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30
NSP-Wisconsin purchased firm natural gas supply utilizing long-term and short-term agreements from approximately 13 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 is a low-income energy assistance program. The costs of this energy conservation and weatherization
program are recovered through the gas DSMCA.
• PSIA — Effective Jan. 1, 2012, the PSIA began to recover costs associated with transmission and distribution pipeline integrity
management programs and two projects to replace large transmission pipelines. Although PSCo had proposed to include the
PSIA in base rates, instead the rider was extended through Dec. 31, 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 conducts proceedings to review
and approve the rate adjustment annually. In 2013, the CPUC extended the terms of the current QSP through the end of 2015.
Capability and Demand
PSCo projects peak day natural gas supply requirements for firm sales and backup transportation to be 1,952,939 MMBtu. In
addition, firm transportation customers hold 797,329 MMBtu of capacity for PSCo without supply backup. Total firm delivery
obligation for PSCo is 2,750,268 MMBtu per day. The maximum daily deliveries for PSCo for firm and interruptible services were
1,865,207 MMBtu on Dec. 5, 2013 and 1,539,864 MMBtu on Dec. 19, 2012.
PSCo purchases natural gas from independent suppliers, generally based on market indices that reflect current prices. The natural gas
is delivered under transportation agreements with interstate pipelines. These agreements provide for firm deliverable pipeline capacity
of approximately 1,822,939 MMBtu per day, which includes 859,514 MMBtu of natural gas held under third-party underground
storage agreements. In addition, PSCo operates three company-owned underground storage facilities, which provide approximately
22,400 MMBtu of natural gas supplies on a peak day. The balance of the quantities required to meet firm peak day sales obligations
are primarily purchased at PSCo’s city gate meter stations.
PSCo is required by CPUC regulations to file a natural gas purchase plan each year projecting and describing the quantities of natural
gas supplies, upstream services and the costs of those supplies and services for the 12-month period of the following year. PSCo is
also required to file a natural gas purchase report by October of each year reporting actual quantities and costs incurred for natural gas
supplies and upstream services for the previous 12-month period.
Natural Gas Supply and Costs
PSCo actively seeks natural gas supply, transportation and storage alternatives to yield a diversified portfolio that provides increased
flexibility, decreased interruption and financial risk and economical rates. In addition, PSCo conducts natural gas price hedging
activities that have been approved by the CPUC.
The following table summarizes the average delivered cost per MMBtu of natural gas purchased for resale by PSCo’s regulated retail
natural gas distribution business:
2013. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4.20
2012. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.28
2011. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.99