0 17 North Second Street PST< 12th Floor Harrisburg, PA 17101-1601 717-731-1970 Main A'l' I'H » S t: VS A T LAW 717-731-1985 Main Fax www.postscheH.com
Andrew S. Tubbs
[email protected] 717-612-6057 Direct 717-731-1985 Direct Fax File #: 154134
March 29,2013
VIA HAND DELIVERY
Rosemary Chiavctta, Secretary Pennsylvania Public Utility Commission Commonwealth Keystone Building 400 North Street, 2nd Floor North P.O. Box 3265 Harrisburg, PA 17105-3265
Rc: Application for Approval of Abandonment of Service by National Fuel Gas Distribution Corporation of Natural Gas Service to One (1) Customer Located in French Creek Township, Mercer County, Pennsylvania Docket No. A-2013-
Dear Secretary Chiavetta:
Enclosed for filing is the Application for Approval of Abandonment of Service by National Fuel Gas Distribution Corporation of Natural Gas Service to One (1) Customer Located in French Creek Township, Mercer County, Pennsylvania. Copies will be provided as indicated on the Certificate of Service.
Also enclosed is a check in the amount of $350 for the filing fee.
Respectfully submittp o rn at m o Arfdrew S. Tubbs rn
AST/jl Enclosures a o en cc: Certificate of Service
ALLENTOWN HARRISBURG LANCASTER PHILADELPHIA PITTSBURGH PRINCETON WASHINGTON, D.C.
A PENNSYLVANIA Pnof ESSKWAL CORPORATION 10592904VI BEFORE THE PENNSYLVANIA PUBLIC UTILITY COMMISSION
Application for Approval of Abandonment of Service by National Fuel Gas Distribution Corporation of Natural Gas Docket No. A-2013- Service to One (I) Customer Located in French Creek Township, Mercer County, Pennsylvania
APPLICATION OF NATIONAL FUEL GAS DISTRIBUTION CORPORATION
TO THE PENNSYLVANIA PUBLIC UTILITY COMMISSION;
National Fuel Gas Distribution Corporation ("National Fuel" or "Company"), pursuant to the provisions of Section 1102(a)(2), hereby requests that the Pennsylvania Public Utility
Commission ("Commission") approve the abandonment or discontinuance of natural gas service to one (1) customer on a segment of National Fuel's system in French Creek Township, Mercer
County, Pennsylvania. In support of the request. National Fuel states as follows:
1. The name and address of the Applicant are:
National Fuel Gas Distribution Corporation 6363 Main Street Williamsville,NY 14221
2. The names and addresses of National Fuel's attorneys are:
CO Maureen Krowicki, Esquire 33 National Fuel Gas Distribution Corporation ^ 5 ^ 1100 State Street ji-t*. ^ O Erie, PA 16512 ^ lH
Andrew S. Tubbs, Esquire ^ ^ Jessica R. Rogers, Esquire Post & Schell, P.C. '% S 17 North Second Street, 12th Floor Harrisburg, PA 17101-1601 3. National Fuel is a corporation organized and existing under the laws of the state of New York. National Fuel has secured from the Commonwealth of Pennsylvania authority to do businesses within the Commonwealth as a foreign corporation, in compliance with the
Pennsylvania Business Corporation Law, Act of May 5, 1933, P.L. 364, as amended. National
Fuel is currently engaged in the business of selling and distributing natural gas to retail customers within the Commonwealth, and is therefore a "public utility" within the meaning of
Section 102 of the Public Utility Code, 66 Pa.C.S. § 102, subject to the regulatory jurisdiction of the Commission. National Fuel provides retail natural gas service to approximately 209,000 customers in 14 counties of Pennsylvania, pursuant to certificates of public convenience granted by the Commission in proceedings docketed at A-121850, which are incorporated herein.
4. National Fuel seeks to abandon distribution service to one (1) customer located in
French Creek Township, Pennsylvania. The customer receives distribution service from a 1,557 foot line that is owned and operated by National Fuel. The name and address of the affected customer is:
Name Address
Boy Scouts of America, 7 Boy Scout Lane French Creek Council Carlton, PA
5. National Fuel currently provides back-up gas service to the French Creek Council
("Council"). The Council's primary source of supply is a well located on the property. The well was drilled by Cabot Oil & Gas in 1981, and is currently operated by Range Resources
Development Company. Since September 2011, the customer has paid only the minimum customer charge, and has not used any natural gas supply from National Fuel. Included as
10567764v 1 Attachment "A" to this Application is a schedule of gas delivered and revenue derived from the
Council over the most recent twelve month period.
6. National Fuel provides for service to the Council from a 2-inch coated steel and plastic pipe called the "new Lebanon Road Mainline," which was installed in 1965. The pipeline is attached to a bridge crossing French Creek in Carlton, Pennsylvania. A map of the affected area is included as Attachment "B" to this Application. The line is located in a rural area and is near one additional potential customer, who currently uses propane. Further development in the area is not likely to occur in the foreseeable future.
7. The Commonwealth of Pennsylvania, Department of Transportation
("PennDOT") notified National Fuel that it intends to replace the bridge crossing. The project is scheduled to start in Spring of 2014. Construction activities are scheduled to take 12 to 18 months to complete. The pipeline must be removed prior to the demolition of the bridge. Once the pipeline is removed. National Fuel will have no alternative method for providing service to the Council. The PennDOT bridge replacement is the sole reason for National Fuel's application for abandonment.
8. In May of 2012, National Fuel contacted the Council to inform them of the need to abandon service as a result of the PennDOT project. In that correspondence, National Fuel offered to assist the Council in obtaining an alternate fuel source at some point in the future if the current natural gas supply proves insufficient. A copy of this letter is attached as Attachment
"C".
9. National Fuel's engineers analyzed the replacement of the pipeline on the bridge crossing and determined that the cost of replacement is approximately $35,000 once PennDOT has finished construction of the bridge. If National Fuel were to attempt to construct the pipeline
I0567764v] via directional drilling under French Creek, the cost of the project would exceed $50,000. The
Company would also incur ongoing expenses associated with the maintenance of the pipeline, even though the Council currently does not receive any natural gas supply from National Fuel.
10. In addition, National Fuel has determined that the costs associated with a permanent replacement of its facilities to the Council and the ongoing maintenance costs cannot be justified based upon the Council's historical usage. Although the Council has requested that
National Fuel rebuild the subject distribution pipeline to continue providing back-up service.
National Fuel's potential revenues from the Council would be limited to the monthly customer charge. Further, the Company does not foresee any potential expansion to other customers in the area served by the affected pipeline.
11. Based upon the substantial costs to replace the affected pipeline and the lack of potential service expansion in the area. National Fuel determined that it is not in the public interest, nor in the interest of National Fuel's other customers, to replace the pipeline.
12. Due to the limited potential revenue, and the extensive costs involved, National
Fuel estimates that the replacement of this line would result in a revenue deficiency of approximately $6,987 per year. This figure is calculated as follows: First, National Fuel would have to extend across a bridge at a total cost of approximately $35,000. Second, the resulting annual cost, based on cost of capital and depreciation, will be approximately $7,245.00. To be economically justified, the line must provide at least this amount in annual distribution revenues
(gas commodity costs are passed through on a cost basis). The customer consumed a total of 0
Mcf from March 2012 to March 2013. With a customer charge of approximately $21.44 per month, the total distribution revenue earned by National Fuel, in the twelve months noted above from selling gas to the customer was $257.28. Subtracting the $257.28 total distribution revenue
10567764vl from (he yearly revenue requirement of approximately $7,245.00 results in a deficiency of approximately $6,987 per year.
13. The Council is currently served by a well located on Council's property. In addition, alternative heating fuels including oil, propane, electricity and wood are readily available as back-up service. National Fuel has confirmed that at least 3 propane companies are available to the affected customers.
14. The Council has not consented to the abandonment of back-up service by
National Fuel.
15. To compensate the Council for the cost of converting from natural gas as its back up service, National Fuel has extended an offer to the Council to defray the costs necessary to convert from natural gas to propane, should such a conversion be required in the future. In addition. National Fuel also offered other technical advice to ensure that the conversion was accomplished in the most cost-effective and practicable manner. As of the date of this filing,
National Fuel has not reached an agreement with the Council.
16. National Fuel's abandonment of service to the Council is reasonable because the significant costs associated with re-building and replacing National Fuel's existing distribution facilities is not economically justified. Further, in the past year, the Council has consumed 0
Mcf of gas from National Fuel, and uses existing on site supply as its primary source. National
Fuel has offered reasonable compensation for conversion from natural gas at future date, should that be appropriate and necessary. However, no conversion is currently necessary because the
Council has an existing source of gas supply on site.
17. Should the Commission wish to condition National Fuel's abandonment request herein on some type of payment to the affected customer. National Fuel asks that the
10567764v 1 Commission approve a payment amount no greater than $772. The calculation National Fuel used to arrive at this amount is consistent with prior Commission-approved methods where the amount shown is the greater of (a) three times the total of the customer's last 12 months of actual bills or (b) 1.5 times an average of the last two 12-month periods. The Council has taken no gas service from National Fuel in recent years. The flat payment amount is proper because National
Fuel has attempted, unsuccessfully, to negotiate payment of the reasonable cost of converting the customer. After reviewing Commission-approved contested abandonment applications. National
Fuel relies on Commission precedent to propose payment to the customer in the amount of
$715.71.
18. Full compensation for the cost of conversion is not a prerequisite for Commission approval of an abandonment application, and indeed, the Commission has repeatedly declined to order utilities seeking abandonment to compensate customers the full or actual amount it will cost them to convert. See, e.g., Graff v. North Perm Gas, 11 Pa. P.U.C. 203 (1992) (ordering gas company to pay $1,000 to each of the affected customers despite one complainant testifying that the cost to convert would total $2,000); Application of National Fuel Gas Distribution
Corporation, Docket No. A-121850F2011 (Order entered March 20, 1997) (directing utility to contribute $4,304 to help defray the cost of converting to propane even though the affected customer requested $10,000 to cover expenses); Able Company, Ltd, 1996 Pa. P.U.C. LEXIS 108
(1996) (ordering utility to pay $500.00 to each of seven customers to defray conversion costs);
Application of National Fuel Gas Distribution Corporation, Docket No. A-121850F2014 (Order entered January 7, 1998) (ordering gas company to pay customer $4,750 to help defray costs of converting to propane despite customer's request that utility fully reimburse his cost of $10,702 to obtain natural gas service from another supplier).
I0567764vl 19. Further, full compensation is not appropriate in this instance, because the Council does not intend to convert in the foreseeable future. Essentially, Council would receive a windfall payment, at the expense of National Fuel's other customers, for a conversion that may never occur. The Commission should rely on the prior Commission-approved methods discussed in paragraph 17, which would provide fair compensation to Council in this instance.
20. Approval of National Fuel's Application is necessary and proper for the following reasons: a. The continuation of natural gas distribution service by National Fuel to the one (1)
customer on the affected pipeline is not in the public interest for the safety and
economic reasons stated above;
b. There are a number of adequate, safe, competitively priced alternate fuel sources
available to the customer, and the customer is currently receiving service from a well
located on site; and
c. National Fuel has offered to contribute to the customer's cost of converting to
propane by one-time payment.
10567764v I WHEREFORE, National Fuel Gas Distribution Corporation respectfully requests that the
Pennsylvania Public Utility Commission issue a Certificate of Public Convenience, pursuant to
66 Pa. C.S. § 1102(a)(2), authorizing National Fuel Gas Distribution Corporation to abandon natural gas distribution service to the account located at 7 Boy Scout Lane, Carlton,
Pennsylvania.
Respectfully submitted,
Maureen Krowicki (ID # 89350) ?Anfre\£ S. Tubbs (ID #80310) National Fuel Gas Distribution Corporation Jessica R. Rogers (ID #309842) 1100 State Street Post & Schell, P.C. Erie, PA 16512 17 North Second Street, 12th Moor Phone: 814-871-8035 Harrisburg, PA 17101-1601 E-mail: [email protected] Phone:717-731-1970 Fax: 717-731-1985 Of Counsel: E-mail:[email protected] E-mail:[email protected] Post & Schell, P.C.
Date: March 29, 2013 Attorneys for National Fuel Gas Distribution Corporation
r
., -v
C"
10567764vl VERIFICATION
Carl M. Carlotti, Senior Vice President for National Fuel Gas Distribution Corporation, being authorized to do so, verifies that the facts set forth in the foregoing Application are true and correct to the best of his knowledge, information and belief. The undersigned further states that he understands false statement therein are made subject to the penalties of 18 Pa. C.S.A. Section 4904 relating to unsworn falsification to authorities.
Carl M. Carlotti
Date: March 22, 2013
-1* o 5>- ro ra: -a o Appendix A RECEIVED
MAR 2 9 2013
PA PUBLIC UTILITY COMMISSION SECRETARY'S BUREAU Appendix "A" Schedule of Gas Delivered and Revenue Derived Over Most Recent 12 Months
Customer Boy Scouts of America, French Creek Council
Acct. U 3620628-08 Feb. 2012 MCF 0.0 Revenue $18.57 March 2012 MCF 0.0 Revenue $22.57 Apr. 2012 MCF 0.0 Revenue $17.43 May 2012 MCF 0.0 Revenue $19.86 June 2012 MCF 0.0 Revenue $19.86 Jul 2012 MCF 0.0 Revenue $21.13 Aug. 2012 MCF 0.0 Revenue $19.86 Sepl. 2012 MCF 0 Revenue $18.57 Oct. 2012 MCF 0 Revenue $20.47 Nov. 2012 MCF 0 Revenue $19.85 Dec. 2012 MCF 0 Revenue $18.72 Jan. 2013 MCF 0 Revenue $21.82 Feb. 2013 MCF 0 Revenue $18.55
TOTAL MCF 0.0 Revenue $257.26 RECEIVED
MAR 2 9 2013
PA PUBLIC UTILITY COMMISSION SECRETARY'S BUREAU
Appendix B Attachment "B1 APPendix C
EJ 5 m
.< VJD m
V9
^2 fV> r._ Attachment "C" national Fuel
May 4,2012
Boy Scouts of America French Creek Council Mr. Duane Havard, Scout Executive 1815 Robinson Road West Erie, PA 16509 Re: Abandonment Notification
Dear Mr. Havard: National Fuel Gas Distribution Corporation (National) has found it necessary to begin the procedures to abandon the natural gas pfpetine supplying natural gas to the Boy Scouts, Custaloga Town. Your natural gas service is the only one on the end of a 1,439-foot long pipeline, which apart Is attached to the Carlton Bridge. The Pennsylvania Department of Transportation (DOT) has plans to remove this bridge crossing French Creek at Carlton in March of 2013. National Fuel will not be able to supply natural gas service after that date. The Boy Scouts, Custaloga Town situation is not a normal buyout case for two reasons. The circumstances proposed by the PA DOTforces Nationa l to terminate service. National's serviceto the camp Is a backup supply to the existing supply provided by the free gas from the lease and producing wells on the property.
National Is offering to provide a means of alternate fuel source to the camp should at some point fn time the current natural gas supply should cease. National will prepare and submit a petition to the Pennsylvania Public Utility Commission (PUC) outlining the situation. The petition would need to be filed and approved priorto th e DOTs demolition of the bridge. The PUC will notify you of the filing, your rights associated with the action, and the procedures associated with an appeal. A hearing before the Administrative Law Judge would be held in Pittsburgh, if contested. Cases normally take between two and four months to process through the system. In order to give enough time to process the petition and to give you as much time as possibleto determin e the conversion cost National Is projecting the termination of the natural gas service to occur sometime later this year. A specific date will be set once the approved order Is received from the PUC.
National offers to assist you in any way possible through this event For example: 1. Payment to convert to propane at a future date. 2. Upon request an energy audit of the property that can include a compatibility assessment of existing equipment utilizing another fuel (ex. natural gas furnace converted to propane), and estimate the amount of propane that would be used based upon current natural gas consumption. Also provided is the size and rating of new equipment 3. Upon request will evaluate contractor bidsto replace or convert equipment to ensure fair pricing. 4. Provide a worksheet so customer can compare pricing of propane companies. National apologizes for any Inconvenience this will cause the Boy Scouts. I am available to assist you through this procedure. Please call to discuss the next step In this process. I can bereached by calling 814-871-8640. Sincerely yours,
Troy J. Tlppen, Land Services Manager
NATIONAL PURL OAS DISTRIBUTION CORPORATION/P.O. BOX BOSWBRIE, PA 18911 CERTIFICATE OF SERVICE
I hereby certify that a true and correct copy of the foregoing Application has been served upon the following persons, in the manner indicated, in accordance with the requirements of 52 Pa. Code § 1.54 (relating to service by a participant).
VIA FIRST CLASS MAIL
Boy Scouts of America French Creek Council 7 Boy Scout Lane Carlton, PA 16311
Date: March 29, 2013 X'l/- Andrew S. Tubbs
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