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29
The following table summarizes the average delivered cost per MMBtu of natural gas purchased for resale by NSP-Wisconsin’s
regulated retail natural gas distribution business:
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6.52
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.51
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.36
The higher cost of natural gas was primarily due to higher at market prices from increased demand because of cold weather in early
2014.
The cost of natural gas supply, transportation service and storage service is recovered through various cost-recovery adjustment
mechanisms. NSP-Wisconsin has firm natural gas transportation contracts with several pipelines, which expire in various years from
2015 through 2029.
NSP-Wisconsin has certain natural gas supply, transportation and storage agreements that include obligations for the purchase and/or
delivery of specified volumes of natural gas or to make payments in lieu of delivery. At Dec. 31, 2014, NSP-Wisconsin was
committed to approximately $71 million in such obligations under these contracts.
NSP-Wisconsin purchased firm natural gas supply utilizing long-term and short-term agreements from approximately 8 domestic and
Canadian suppliers. This diversity of suppliers and contract lengths allows NSP-Wisconsin to maintain competition from suppliers
and minimize supply costs.
See Items 1A and 7 for further discussion of natural gas supply and costs.
PSCo
Public Utility Regulation
Summary of Regulatory Agencies and Areas of Jurisdiction — PSCo is regulated by the CPUC with respect to its facilities, rates,
accounts, services and issuance of securities. PSCo holds a FERC certificate that allows it to transport natural gas in interstate
commerce without PSCo becoming subject to full FERC jurisdiction under the Federal Natural Gas Act. PSCo is subject to the DOT
and the CPUC with regards to pipeline safety compliance.
Purchased Natural Gas and Conservation Cost-Recovery Mechanisms — PSCo has retail adjustment clauses that recover purchased
natural gas and other resource costs:
• GCA — The GCA recovers the actual costs of purchased natural gas and transportation to meet the requirements of its
customers and is revised quarterly to allow for changes in natural gas rates.
• DSMCA — The DSMCA recovers costs of DSM and performance initiatives to achieve various energy savings goals.
• PSIA — The PSIA recovers costs associated with transmission and distribution pipeline integrity management programs and
two projects to replace large transmission pipelines. The rider was extended through 2015.
QSP Requirements — The CPUC established a natural gas QSP that provides for bill credits to customers if PSCo does not achieve
certain performance targets relating to natural gas leak repair time and customer service. The CPUC has extended the terms of the
QSP through 2015.
Capability and Demand
PSCo projects peak day natural gas supply requirements for firm sales and backup transportation to be 1,983,672 MMBtu. In
addition, firm transportation customers hold 771,112 MMBtu of capacity for PSCo without supply backup. Total firm delivery
obligation for PSCo is 2,754,784 MMBtu per day. The maximum daily deliveries for PSCo for firm and interruptible services were
2,116,747 MMBtu on Dec. 30, 2014 and 1,865,207 MMBtu on Dec. 5, 2013.