate increase was

too high. UGI f i l e d a timely Answer. Mr. Vidoni was an inactive

party who did not appear at the public input hearings. Mr. Vidoni

did not submit w r i t t e n comments on either the Settlement


Complaint i n t o evidence. The Complaint i s of record only as a



8. Complaint of Excel Fabrics. Inc. at Docket No. R-00953297C0008

The Complaint of Excel Fabrics, Inc. was f i l e d on

February 21, 1995. The Complaint alleged t h a t the proposed rate

increase was too high. UGI f i l e d a timely Answer. Excel Fabrics,

Inc. was an inactive party who did not appear at the public input

hearings. Excel Fabrics, Inc. did not submit w r i t t e n comments on

either the Settlement S t i p u l a t i o n or the Extension St i p u l a t i o n . No

party moved the Complaint in t o evidence. The Complaint i s of

record only as a pleading, not as evidence. 52 Pa.Code §5.405.

Therefore, we recommend that the docket be closed.

9. Complaint of Frank Oese. Sr. at Docket No. R-00953297C0009

The Complaint of Frank Oese, Sr. was f i l e d on February

21, 1995. The Complaint alleged t h a t the proposed rate increase

was too high. UGI f i l e d a timely Answer. Mr. Oese was an inacti v e

39

party who did not appear at the public input hearings. Mr. Oese


Stip u l a t i o n or the Extension Stipulation, No party moved the


pleading, not as evidence. 52 Pa.Code §5.4 05. Therefore, we


10. Complaint of Margaret M. McLaughlin at Docket No. R-00953297C0010

The Complaint of Margaret M. McLaughlin was f i l e d on


increase was too high. UGI f i l e d a timely Answer. Ms. McLaughlin

was an inactive party who did not appear at the public input

hearings. Ms. McLaughlin did not submit w r i t t e n comments on either

the Settlement s t i p u l a t i o n or the Extension S t i p u l a t i o n . No party

moved the Complaint i n t o evidence. The Complaint i s of record only

as a pleading, not as evidence. 52 Pa.Code §5.4 05. Therefore, we


11. Complaint of Alma M. Sunyak at Docket No. R-00953297CQ011

The Complaint of Alma M. Sunyak was f i l e d on February 23,


too high. UGI f i l e d a timely Answer. Ms. Sunyak was an inactive

party who did not appear at the public input hearings. Ms. Sunyak

did not submit wr i t t e n comments on e i t h e r the Settlement





40

12. Complaint of Larry K i l l o at Docket No. R-00953297C0012

The Complaint of Larry K i l l o was f i l e d on February 23,


too high. UGI f i l e d a timely Answer. Mr. K i l l o was an inactive

party who did not appear at the public input hearings. Mr. K i l l o






13. Complaint of Mr. and Mrs. L. G. Kessinger at Docket No. R-00953297C0013

v The Complaint of Mr. and Mrs. L. G. Kessinger was f i l e d

on February 23, 1995. The Complaint alleged that the proposed rate

increase was too high. UGI f i l e d a timely Answer. Mr. and Mrs.

Kessinger were inacti v e parties who did not appear at the public

input hearings. Mr. and Mrs. Kessinger did not submit w r i t t e n

comments on either the Settlement S t i p u l a t i o n or the Extension

S t i p u l a t i o n . No party moved the Complaint into evidence. The

Complaint i s of record only as a pleading, not as evidence. 52

Pa.Code §5.405. Therefore, we recommend t h a t the docket be closed.

14. Complaint of Theresa L. Spiess at Docket No. R-00953297C0014

The Complaint of Theresa L. Spiess was f i l e d on February

23, 1995. The Complaint alleged that the proposed rate increase

was too high. UGI f i l e d a timely Answer. Ms. Spiess was an

inactive party who d i d not appear at the public input hearings.

Ms. Spiess did not submit w r i t t e n comments on either the Settlement

41

Stipulation or the Extension St i p u l a t i o n . No party moved the




15. Complaint of Mr. and Mrs. Fred D. Hrubenak. Sr. at Docket No. R-00953297C0015

The Complaint of Mr. and Mrs. Fred D. Hrubenak, Sr. was

f i l e d on February 23, 1995. The Complaint alleged that the

proposed rate increase was too high. UGI f i l e d a timely Answer.

Mr. and Mrs. Hrubenak were inactive parties who did not appear at

the public input hearings. Mr. and Mrs. Hrubenak did not submit

w r i t t e n comments on either the Settlement Stipulation or the

Extension s t i p u l a t i o n . No party moved the Complaint i n t o evidence.


Pa.Code §5.405. Therefore, we recommend th a t the docket be closed.

16. Complaint of Helen A. Loper at Docket No. R-Q0953297C0016

The Complaint of Helen A. Loper was f i l e d on February 27,


too high. UGI f i l e d a timely Answer. Ms. Loper was an inacti v e

party who did not appear at the public input hearings. Ms. Loper






17. Complaint of Milton D. Harte at Docket No. R-00953297C0017

The Complaint of Milton D. Harte was f i l e d on February

42

21, 1995. The Complaint alleged that the proposed rate increase

was too high. UGI f i l e d a timely Answer. Mr. Harte was an

inactive party who did not appear at the public input hearings.

Mr. Harte did not submit w r i t t e n comments on either the Settlement





18. Complaint of Mr. and Mrs. Bernard Pavlik at Docket No.

R-00953297C001B

The Complaint of Mr. and Mrs. Bernard Pavlik was f i l e d on


increase was too high. UGI f i l e d a timely Answer. Mr. and Mrs.

Pavlik were inacti v e parties who did not appear at the public input

hearings. Mr. and Mrs. Pavlik did not submit w r i t t e n comments on

ei t h e r the Settlement Sti p u l a t i o n or the Extension St i p u l a t i o n . No

party moved the Complaint in t o evidence. The Complaint i s of


Therefore, we recommend th a t the docket be closed.

19. Complaint of Tekla H. Barron at Docket No. R-00953297C0019

The Complaint of Tekla H. Barron was f i l e d on March 2,


too high. UGI f i l e d a timely Answer. Ms. Barron was an inactive

party who did not appear at the public input hearings. Ms. Barron



Complaint into evidence. The Complaint is of record only as a 43

pleading, not as evidence. 52 Pa.Code § 5.4 05. Therefore, we

recominend that the docket be closed.

20. Complaint of Debra Minotto at Docket No. R-00953297C0020

The Complaint of Debra Minotto was f i l e d on March 10,


too high. UGI f i l e d a timely Answer. Ms. Minotto was an inactive

party who appeared at the public input hearings. Ms. Minotto did

not submit w r i t t e n comments on either the Settlement S t i p u l a t i o n or

the Extension S t i p u l a t i o n . Accordingly, the Complaint w i l l be

dismissed i n part and sustained i n part i n accordance with t h i s

decision.

21. Complaint of UGI I n d u s t r i a l Intervenors at Docket No. R-00953297C0021

The Complaint of UGI I n d u s t r i a l Intervenors was f i l e d on

March 15, 1995. The Complaint alleged t h a t the proposed rate

increase was too high and improperly d i s t r i b u t e d . UGI f i l e d a

t i m e l y Answer. UGI I I was an active party. Accordingly, the


accordance w i t h the recommendations made above.

22. Complaint of Thomas Heck at Docket No. R-00953297C0022

The Complaint of Thomas Heck was f i l e d on March 23, 1995.

The Complaint alleged t h a t the proposed rate increase was too high.

UGI f i l e d a timely Answer. Mr. Heck was an inactive party who d i d

not appear at the public input hearings. Mr. Heck did not submit

w r i t t e n comments on either the Settlement St i p u l a t i o n or the

Extension S t i p u l a t i o n . No party moved the Complaint i n t o evidence.


44

Pa.Code §5.405. Therefore, we recommend that the docket be closed.

23. Complaint of UGI Transportation Customer Group at Docket No. R-00953297C0Q23

The Complaint of UGI Transportation Customer Group was

f i l e d on A p r i l 20, 1995. The Complaint alleged that the proposed

rate increase was too high and could be unlawful. UGI f i l e d a

timely Answer. UGI TCG was an active party. Accordingly, the


accordance wi t h the recommendations made above.

24. Complaint of Stanley Rabzak at Docket No. R-00953297C0024

The Complaint of Stanley Rabzak was f i l e d on May 10,


too high. UGI f i l e d a timely Answer. Mr. Rabzak was an inactive

party who d i d not appear at the public input hearings. Mr. Rabzak





recommend t h a t the docket be closed.

25. Complaint of Irene K. Pierce at Docket No. R-00953297C0025

The Complaint of Irene K. Pierce was f i l e d on May B,

1995. This Complaint was o r i g i n a l l y docketed as C-00956838, but

subsequently re-docketed as R-00953297C0025. The Complaint alleged

that the proposed rate increase was too high. UGI f i l e d a timely

Answer. Ms. Pierce was an inactive party who did not appear at the

public input hearings. Ms. Pierce did not submit w r i t t e n comments

on either the Settlement S t i p u l a t i o n or the Extension St i p u l a t i o n .

45

No party moved the Complaint in t o evidence. The Complaint i s of


Therefore, we recommend that the docket be closed.

26. Complaint of Township of Exeter at Docket No. R-00953297C0026

The Complaint of Township of Exeter was f i l e d on June 27,

1995. This Complaint was o r i g i n a l l y docketed as R-00953374C0002,

but was subsequently corrected to be docketed as R-00953297C0026.

The Complaint alleged t h a t the proposed rate increase was too high.

UGI f i l e d a timely Answer. Township of Exeter was an inactive

party who did not appear at the public input hearings. Township of

Exeter did not submit w r i t t e n comments on either the Settlement

s t i p u l a t i o n or the Extension S t i p u l a t i o n . No party moved the




V. Return on Equity

By memorandum dated July 31, 1995, the Acting Chief

Administrative Law Judge provided the following guidance t o a l l

Administrative Law Judges:

At Public Meeting of July 20, 1995, the Commiss ion indicated t h a t they want rate of return on equity figures f o r settlements i n rate cases. . . . Please ask the parties f o r a number on equity return even i n a settlement s i t u a t i o n . . . . The Commissioners want the number f o r comparison purposes, especially comparison with a quarterly report which i s produced.

The memo i s the r e s u l t of a d i r e c t i v e issued at Public Meeting on

July 20, 1995, at which time the Vice Chairman issued the follo w i n g

46

statement:

Before us for consideration i s the Office of Special Assistants' report regarding quarterly earnings of Pennsylvania u t i l i t i e s f o r the quarter ending March 31, 1995. I have reviewed the report and agree with the s t a f f ' s recommendation t o release the report to the public. After reviewing the report, however, I was unable to do a complete comparable analysis of actual and approved rate of return on equity f o r a l l the u t i l i t i e s ("ROE") because i n a number of the rate cases the parties s e t t l e d the case and the reported s t i p u l a t i o n s t o the Commission do not provide authorized ROE.

I t has been the practice of t h i s Commission not t o require a rate of return on common equity as an ingredient of the settlement process. I n the t y p i c a l settlement proceeding of a rate case, the revenues, expenses, customer b i l l s per u n i t , etc., are stipulated t o by the parties. The rate of return, therefore, i s not a negotiated issue of the settlement process.

I t would be h e l p f u l to have a calculation of the book return on common equity (ROE) produced as a r e s u l t of the settlement procedure. This would r e s u l t i n a quick future reference of the f i n a n c i a l disposition of the rate case. I t should be noted that the resultant ROE calculation could be "backed i n t o " based on the s e t t l e d issues. The ROE does not have to be a part of the settlement of the p a r t i c u l a r rate case nor would i t r e f l e c t on the ultimate fairness of the settlement.

An Office Of Special Assistants Report To The Commission Regarding

Quarterly Earnings Of Pennsvlvania U t i l i t i e s For The Quarter Ended

March 31, 1995. Statement of Vice Chairman Lisa Crutchfield, dated

July 19, 1995, Public Meeting report July-95-OSA-1279.

As noted previously, a settlement hearing was held on

August 9, 1995, before the undersigned. Since a return on equity

47

was not contained i n either s t i p u l a t i o n , we discussed the d i r e c t i v e

with the pa r t i e s as one of the items on the agenda. Not

s u r p r i s i n g l y , the parties were unable to agree on a return on

equity (ROE) and u n w i l l i n g t o provide anything other than t h e i r

l i t i g a t e d positions.

As an a l t e r n a t i v e and i n an e f f o r t t o comply with the

d i r e c t i v e , we have calculated an ROE which could be viewed as a

r e s u l t of the settlement. The. number i s the range of 8.03% to

8.32%. Due to the nature of the settlement structure, we believe

the range i s the r e s u l t of a flawed calculation (which cannot be

corrected), grossly understated and do not recommend i t s adoption.

For reasons which w i l l be explained more f u l l y below, the range i s

not suitable f o r comparison purposes. We hasten to add that we

have no expectation that the parties w i l l agree with the range.

However, i t i s the best we can do under the circumstances.

Before presenting our reasoning f o r not endorsing the

range, we believe we should explain how t h i s range was generated.

F i r s t , we note t h a t our calculations are i l l u s t r a t e d i n the tables

which follow t h i s decision. Our s t a r t i n g point was UGI Statement

No. 1-R, Attachment A, page 1, which i s the Company's f i n a l

adjusted p o s i t i o n . The pro forma operating income with adjustments

was divided by the proposed increase to generate an estimated tax

f a c t o r f o r the proposed increase ($20.5 million/38.3 m i l l i o n =

53.7%). The settlement increase was m u l t i p l i e d by the estimated

tax f a c t o r ($19.5 m i l l i o n x .537 = $10.5 m i l l i o n ) t o derive the

a d d i t i o n a l income available f o r return. The additional income

48

a v a i l a b l e f o r r e t u r n was added t o pro forma operating income

w i t h o u t adjustments t o produce the t o t a l o p e rating income a v a i l a b l e

under settlement r a t e s ($10.5 m i l l i o n + 24.1 m i l l i o n = $34.6

m i l l i o n ) . The t o t a l o p e rating income a v a i l a b l e under settlement

r a t e s was then d i v i d e d by r a t e base. As i s evident on the t a b l e ,

t h i s c a l c u l a t i o n was repeated t h r e e times (once each f o r the

Company, OCA and OTS r a t e base f i g u r e s ) . These c a l c u l a t i o n s

p r o v i d e an o v e r a l l r a t e of r e t u r n f o r UGI. L u c k i l y due t o the f a c t

t h a t these p a r t i e s agreed 8 on the c a p i t a l s t r u c t u r e , we were able

t o "back out" an ROE number f o r each of the three p a r t i e s . Our

c a l c u l a t i o n s demonstrate t h a t the settlement produces the f o l l o w i n g

ROEs using t h e i r r e s p e c t i v e r a t e bases:

UGI 8.03%

OCA 8.32%

OTS 8.18%

Thus, we have formulated t h e range of 8.03% t o 8.32%.

Having set f o r t h the manner of c a l c u l a t i n g the ROE, we

repeat our conclusion t h a t we do not recommend adoption of any of

these numbers. The most obvious f l a w w i t h t h i s c a l c u l a t i o n i s t h a t

i t assumes t h a t a l l adjustments were made i n the r a t e of r e t u r n .

Indeed, t h e r e are no expense adjustments. We remind the Commission

t h a t the p a r t i e s l i t i g a t e d p o s i t i o n s included expense adjustments.

From a mathematical standpoint, the expense l e v e l i s i n v e r s e l y

p r o p o r t i o n a l t o the o p erating income, i e . as expenses go down,

W i t h o u t t h i s agreement i n the l i t i g a t i o n phase of the case, the c a l c u l a t i o n would have been more d i f f i c u l t , i f not impossible.

49

operating income goes up. Operating income and ROE are d i r e c t l y

proportional, i e . as operating income goes up, ROE goes up.

The reason there are no expense adjustments i s that the

parti e s did not s t i p u l a t e t o any expense fi g u r e . The parties are

not reguired t o so s t i p u l a t e , nor do we believe they should be. A

c r u c i a l piece of the puzzle i s missing which cannot be corrected i n

our calc u l a t i o n . Ergo, our calculation i s flawed, and the range i s

grossly understated.

The case i s a perfect example of how t o t a l settlements

occur. Total rate case settlements require only two pieces of

information. More s p e c i f i c a l l y , the part i e s must agree to the

t o t a l revenue requirement and rate design at a minimum. Other

issues may be included i n the settlement which help t o give insight

i n t o the settlement process, but they are not required.

I n t h i s regard we believe that a certain settlement t r u t h

i s self-evident. I f the Commission increases the number of issues

which must be specified i n the settlement, the chances of

settlement w i l l be reduced. I n other words, requiring the parties

t o provide a settlement ROE i s counter-productive t o the settlement

process.

Furthermore, the parties have good reasons f o r not

producing t h i s number, and t h i s Commission has good reasons f o r not

asking. We believe t h a t any party should approach the negotiation

process with a minimum target zone or threshold of reasonableness.

This zone should be defined by the lowest/highest reasonable number

which the party w i l l accept and i t s evaluation of what the most

50

reasonable nuinber i s t h a t t h i s Commission w i l l allow. This zone

should be the most closely guarded secret i n the negotiation

process. A settlement i s possible only when one party makes an

o f f e r which i s w i t h i n or favorably outside another party's zone.

The more information which t h i s Commission requires the parties to

divulge about t h i s zone, the more reluctant the parties w i l l be to

s e t t l e .

I n order t o negotiate successfully, a party must have

some i n t e r n a l assessment of the strengths and weaknesses of i t s own

case. Otherwise, compromise i s not possible. One of the reasons

why there i s no agreement on expense adjustments i s t h a t the

parties can avoid revealing t h e i r assessments of t h e i r strengths

and weaknesses. The same i s true f o r rate base and rate of return.

We must remember that the u t i l i t y bar i s a generally

closed class. These part i e s negotiate w i t h each other a l l of the

time. I f the Commission requires them t o reveal too much

information ( i . e . , agreement on expenses and ROE) / that data can be

used to t h e i r disadvantage i n l a t e r negotiations of other cases.

Thus, the requirement to produce better defined agreements produces

a c h i l l i n g e f f e c t on the settlement of the immediate case and

fut u r e cases.

Asking the parties to provide an estimate of the ROE

r e s u l t i n g from a settlement i s not well-advised. I n a l i t i g a t e d

case the Company has a natural bias towards i n f l a t i n g that number.

I n a s e t t l e d case, the Company should s t i l l want to i n f l a t e the

number: Since the number w i l l be used as a comparison to quarterly

51

earnings, the Company wants to avoid the appearance of over-earning

i n the future. Logic dictates that the public advocates should be

biased towards a lower number f o r reasons which are the mirror

image of the Company' s. For the parties to be required to

calculate a settlement ROE only allows them the opportunity to skew

the variables (which were not settled) i n t h e i r d i r e c t i o n . Thus,

asking the parties t o provide an estimate creates the kind of

c r e d i b i l i t y issue a settlement i s designed t o avoid.

I n summary, we emphasize that we are making no

recommendation on an ROE re s u l t i n g from t h i s settlement. (Thus,

there should be no need f o r the parties to f i l e exceptions on t h i s

issue.) Further, req u i r i n g the pa r t i e s to agree on a settlement

ROE i s counter-productive to the settlement process. Asking the

partie s to estimate an ROE aft e r settlement creates an unnecessary

c r e d i b i l i t y issue. F i n a l l y , c a l c u l a t i n g an ROE from the e x i s t i n g

settlement terms (either by the parti e s or the judges) does not

lead t o a credible number because too many of the variables needed

f o r the calculation are missing.

VI. Order

NOW THEREFORE, IT IS RECOMMENDED:

1. That the St i p u l a t i o n I n Settlement, as revised by

the l e t t e r of August 10, 1995 and i t s attachments, i s hereby

approved.

2, That the Proposed S t i p u l a t i o n Between Office Of

Consumer Advocate And UGI U t i l i t i e s , Inc. Concerning Extension Of

F a c i l i t i e s i s hereby approved.

52

3. That UGI U t i l i t i e s , Inc. - Gas Division be permitted

to use i t s projected sales volumes to design rates.

4. That the settlement revenue increase be allocated

among the rate classes as indicated on Appendix B of the Settlement

S t i p u l a t i o n .

5. That the Customer Charges f o r Residential, Non-

Residential and Commercial and I n d u s t r i a l A i r Conditioning Rates

.shall be nine dollars per month. A l l other customer charges s h a l l

remain as proposed by UGI U t i l i t i e s , Inc. - Gas Division and as

demonstrated i n the Settlement S t i p u l a t i o n , Appendix B.

6. That UGI U t i l i t i e s , Inc. - Gas Division s h a l l

withdraw i t s proposed Competitive Adjustment without prejudice.


calculate and recover i t s Other Postretirement Employee Benefits i n

accordance with Commission precedent and the terms and conditions

set f o r t h i n the Settlement S t i p u l a t i o n , Paragraph I l l . l . f .


recover previously deferred state income taxes at the annualized

rate of $958,000.00 per year i n accordance with the Settlement

S t i p u l a t i o n , Paragraph I l l . l . g .

9. That the State Tax Ad j ustment Surcharge f o r UGI

U t i l i t i e s , Inc. - Gas Division s h a l l be established at 0%.

10. That, unless otherwise ordered by t h i s Commission or

i n response to other regulatory, accounting or federal tax

p o l i c i e s , UGI U t i l i t i e s , Inc. - Gas Division s h a l l not f i l e a

t a r i f f or t a r i f f supplement proposing a general increase i n base

53

rates p r i o r t o January 25, 1997.

11. That the revenue allowance i n the settlement rates

s h a l l include $315,000.00 and approximately $400,000 f o r current

b i l l s h o r t f a l l s which are associated with the implementation of the

Low Income Self Help Program. Further, i f forgiven and w r i t t e n o f f

arrearages from the LISHP program f a l l w i t h i n the period used to

develop u n c o l l e c t i b l e expenses, UGI U t i l i t i e s , Inc. - Gas Division

s h a l l be permitted t o include w r i t t e n o f f LISHP arrearages i n

developing i t s next u n c o l l e c t i b l e expense claim.

12. That the settlement rates s h a l l not include any

additional depreciation r e s u l t i n g from UGI U t i l i t i e s , Inc. - Gas

Division's accelerated noncore depreciation proposal.

13. That the settlement rates s h a l l not include the

amortization of additional expenses allegedly r e s u l t i n g from severe

winter storm damage during calendar year 1994. Further, UGI

U t i l i t i e s , Inc. - Gas Division s h a l l make no ratemaking claim t o

recover the alleged 1994 storm damage expenses i n future

proceedings.

14. That UGI U t i l i t i e s , Inc. - Gas Division s h a l l engage

an outside consultant to prepare a study of the consequences of

removing competitively situated customers from rate regulation i n

accordance wi t h the terms and conditions set f o r t h i n the

Settlement S t i p u l a t i o n , Paragraph I l l . l . m .

15. That the proposed changes t o T a r i f f Pages 8, 8A, 13,

15, 15A, 16, 20, 33A, 35, 36, 39, 39A, 40, 41, 42, 43, 44, 45, 46,

47, 57, 57A, 60, 61, 63, 64, 65, 65A, 66, 67, 68, 68A, 69, 70, 73,

54

73A, 74, 75, 78, 79, 80, 81, 82, 84, 85, 88, 90 and 91, as set

f o r t h i n Appendix A to the Settlement S t i p u l a t i o n and as revised by

the l e t t e r of August 10, 1995 are hereby approved.

16. That the T a r i f f Addendum which r e f l e c t s hourly

service rates and which was included with the l e t t e r of August 10,

1995, i s hereby approved. The service rates Addendum s h a l l be

revised annually.

17. That UGI U t i l i t i e s , Inc. - Gas Division w i l l be

permitted t o record s i t e s p e c i f i c environmental costs i n accordance

wit h the terms and conditions of the Settlement Sti p u l a t i o n ,

Paragraph I I I . l . p .


continue t o assign t o Rate Extended Delivery customers up to

50,241/Dth of Columbia/Columbia Gulf Capacity and continue to

c r e d i t Purchased Gas Costs by reference t o the payments made by the

Rate XD customers. Further, a l l p a r t i e s s h a l l comply wi t h the

remaining terms and conditions of the Settlement S t i p u l a t i o n ,

Paragraph I l l . l . g .

19. That purchased gas demand charges f o r Rate Business

Development customers s h a l l be calculated on the basis of the

weighted average cost of f i r m transportation gas on a l l pipelines

serving UGI U t i l i t i e s , Inc. - Gas Division i n accordance with the

terms and conditions of the Settlement Stipulation, Paragraph

I l l . l . r . Further, these provisions of the Settlement s h a l l remain

i n e f f e c t without challenge u n t i l the next base rate proceeding of

UGI U t i l i t i e s , Inc. - Gas Division.

55

20. That UGI U t i l i t i e s , Inc. - Gas Division shall c r e d i t

purchased gas costs i n an amount equal to the f i r m capacity

provided to Rate Large Firm Delivery customers m u l t i p l i e d by the

weighted average cost of f i r m transportation on a l l pipelines

serving UGI U t i l i t i e s , Inc. - Gas Division i n accordance with the

terms and conditions of the Settlement S t i p u l a t i o n , Paragraph

I I I . l . s . I n addition, UGI U t i l i t i e s , Inc. - Gas Division s h a l l

charge Rate LFD customers a system access fee, computed i n

accordance with the terms and conditions of the Settlement

St i p u l a t i o n , Paragraph I I I . 1 . s . and Appendices A, B and C.

Further, no party s h a l l challenge those terms and conditions u n t i l

the next base rate case f o r UGI U t i l i t i e s , Inc. - Gas Division.


calculate the c r e d i t f o r purchased gas costs from Rate Delivery

Service customers i n accordance with the terms and conditions set

f o r t h i n the Settlement S t i p u l a t i o n , Paragraph I I I . 1 . t . and

Appendix D. I n addition, UGI U t i l i t i e s , Inc. - Gas Division s h a l l

charge Rate DS customers a volumetric system access fee as

described i n the Settlement S t i p u l a t i o n , Appendices A, B and D.

Further, t h a t UGI U t i l i t i e s , Inc. - Gas Division s h a l l i n i t s 1997

Purchased Gas Cost f i l i n g calculate and propose rates for the rate

DS customers which r e f l e c t a weighted average cost of f i r m storage

and transportation capacity i n accordance wi t h the terms and

conditions of the Settlement S t i p u l a t i o n , Paragraph I I I . 1 . t .

F i n a l l y , no party w i l l challenge the ca l c u l a t i o n of the c r e d i t from

DS customers i n any non-base rate proceeding p r i o r to the 1997

56

Purchased Gas Cost proceeding.

22. That the credits to the Purchased Gas Costs

r e s u l t i n g from the calculations reguired f o r the Rate BD, LFD and

DS customers s h a l l be recomputed i n subsequent Purchased Gas Costs

proceedings t o r e f l e c t changes i n pipeline charges and volumes.

23. That the language of T a r i f f Rule 5.2 i s hereby

approved as revised by the Extension S t i p u l a t i o n , Paragraph

I l l . l . a .

24. That the language of T a r i f f Rule 5.3A i s hereby


I l l . l . b .



I I I . I . e .



I l l . l . d .

27. That the Complaint of Christine M. Sto t t a t Docket

No. R-00953297C0001 be closed.

28. That the Complaint of Dorothea Sandbrook at Docket


29. That the Complaint of Irwin A. Popowsky, Consumer

Advocate, at Docket No. R-00953297C0003 i s hereby dismissed i n part

and sustained i n part i n accordance with the Recommended Decision.

30. That the Complaint of Bernard A. Ryan, J r . , Small

Business Advocate, at Docket No. R-00953297C0004 i s hereby

57

dismissed i n part and sustained i n part i n accordance wi t h the

Recommended Decision.

31. That the Complaint of Charles H. and Pauline H.

Albert, Sr. at Docket No. R-00953297C0005 be closed.

32. That the Complaint of James R. Brokenshire at Docket

No. R-00953297C0006 i s hereby dismissed i n part and sustained i n

part i n accordance wi t h the Recommended Decision.

33. That the Complaint of John Vidoni at Docket No.

R-00953297C0007 be closed.

34. That the Complaint of Excel Fabrics, Inc. at Docket


35. That the Complaint of Frank Oese, Sr. at Docket No.

R-00953297C0009 be closed.

36. That the Complaint of Margaret M. McLaughlin at

Docket No. R-00953297C0010 be closed.

37. That the Complaint of Alma M. Sunyak at Docket No.

R-00953297C0011 be closed.

38. That the Complaint of Larry K i l l o at Docket No.

R-00953297C0012 be closed.

39. That the Complaint of Mr. and Mrs. L. G. Kessinger

at Docket No. R-00953297C0013 be closed.

40. That the Complaint of Theresa L. Spiess at Docket


41. That the Complaint of Mr. and Mrs. Fred D. Hrubenak,

Sr. at Docket No. R-00953297C0015 be closed.

42. That the Complaint of Helen A. Loper at Docket No.

58

R-00953297C0016 be closed.

43. That the Complaint of M i l t o n D. Harte a t Docket No.

R-00953297C0017 be closed.

44. That the Complaint of Mr. and Mrs. Bernard P a v l i k a t

Docket No. R-00953297C0018 be closed.

45. That t he Complaint o f Tekla H. Barron a t Docket No.

R-00953297C0019 be closed.

46. " That t he Complaint of Debra Minotto a t Docket No.

R-00953297C0020 i s hereby dismissed i n p a r t and sustained i n p a r t

i n accordance w i t h the Recommended Decision.

47. That the Complaint o f UGI I n d u s t r i a l I n t e r v e n o r s a t

Docket No. R-00953297C0021 i s hereby dismissed i n p a r t and

sustained i n p a r t i n accordance w i t h the Recommended Decision.

48. That t he Complaint o f Thomas Heck a t Docket No.

R-00953297C0022 be closed.

49. That t he Complaint of UGI T r a n s p o r t a t i o n Customer

Group a t Docket No. R-00953297C0023 i s hereby dismissed i n p a r t and

sustained i n p a r t i n accordance w i t h the Recommended Decision.

50. That t h e Complaint of Stanley Rabzak a t Docket No.

R-00953297C0024 be closed.

51. That t he Complaint of Irene K. Pierce a t Docket No.

R-00953297C0025 be closed.

59

52. That the Complaint of Township of Exeter at Docket


7 * • / , , LOUIS G. COCHERES Administrative Law Judge

WA2?NE L. WEISMANDEL Administrative Law Judge

60

CERTIFICATE OF SERVICE

Re: Pennsylvania Public Utility Commission v.

UGI Utilities, Inc. - Gas Division Docket No. R-00016376

I hereby certify that I have this day sen'ed a tme copy of the foregoing document, Office

of Consumer Advocate's Brief, upon parties of record in this proceeding in accordance with the

requirements of 52 Pa. Code § 1.54 (relating to service by a participant), in the manner and upon the

persons listed below:

Dated this 28ch day of August, 2001.

SERVICE BY FACSIMILE. E-MAIL AND FIRST CLASS MAIL

Alan Kohler, Esq Mark Stewart, Esq Wolf, Block, Schorr and Solis-Cohen, LLP 212 Locust Street, Suite 300 Harrisburg, PA 17101

David B. MacGregor, Esq. Morgan Lewis & Bockius 1701 Market Street Philadelphia, PA 19103-2921

Mark C. Morrow, Esq. UGI Utilities - Gas Division 460 North Gulph Road King of Prussia, PA 19406

Kandace F. Melillo Office of Trial Staff Pa Public Utility Commission Pitnick Bldg., P.O. Box 3265 Harrisburg, PA 17101

co o Angela T. Jones, Esq.

Office of Small Business Advocate cr Suite 1102 Commerce Building^ 300 North Second Street ^j> Harrisburg, PA 17101 ^r.

rn 3>

CO

Pamela C. Polacek Derrick P. Williamson McNees, Wallace & Nurick 100 Pine Street P. O. Box 1166 Harrisburg, PA 17108-1166

Vicki O. Ebner Vice President-Marketing & Gas Supply 100 Kachel Blvd., Suite 400 P.O. Box 12677 Reading, PA 19612-2677

Richard A. Baudino J. Kennedy and Associates, Inc. 570 Colonial Park Drive, Suite 305 Roswell, GA 30075

Brian Kalcic Excel Consulting Suite 720-T 225 S. Meramec Avenue St. Louis, MO 63105

Stephen J.feene Senior Assistant Consumer Advocates

Counsel for Office of Consumer Advocate 555 Walnut Street 5th Floor, Forum Place Harrisburg, PA 17101-1923 (717) 783-5048 58342

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