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Key Points/issues (cont.): <br /> <br /> no increase for the Rate PT - Pipeline Transportation, <br /> Rate I - Industrial Sales, and Rate T - Transportation rate <br /> classes; a 2% increase for the Rate C - Commercial <br /> Sales rate class; and a 10% increase for the Rate R - <br /> Residential Sales rate class and the Rate CGS - City <br /> Gate Service rate class. <br /> <br /> 4. Service on the TXU Gas System is provided to six principal <br /> customer classes. On the pipeline portion of the TXU Gas <br /> system, those classes are: (1) city gate and (2) pipeline <br /> transportation. On the distribution portion of the system, <br /> those classes are: (1) residential sales; (2) commemial <br /> sales; (3) industrial sales; and (4) transportation. <br /> <br /> 5. Fixed costs should be allocated using the average of the <br /> peak daily usage occurring during the peak months of <br /> December through March, which is referred to as the Four <br /> Maximum Daily Usage method ("4MDU"). <br /> <br /> 6. A Cost Allocation Study is an accounting and engineering <br /> analysis that allocates plant investment, revenues, and <br /> expenses to the various ctasses of customers served by <br /> the utility. The allocation of a utility's costs to the various <br /> customer classes based on their individual characteristics <br /> results in the identification of the cost responsibility of each <br /> customer class. <br /> <br />Summary/Recommendations: <br /> <br /> The cost allocation methodology used by TXU Gas is reasonable. <br /> The proposed rate design is reasonable, provides greater price <br /> transparency for customers, and ensures the opportunity for cost <br /> recovery by TXU Gas. The proposed Tariff provides a <br /> comprehensive set of rates for all services provided by TXU Gas <br /> and the terms and conditions under which those services will be <br /> provided. <br /> <br /> Houle - Summary of Testimony (Cost Allocation & Rate Design) Page 2 of 2 <br /> <br /> <br />