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263642 Y CLERK � NCE . Council A PA�2TMEN: (iITY OF sAINT PAITL File N0._ � ��`�t� i' Ati'OR � , ' O/ f�liZ/`vL/`CG Ordinance N O. �j�� I Presented By Referred To Committee: Date Out of Committee By Date AN ORDINANCE AMENDING ORDINANCE N0. 15474, ENTITLED: "An administrative ordinance granting to Northern States Power Company, a corporation organized under the laws of the State of Minnesota, its successors and assigns, a franchise to use the streets and other public property located in the City of 5aint Paul for the purpose of conducting and supplying gas for all purposes for a term extending from January 1, 1974 to December 31, 1974, prescribing rates which the Company may charge for such service, and determining the amount which the Company shall pay to the City for the use and occupan,�y of its streets and other public property. ° t�EAS, Northern States �ovser Company, a corporation organized under aws of the State of�Minnesota, being a public service cor oration P conducting and supplying, gas within the City of Saint Paul under Ordi- '�° nan�e Mo. 15474, approved January 4, 1974, did under Section 7 thereof file its petition addressed to the Council of said City on March 8, 1974, for its review of the operations of said Northern States Power Company under said franchise and for said Council-' s p�escription by ordinance of reasonable rates which said Northern States Power Company may charge for such gas service within said City, whie�° shall be there- after furnished by said Company thereunder; and - ,� COUNCILMEN Requested by Department of: Yeas Nays �t Christensen - �xo�� Hozza I❑ Favor Levine ��S�.vester Against BY � e er Tedesco Mme.President $Q.p�r gUnt Form Approved by City Attorney Adopted by Council: Date � Certified Passed by Council Secretary By ,,,� to /.fAL�J By Approved by Mayor: Date Appro ed Mayor Submissi By By r: + � • . x_ f . ` Pa e Two �"�-+'� � g �� WHEREAS, after reviewing the facts and conclusions presented in said petition of said Northern States Power Company, the City Coun- cil has agreed with the Company to setting rates without requiring a hearing before a Hearing Examiner, and through such agreement, it has been determined that commencing on August 5, 1974, the Com- pany be entitled to an increase of 6.4/ above the rates now in effecfi, which rates shall be the established rates upon the ordi- nance becoming effective and lasting until they shall be changed by law; THE COUNCIL OF THE CITY OF SAINT PAUL DOES ORDAIN: Section l. That Ordinance No. 15474, approved January 4, 1974, shall be and the same is hereby amended in the following parti- culars, to-wit: 7.'hat Section 6 of Ordinance No. 15474 and Appendix "A" attached thereto are hereby deleted in full and' inserted in lieu`'.thereof is a new Section 6 to read as follows: - "Section 6. �'he Council hereby adopts and prescribes as rates as of August 8, 1974 the rates contained in Appendix "A" attached hereto and made a part hereof, and the same shall become effective on such date, and as such shall apply to all bills of the Company, based upon regular meter readings on and after such effective date. "'I�he Council further deems the rates es- tablished herein to be the reasonable and fair rates, and such rates shall continue to be applied to all bills computed from regular meter readings on and after such date until lawfully changed. " Section 2. The Company shall, within thirty (30) days after the passage, approval and publication of this ordinance, file with the City Clerk of said City its written acceptance thereof in form to be approved by the City Attorney, and therein shall agree to abide by, keep and perform all the terms, limitations, conditions, and provisions of this ordinance. WHI'�'E - CITY CLERK . CO1111C11 2636�2 PINK .� - FINAt+CE - GITY OF SAINT PALTL CANARV - DEFARTMENT BWE �iIYOR Fll@ NO. , � ` �l � � � Ordin�nce Ordinance N0. �.7�T� _ . Preserited By Referred To Committee: Date Out of Committee By Date Page Three Section 3. This ordinance shall take effect and be in force after the public hearing prescribed by law and thirty (30) days after its passage, approval, and publication, and upon its acceptance, as provided in Section 2 hereof. r COUIVCILMEN � Yeas Nays Requested by Department of: �t Christensen ��e�c� Hozza � In Favor Levine � �d�c Sylvester A ainst By � Roedler g Tedesco Mme.President �.�r Htlrit J U N 2 6 1974 Form Approved by City Attorney Adopted by Council: Date � Certifie s ��Council Secreta� By /�c �� By yj,_�� /� Appr e by Mayo . Date �g7 Approve May ubmission t gy By �(ll�L1SHED ,��. 6 1974 � CITY OF ST. PAUL GENERAL SERVICE Availability: Available to any residential, coimnercial, or industrial customer for general use of na�ural gas service. Rate: First 2 000 cubic feet per month @ $2.28 per Mcf Next 3 000 " " " " @ 1.22 " " Next 5 000 " " " " @ 1.15 " " Next 390 000 " " " " @ 1.10 " " Next 400 000 " " " " @ 1.08 " " Next 1 200 000 " " " " @ 1.05 " " Excess " " " " @ 1.03 " " Purchased Gas Adjustment: Bills subject to the adjustment provided for in Purchased Gas Adjusianent Rider for General Service. Monthly Minimum Charge: $2.15 Heating Value: Natural gas with a nominal heating vaiue of 1000 Btu per cubic foot. • � � � • CITY OF ST. PAUL INTERRUPTIBLE SERVICE Availability: Available on an interruptible basis to a conrtnercial or industrial customer whose maximum hourly requirements are in excess of 1000 cubic feet and who will agree (1) to curtail his use of gas whenever requested by Campany, (2) to provide and maintain suitable and adequate standby facilities, and (3) to have available at all times sufficient standby fuel to maintain continuous plant operation during periods of curtailment in the delivery of gas sold hereunder. A customer who prior to August 1, 1974, had contracted for service during the months of April through October only and for which the requirements of (2) and (3) were waived may continue to take interruptible service without standby facilities, subject to the same curtailment as other customers in his priority classification. During the months of November through the following March, the supply of gas for large volume loads will only be available to those customers who were receiving service for such loads on August 1, 1974. Large volume loads are defined to be those having a maximum day requirement of 200 Mcf or more. Character �of Service: Delivery of gas hereunder shall be subject to curtailment .. whenev�r requested by Company, such requests to be made as far in advance as possible.� Rate: Priority Rate Monthly Maximum Day Mcf Monthly Requirements Classi- Per Minimum Requirements for at least six months fication Mcf Charge (See Note 1) each year (See Note 1) AA $.94 $ 51.50 More than 1000 cu. ft. per hour but less than 50 Mcf per day A .77 155.00 50 Mc� or more but less than 200 Mcf BB .75 310.00 200 Mcf or more B .73 620.00 " " " " 5 000 to 9 999.9 C .69 1 445.00 " " " " 10 000 to 19 999.9 D .66 2 685.00 " " " " 20 000 to 49 999.9 E .62 6 090.00 " " " " 50 000 to 199 999.9 F .59 10 325.00 More than 12 000 Mcf 200 000 and more (Continued on following sheet) �, .,,-.;n,��'�` � �,.,_,:...__. CITY OF ST. PAUL INTERRUPTIBLE SERVICE (Contd.) Purchased Gas Adjustment: Bills subject to the adjustment provided for in Purchased Gas Adjustment Rider for Interruptible Service. Monthly Mini.mum Charge: If in any month customer does not use the minimum amount provided for herein because of Company's failure to deliver gas wholly or in part, the monthly minimum charge shall be reduced proportionately to the amount of curtailment during such month. Where custamer agrees to dfscontinue the use of service during the period from November l �to March 31, inclusive, each year, the monthly minimum charges hereunder will be waived during said period. Additional Charge for Use of Gas During Curtailment: If customer fails to curta�l his use of gas hereunder when requested to do so by Company, he shall pay in addition to the appropriate above rates, either an �nount equal to any payment Company is required to make to its pipeline supp.lier under the terms of its Town Border Contract as a result of such failure to curtail, or $5.43 per Mcf of gas used in excess of the volume of gas to which customer 'is requested to curtail, whichever amount is greater. Such payments-, however, shall not preclude Company from shutting off customer�!s supply of gas in the event of"his failure to curtail his use thereof when requested by Company to do so. Prompt Payment Provision: A charge of 5% on the first $25.00 monthly plus 1% on the remainder will be added to net monthly bill, computed at the rate schedule shown above, which charge shall constitute a discount from gross bill for payment within the discount period. Unit of Measurement: The unit of ineasurement shall be a cubic foot of gas at an absolute pressure of 30 inches of inercury, and a temperature of 60 degrees Fahrenheit. . Heating Value: From 975 to 1025 Btu (inclusive) per cubic foot. If in any month, the arithmetic average of hourly total heating values of the gas is less than 975 Btu per cubic foot, the volume of gas measured hereunder during such period shall be decreased for billing purposes in proportion to the decrease below 975 Btu per cubic foot. Priority Classification: Class AA shall have first priority. Curtailment shall begin with Classification F and progress to Classification AA. Term of Agreement: Service agreement shall be for a term of not less than one year. Upon expiration of term, Agreement continues in force until terniinated by at least thirty days' written notice by either party. Note 1: Applies to estimated requirements until actual requirements have been ascertained. Note 2: The above rate schedules for interruptible service are also subject to Company's contract with Northern Natural Gas Company from whom the gas contemplated to be sold hereunder will be purchased. CITY OF ST. PAUL LARGE GENERAL SERVICE Availability: Available to coimnercial and industrial customers with requirements of 50 Mcf or more per day. Rate: Demand Charge $3.65 per Mcf per month of Billing Demand - plus - Commodity Charge First 2 000 Mcf per month @ $.80 per Mcf Next 3 000 " " '� @ .73 " " Next 15 000 " " " @ .67 " �� Next 30 000 " " " @ .64 " " Excess " " ►' @ ,62 " " Purchased Gas Adjustment: Bills subject to the adjustment provided for in Purchased Gas Adjustment Rider for Large Genexal Service. Mon_thly Minimum Charge: The Demand Charge Prampt Payment Provision: A charge of 5% on the first $25.00 monthly plus 1% on the remainder will be added to net monthly bill, computed at the rate schedule shown above, which charge shall consitute a discount from gross bill for payment within the discount period. Detern►ination of Billing Demand: The demand in Mcf for billing purposes shall be the greatest daily consiunption in Mcf during the month for which bill is rendered, but in no event shall the demand to be billed be considered as less than the daily demand in Mcf Company agrees to deliver as specified in the contract between Company and customer, nor less than the demand previously billed hereunder. Heating Value: Natural gas with a nominal heating value of 1000 Btu per cubic foot. Note: Gas consumed under this rate schedule must be separately metered from customer's other firm gas requirements. . � , , • CITY OF ST PAUL PURCHASED GAS ADJUSTMENT RIDERS Purchased Gas Adjustment Rider for General Service In the event there is a change in the town border rate under which Company purchases gas sold under the above schedule, there shall be added to or deducted fram the monthly bill camputed according to the above schedule the product of the monthly consumption and the amount per Mcf to the nearest 0.1� by which the average annual town border purchase cost per Mcf to Campany, based on the number of days use of the contract demand necessary to serve the total General Service requirements, is more or less than the average annual town border purchase cost per Mcf camputed on the same basis and on town border rates consisting of a demand charge of $2.575 per Mcf per month and a cammodity charge of 43.10� per Mcf. In the event the tota� variation is a positive amount, such amount will be multiplied by 1.087. The average annual town border purchase cost per Mcf shall be computed with the use of the billing demand units and annual volumes of natural gas purchased from Northern Natural Gas Company for resale to General Service gas customers served by Campany in its Minnesota service area, adjusted to reflect normal temperatures, for Ehe calendar year preceding the change in the town border � rate. In the event a refund is received by the Campany fram Northern Natural Gas Company attributable to the cost of gas which has been sold by the Company under the foregoing purchased gas adjustment clause, such attributable refund, multiplied by the factor 1.087, together with interest thereon, received by the Company will be applied as a reduction in the purchased gas adjustment until the amount of such attributable refund and interest has been expended. Such unit reduction will be extended over a period not to exceed twelve months. Purchased Gas Adiustment Rider for Large General Service In the event there is a change in the town border rate under which Company purchases gas sold under the above schedule, there shall be added to or deducted fram the monthly bill computed according to the above schedule the simn of (1) th e product of the monthly billing demand and the amount per Mcf to the nearest O.1G by which the town border demand charge varies from $2.575 and, (2) the product of the monthly consumption in Mcf and the �nount per Mcf to the nearest 0,01� by which the town border commodity charge varies fram 43.10� per Mcf. In the event the total variation is a positive amount, such amount will be multiplied by 1.087, (Continued on following sheet) , � r �, � � . CITY OF ST PAUL PURCHASED GAS ADJUSTMENT RIDERS (Contd) Purchased Gas Adjustme�nt Rider for Interruptible Service In the event there is a change in the town border rate under which Campany purchases gas sold under the above schedule, there shall be added to or deducted fram the monthly bill camputed according to the above schedule the product of the monthly consumption in Mcf and the amount per Mcf to the nearest 0.01� by which the town border coaanodity charge varies from 43.10� per Mcf. In the event the total varistion is a positive amount, such amount will be multiplied by 1.087. In the event a refund is received by the Company fram Northern Natural Gas Campany attributable to the cost of gas which has been sold by the Company under the foregoing purchased gas adjustment clause, such attributable refund, multiplied by the factor 1.087, together with interest thereon, received by the Company will be applied as a reduction in the purchased gas adjustment until the amount of such attributable refund and interest has been expended. Such unit reduction will be extended over a period not to exceed twelve months. � aP'UBLtSHED �f�� 6 197� NOTICE OF PUBLIC HEARING ON APPLICATION OF NORTHERN STATES POWER COMPANY FOR AN INCREASE IN ITS GAS R.ATES IN THE C ITY OF SA INT PAUL PLEASE TAKE NOTICE that a public hearing will be held with respect to the application of Northern States Power Company for an increase in its gas rates, which increase has been agreed upon between the Council of the City of Saint Paul and North ern States Power Company to be 6.4/ over the rates in effect prior to the filing of the application, and which will be considered by the Council of the City of Saint Paul through passage of an ordinance now pending before it. Said hearing will be conducted in the Council Chambers on the 3rd floor, City Hall and Court House, at• O.' o' clock /� .M. on 'VvHd �� , 1974. Dated June 11 , 19�4 Aose Mix City �lerk (June 15,1974) � ' . � . CITY OF ST. PAUL GENERAL SERVICE Availability: Available to any residential, co�nercial, or industrial customer for general use of natural gas service. Rate: First 2 000 cubic feet per month @ $2.28 per Mcf Next 3 000 " " " " @ 1.22 " " Next 5 000 " " " " @ 1.15 " " Next 390 000 " " " " @ 1.10 " " Next 400 000 " " " " @ 1.08 " " Next 1 200 000 " " " " @ 1.05 " " Excess " " " " @ 1.03 " " Purchased Gas Adjustment: Bills subject to the adjustment provided for in Purchased Gas Adjustznent Rider for General Service. Monthly Minimum Charge: $2.15 Heating Value: Natural gas with a nominal heating value of 1000 Btu per cubic foot. . � . � CITY OF ST. PAUL INTERRUPTIBLE SERVICE Availability: Available on an interruptible basis to a co�nercial or industrial customer whose maximum hourly requirements are in excess of 1000 cubic feet and who will agree (1) to curtail his use of gas whenever requested by Company, (2) to provide and maintain suitable and adequate standby facilities, and (3) to have available at all times sufficient standby fuel to maintain continuous plant operation during periods of curtailment in the delivery of gas sold hereunder. A customer who prior to August 1, 1974, had contracted for service during the months of April through October only and for which the requirements of (2) and (3) were waived may continue to take interruptible service without standby facilities, subject to the same curtailment as other custamers in his priority classification. During the months of November through the following March, the supply of gas for large volume loads will only be available to those customers who were receiving service for such loads on August 1, 1974. Large volume loads are defined to be those having a maximum day requirement of 200 Mcf or more, Character of Service: Delivery of gas hereunder shall be subject to curtailment whenever requested by Company, such requests to be made as far in advance as possible. Rate: Priority Rate Monthly Maximum Day Mcf Monthly Requirements Classi- Per Minimum Requirements for at least six months fication Mcf Charge (See Note 1) each year (See Note 1) AA $.94 $ 51.50 More than 1000 cu, ft. per hour but less than 50 Mcf per day A .77 155.00 50 Mcf or more but less than 200 Mcf BB .75 310.00 200 Mcf or more B .73 620.00 " " " " 5 000 to 9 999.9 C .69 1 445.00 " " " " 10 000 to 19 999.9 D .66 2 685.00 " " " " 20 000 to 49 999.9 E .62 6 090.00 " " " " 50 000 to 199 999.9 F .59 10 325.00 More than 12 000 Mcf 200 000 and more (Continued on following sheet) � A/ • CITY OF ST. PAUL INTERRUPTIBLE SERVICE (Contd.) Purchased Gas Adjustment: Bills subject to the adjustment provided for in Purchased Gas Adjustment Rider for Interruptible Service. Monthly Minimum Charge: If in any month custamer does not use the minimum amount provided for herein because of Company's failure to deliver gas wholly or in part, the monthly minimum charge shall be reduced proportionately to the amount of curtailment during such month. Where custamer agrees to discontinue the use of service during the period from November 1 to March 31, inclusive, each year, the monthly minimum charges hereunder will be waived during said period. Additional Charge for Use of Gas During Curtailment: If customer fails to curtail his use of gas hereunder when requested to do so by Company, he shall pay in addition to the appropriate above rates, either an amount equal to any payment Company is required to make to its pipeline supplier under the terms of its Town Border Contract as a result of such failure to curtail, or $5.43 per Mcf of gas used in excess of the volume of gas to which customer is requested to curtail, whichever amount is greater. Such payments, however, shall not preclude Company from shutting off customer's supply of gas in the event of his failure to curtail his use thereof when requested by Campany to do so. Prompt Payment Provision: A charge of 5% on the first $25.00 monthly plus 1% on the remainder will be added to net monthly bill, computed at the rate schedule shown above, which charge shall constitute a discount from gross bill for payment within the discount period. Unit of Measurement: The unit of ineasurement shall be a cubic foot of gas at an absolute pressure of 30 inches of inercury, and a temperature of 60 degrees Fahrenheit. Heating Value: From 975 to 1025 Btu (inclusive) per cubic foot. If in any month, the arithmetic average of hourly total heating values of the gas is less than 975 Btu per cubic foot, the volume of gas measured hereunder during such period shall be decreased for billing purposes in proportion to the decrease below 975 Btu per cubic foot. Priority Classification: Class AA shall have first priority. Curtailment shall begin with Classification F and progress to Classification AA. Term of Agreement: Service agreement shall be for a term of not less than one year. Upon expiration of terni, Agreement continues in force until terminated by at least thirty days' written notice by either party. No�e 1: Applies to estimated requirements until actual require;ments have been ascertained. Note 2: The above rate schedules for interruptible service are also subject to Company's contract with Northern Natural Gas Company fram whom the gas contemplated to be sold hereunder will be purchased. • ,. , CITY OF ST. PAIJL LARGE GENERAL SERVICE Availability: Available to co�nercial a.nd industrial customers with requirements of 50 Mcf or more per day. Rate: Demand Gharge $3.65 per Mcf per month of Billing Demand - plus - Commodity Charge First 2 000 Mcf per month @ $.80 per Mcf Next 3 000 " " '� @ .73 " " Next 15 000 " " " @ .67 " �� Next 30 000 " " " �d .64 " " Excess " " " @ .62 " " Purchased Gas Adjustment: Bills subject to the adjustment provided for in Purchased Gas Adjustment Rider for Large General Service. Monthly Minimum Charge: The Demand Charge Prompt Payment Provision: A charge of 5% on the first $25.00 monthly plus 1% on the remainder will be added to net monthly bill, computed at the rate schedule shown above, which charge shall consitute a discount from gross bill for payment within the discount period. Determination of Billing Demand: The demand in Mcf for billing purposes shall be the greatest daily consumption in Mcf during the month for which bill is rendered, but in no event shall the demand to be billed be considered as less than the daily demand in Mcf Company agrees to deliver as specified in the contract between Company and customer, nor less than the demand previously billed hereunder. Heating Value: Natural gas with a nomiaal heating value of 1000 Btu per cubic foot. Note: Gas consumed under this rate schedule must be separately metered from customer's other firm gas requirements. r • ' . " �, '. � CITY OF ST PAUL PURCHASED GAS ADJUSTMENT RIDERS Purchased Gas Adjustment Rider for General Service In the event there is a change in the town border rate under which Company purchases gas sold under the above schedule, there shall be added to or deducted fratn the monthly bill computed according to the above schedule the product of the monthly consumption and the amount per Mcf to the nearest 0,1� by which the average annual town border purchase cost per Mcf to Campany, based on the number of days use of the contract demand necessary to serve the total General Service requirements, is more or less than the average annual town border purchase cost per Mcf computed on the same basis and on town border rates consisting of a demand charge of $2.575 per Mcf per month and a cammodity charge of 43.10� per Mcf. In the event the total variation is a positive amount, such amount will be multiplied by 1.087. The average annual town border purchase cost per Mcf shall be computed with the use of the billing demand units and annual volumes of natural gas purchased from Northern Natural Gas Company for resale to General Service gas custamers served by Campany in its Minnesota service area, adjusted to reflect noYmal temperatures, for the calendar year preceding the change in the town border rate. In the event a refund is received by the Company fram Northern Natural Gas Company attributable to the cost of gas which has been sold by the Company under the foregoing purchased gas adjustment clause, such attributable refund, multiplied by the factor 1.087, together with interest thereon, received by the Company will be applied as a reduction in the purchased gas adjustment until the amount of such attributable refund and interest has been expended. Such unit reduction will be extended over a period not to exceed twelve months. Purchased Gas Adiustment Rider for Large General Service In the event there is a change in the town border rate under which Campany purchases gas sold under the above schedule, there shall be added to or deducted from the monthly bill computed according to the above schedule the sum of (1) the product of the monthly billing demand and the amount per Mcf to the nearest 0.1� by which the town border demand charge varies fram $2.575 and, (2) the product of the monthly consumption in Mcf and the �nount per Mcf to the nearest O.Olfi by which the town border co�nodity charge varies fram 43.10� per Mcf. In the event the total variation is a positive amount, such amount will be multiplied by 1.087. (Continued on following sheet) r • � , w � � ( � CITY OF ST PAUL PURCHASED GAS ADJUSTMENT RIDERS (Contd) Purchased Gas Adjustme�t Rider for Interruptible Service In the event there is a change in the town border rate under which Company purchases gas sold under the above schedule, there shall be added to or deducted fram the monthly bill computed according to the above schedule the product of the monthly conswnption in Mcf and the �nount per Mcf to the nearest 0.01� by which the town border commodity charge varies from 43.10� per Mcf. In the event the total variation is a positive amount, such amount will be multiplied by 1.087. In the event a refund is received by the Campany fram Northern Natural Gas Company attributable to the cost of gas which has been sold by the Company under the foregoing purchased gas adjustment clause, such attributable refund, multiplied by the factor 1.087, together with interest thereon, received by the Company will be applied as a reduction in the purchased gas adjustment until the amount of such attributable refund and interest has been expended. Such unit reduction will be extended over a period not to exceed twelve months. � � � � : � � � �,��v NOTICE OF PUBLIC HEARING ON APPLICATION OF NORTHERN STATES POWER COMPANY FOR AN INCREASE IN ITS GAS RATES IN THE CITY OF SAINT PAUL PLEASE TAKE NOTICE that a public hearing will be held with respect to the application of Northern States Power Company for an increase in its gas rates, which increase has been agreed upon between the Council of the City of Saint Paul and Northern States Power Company to be 6.4% over the rates in effect prior to the filing of the application, and which will be considered by the Council of the City of Saint Paul through passage of an ordinance now pending before it. Said hearing will be conducted in the Council Chambers on the 3rd floor, City Hall and Court House, at O,' o' clock /� .M. on �VVH+� ��o , 1974. Dated June 11 , 19�4 �ose Mix � �itv �lerk �June 15,19?4�) x , , � �3b�12 � risr� N O R T H E R N S T A T E 5 P O W E R C O M P A N Y MINNEAPOLIS, MINNESOTA SS401 July 22, 1974 F3LED Ju� ZZ � �s �'�� 3i'� To the Honorable Mayor and CITY CLcft�'S 4FFfCE ST PAUL� MIPdtJ. Members of the City Council Saint Paul, Minnesota Gentlemen: The undersigned, Northern 5tates Power Company, does hereby accept and agree to abide by, keep and perform all of the terms, limitations, conditions and provisions of Council File No. 263642, being Ordinance No. 15643, adopted. by the Council on June 26, 1974, and approved by the Mayor on June 28, 1974. NORTHERN ST TES POWER COMPANY gy / Division ger �a �. �•9 Assistant Secretary A TO F . City At rney , � � . ��r: rxy'e�^r� 4 $ '�-� �+�.r'�w...i trs �""aL�.'�.y..` �� 'h�. .yF�,� .� .T�r I �y. S sG Y .$'Y. `3�:y.:q.> ., ``h4 ' ��,� yp,.• .I'� Pe .` '. .. ' ' � . 4�� S:"."F ViY 'A_y,�t`�I •. I�i�r . } . . � '� ';� I � � �. �-�'`� f �. � •y� �� .� �. �,•�^ �� J�� . ,j ".-.Ve :. �- r�� . xs '�S`@ftr�"!.�' � �"` t . � .. � . � v � �u �� w� . , � „� �x�� ;_�M �� . � �3 � �� r : �i �� r �'�� , r� . P r�,�;. . • �-.��; � � � . • �� . < �' :� � -�•}� � � y� 1i�� . . F� .. �P � �.:;. . . ' �� k �•'� ��S �• 6 . , •a _. ! w.�-�� . � � , t. � �m�'�° • d • • r � . xx,�� , �` March 12, 1974 �� +: � . ` � �.. ''� - } . . �'�,� �t . � � - - } _�' ,�'� � �r. R. Scott Davies, � : � _<. City AttorneY ` , � ��; �- _.�. h �Room 647, City Hall =��♦ ' Minnesott � St. Yaul, � ' '° � . . a �- � � � Dear Sir: � �� The City Councll today was in receip� of a latt��`� t �rth�rn �� States P�wPr Cor�anq transmitting e�1t>ita and t � ted informn- y � � '� tion in connection with their petition far •n �1! t�asa 'tn ga8 �w: tales Which vsa filed on January 21, 1974. =hi! . atinCil zequests iour opinion oq'che official date for the lilitS� t i request for � y ate incr�• ea th t� kl'tanoh �a Ordlnance�. gas r � in acc�ordance wl � � . �; i . «. . - You� v°ry'�truly� �', - . ,_ • � � . :_ � , t '�J � '� � � - Ci Y Cln rk � .. � � � �: � > � k ' ' ' f k / ,.. � 4 �Qi�i V y ' i7"� �� .; 7 * � (�y "'�� , . � ; " �� _. � � ��. �: . 4 . . . .� . � . . . I . � �� J�"t .. � h� � � . .. • .'� � .. � ... . ?�� a� , �Y, ,9 . • � �` � � �, •. / i . � � `R . � ` . - .. � ' ` ! � . �.�,?:; . . . � � 1 � . ' 9 . � ��' t 11: . .. . � . . r '�:s'£`�. �� -,�: -�...��..._:�,,;� �' �`, , , r� ... �''A ��w ° �y�� "''� . . . „q �d � � $� : ' . . '"�, ( , . , y' � . Y � a� JJ� . � ., . . ..� . . � . � x� � � • ... �. I F , . ,3' . #�� . � A �� 4�; �f . � •. � f . � • �l.� �� . � �, Y� • ` �+ , � . . ` I 9"_ , . . � , . a �.� . . e�' , - ' � . . '' . . � � �� ' . � H . . .. .. I�] . r . , ` . L � • � . ��:y � ..�.TM4 � � � � }}P ' �� § . �. � March 12�s'1974 ��) . ��: � � s �' . , � ' ' Y t; � �- = � �� , � � ,�:� , �, � , ��; �. � .� � , �Councilc�ou�an R�e�A13a Butler � � .�, ,�; . , ; _� }; Chairman � . � a �'� ` �� Public Utiltt i�A ttee '� '� � k �' � - � ; : �= � ;� Room Z13, Ci t y 11� .� ; 4' �' � � � St. Paul, Miana a �n° � ,� � . � . Dear Ma�a�az _,:`- � : � � � � � � ' �� . '3�.� . �`. �� The Co�ci� t+ ed to the Utilitie Cae�itt�►� d t� �. �o�s � ! � Steat�� a �� at Northerri S�ates�p�'-r ��tn,� tr�nsr�.ttting � + �: exhibite �nd �► tional information'in'��'��tti uxth .� � tioa tor ss� ! - �a+e in gaa rates. " � � :., their peti- ti 1 . � � ' ' � `� � . �: `� ,� Youri�vcry. tcu�yr ��'° ,A ` ,. � k' ;.� � J ` - 3'� � � � 4, . � - �ti��'. :., � �.. �, . ' a,- � . �;. . � Cic� Cl�r1� �: � . � � � , �� ,��,,. �, . 0•�! � �� . ��. . p . .�� :� �• , a;b ; f ��.� r .. . �s r�'� �"� . F� � � r�'� � . . . � - , .� y , �Z��, . . . � t , �� ` • � � . �3 �"i' • �+4 ��N: . � � j � � �' '�:,:. �Y �, e III c • (' $'�':�j- r' ;¢� A , �z - `� ��'�� s �, '��,�. '� , .. � w x �'' ;'� � ( �� ... � . A£ � � �x.a:. . .� �• . ��5: � 'f,. ��t� � ,.ti �` � � r � �. ��w, { � . . �� ._ f� � ~`K � . �� . . � ' ;� , .:+i � �� '9"'�V „�, ,a �y .,�x � �h ��; ' � �^�',� � . .. x �4 �.w . . � � � �.a ��. . M / , �r �� :� � � - � .. ��t . �'.�� `.:. :yg'` �v e . . ,'ti �'}�� . ... •. .. � � �'` '�'.' �*M.��'... - � k: + rl ' � �,. a. �'R ��.:.s`sw.+w . .: .. � .-. - �� . s." . ' .� +«.. . • � � � _ � � ; , , z' � : f � � , . � � y � . � ; � ' � :��: . , � ' � � � � , , � .} . . � � , - .. � � � ,y ♦� � .f � e • � ' I ' : �, , �ti . . 4a: 4�`. s � 3 ;� �'� 'T � � �, March 12, 1974 �`�� ^ f � �. . ' • `� ,: �'� ' � � . . � � . Mr. Tha s�t�� Stearns , t � t + R�zte f�x��rt • > �� ' Roo:i °t�6� � C Hall � • r ' . � ' , , . � St. P.�v2, _ esota � = . �. i ' �. � � � Deai �lYi • � . '' y � . � � �l �,� Glt�t � ci1 today received a lr.tt�r of ;Torthern States Power � �'gn7 � ttin� information in Connection �,rith the petition `� p! T��?xt� ��$tates Power Con any for an increase in • ' ;� �t� e�tto P gas rates and referred to you for neceasary action. �. - �: � � . : a. �r ;;� ,. . f- . r-�= Youra very truly� ' �'' Y�. � ` � �:. � , . - � �' *� City Clerk - � , K� , r. . . . � . . . . . ,k {.,a 1►��:M� ' : � �"; . `�'� � `� - . _ �.�£_ � , fi, �: z :�3 =: ,�„� �°� . . �-, � �,`,, ' , - 1 , �.' ; � �?_ .�� .y' , , �� . � � r . t � � � �� , , ' • ' t� � � '�+, �� s _, ' . . ,��. �� . r � . � . . '. �S � , ' ' , �, � ;� t�,� • tl¢� � �j' y, �r �, :; . . �� i. �.. �.. � r.� ,: / f. . � (. �kq.Y... � .. . I . � � -�� .. � �# �}�; .. . y . . . . , . � . . . . 's;.{, � i ' . a�-., . ,' � * � . ��t` � �� ''. . � �''.t � � par'' s..-. ��,�,..�, a . ,�.� � .� ., .�,#a..+�.:` � � � •'� � � � risp � � ' �� N O R T H E R N 5 T A T E S P O W E R C O M P A N Y SAINT PAUL, MINNESOTA 55102 FILED ��I► � !� �i ri1�7 P� �'1 March 8, 1974 C1TY C�.ERK'S OF�ICE ST PAUL, �ili�N. The Honorable Council of the City of Saint Paul City Hall and Courthouse Saint Paul, Minnesota. 55102 Dear Council Members; In my letter of January 18, 1974, I inforined you that Northern 5tates Power Company has found it necessary to petition for increases in gas rates. I hereby file with you, copies of the exhibits and direct testimony of T. A. Connelly, F. P. Vixo, Charles J. Sherlock and J. M. Agrey. These materials describe our gas business, the financial statements for Saint Paul operations and the proposed rates, We rely on and incorporate by reference herein, the exhibits and testimony of Dr. Henry Herz and J. O. Cox concerning the Coxnpany's financial requirements and rate of return testimony in the currently pending electric rate case. We will be filing materials prepared by Mr. John Gillett which will cover trended original cost of gas utility plant in a manner similar to that of his electric case testimony. NSP reserves the right to update all filed materials during the review procedures. Very truly yours, L!iC rfi�s� Q Thomas A. Connelly Division Manager encls ., .r � Exhibit (,TNIA-1) Schedule 1 Page 3 of 6 Northern States Power Company (Minnesota) .�.... Gas Utility - City of St. Paul RATE SCHEDULE FOR INTERRUPTIBLE SERVICE (Continued) Purchased Gas Adiustment Bills subject to the adjustment provided for in Purchased Gas Adjustment Rider for Interruptible Service. Monthly Minimum Charge If in any month customer does not use the minimum amount provided for herein because of Company's failure to deliver gas wholly or in part, the monthly minimum charge shall be reduced proportion- ately to the amount of curtailment during such month. Where customer agrees to discontinue the use of service during the period from November 1 to March 31, inclusive, each year, the monthly minimum charges hereunder will be waived during said period. Additional Charge for Use of Gas During. Curtailment If customer fails to curtail his use of gas hereunder when requested to do so by Company, he shall pay in addition to the appropriate above rates, either an amount equal to any payment . Company is required to make to its pipeline supplier under the terms of its Town Border Contract as a result of such failure to curtail, or $5.43 per Mcf of gas used in excess of the volume of gas to which customer is requested to curtail, whichever amount is greater. Such payments, however, shall not preclude Company from shutting off customer's supply of gas in the event of his failure to curtail his use thereof when requested by Company to do so. Prompt Payment Provision A charge of 5% on the first $25.00 monthly plus 1% on the remainder will be added to net monthly bill, computed at the rate schedule shown above, which charge shall constitute a discount from gross bill for payment within the discount period. Unit of Measurement The unit of ineasurement shall be a cubic foot of gas at an absolute pressure of 30 inches of inercury, and a temperature of 60 degrees Fahrenheit. Heatin� Value From 975 Btu to 1025 Btu (inclusive) per cubic foot. If in any month, the arithmetic average of hourly total heating values of the gas is less than 975 Btu per cubic foot, the volume of gas measured hereunder during such period shall be decreased for billing purposes in proportion to the decrease below 975 Btu per cubic foot. Priority Classification Class AA shall have first priority. Curtailment shall ^begin with Classification F and progress to Classification AA. Term of A�reement Service agreement shall be for a term of not less than one year. Upon expiration of term, Agreement continues in force until terminated by at least thirty days' written notice by either party, Note l: Applies to estimated requirements until actual requirements have been ascertained, Note 2: The above rate schedules for interruptible service are also subject to Company's contract with Northern Natural Gas Company from whom the gas contemplated to be sold hereunder will be purchased. .- � � � Exhibit (JMA-1) Schedule 1 Page 2 of 6 Northern States Power Company (Minnesota) � Gas Utility - City of St. Paul RATE SCHEDULE FOR INTERRUPTIBLE SERVICE Availability Available on an interruptible basis to a commercial or industrial customer whose maximum hourly requirements are in excess of 1000 cubic feet ' and who will agree (1) to curtail his use of gas whenever requested by Company, (2) to provide and maintain suitable and adequate standby facilities, and (3) to have available at all times sufficient standby fuel to maintain continuous plant operation during periods of curtailment in the delivery of gas sold hereunder. A customer who prior to November 1, 1973, had contracted for service during the months of April through October only and f�r which the requirements of (2) and (3) were waived may continue to take interruptible service without standby facilities, subject to the same curtailment as other customers in his priority classification. During the months of November through the following March, the supply of gas for large volume loads will only be available to those customers who were receiving service for such loads on November 1, 1973. Large volume loads are defined to be those having a maximum day requirement of 200 Mcf or more. Character of Service Delivery of gas hereunder shall be subject to curtailment whenever requested by Company, such requests to be made as far in advance as possible. Rate Priority Rate Monthly Maximum Day Mcf Monthly Requirements Classi- Per Minimum Requirements for at least six months fication Mcf Charge_ ^_1See Note 1) each year (See Note 1) AA $1.03 $ 51.50 More than 1000 cu. ft. per hour but less than 50 Mcf per day A .87 155.00 50 Mcf or more but less than 200 Mcf BB .85 310.00 200 Mcf or more B .83 620.00 " " " " 5 000 to 9 999.9 C .80 1 445.00 " " " " 10 000 to 19 999.9 D .76 2 685.00 " " " " 20 000 to 49 999.9 E .73 6 090.00 " " " " 50 000 to 199 999.9 F .70 10 325.00 More than 12 000 Mcf 200 000 and more (Continued on following sheet) Northern States Power Company (Minnesota) Gas Utility - City of Saint Paul Statement of T. A. Connelly Saint Paul Division Manager Q. State your name and occupation. A. My name is Thomas A. Connelly and I am Saint Paul Division Manager for Northern States Power Company. Q. Describe your educational background. A. I have a Bachelor of Electrical Engineering Degree from the University of Minnesota and an LLB Degree from William Mitchell College of Law. I am a registered professional engineer in Minnesota and certified to practice law in Minnesota. Q. What is the subject matter and scope of your prepared testimony? A. I will describe the gas operations of NSP and relate it to our gas operations ' in the City of Saint Paul. I will also discuss the need for peaking or supplementary facilities, the supply situation and conservation of energy programs which will indicate the need for increased rates. Q. Describe NSP's operations. A. Northern States Power Company is an investor owned utility which provides electric, gas, steam, and telephone service in parts of the States of Minnesota, Wisconsin, North and South Dakota. The Company provides gas service in Minnesota, Wisconsin, and North Dakota. NSP's gross revenues from gas utility service in 1973 were about $75,000,000. This utility - serves approximately 231,000 gas customers of which 117,000 are located in the Saint Paul Division and about 87,000 in the City of Saint Paul. 2 Q. Where does NSP obtain the gas sold in its system? A. The Company purchases natural gas for this system, at wholesale, from two pipelines whose operations are pursuant to the jurisdiction of the Federal Power Commission under the Natural Gas Act. Natural gas for the Company's North Dakota operations and a portion of the Wisconsin operations near Eau Claire, Wisconsin, are purchased from Midwestern Gas Transmission Company. That company takes delivery of gas which is gathered and transported from Alberta, Canada, at the Canadian border and redelivers it to its customers along its pipeline system. The major portion of the natural gas purchased by Northern States Power Company, including that for St. Paul, is supplied by Northern Natural Gas Company, which has its major source of supply in the Southwestern United States. I have attached to my testimony a fold-out sheet that shows the relationship of these two pipelines. Q. How does NSP serve St. Paul gas customers? A. Gas service is provided by Northern States Power Company to the City of Saint Paul and surrounding suburban co�nunities by an interconnected high- pressure gas system. The gas distribution system for the City of Saint Paul is a network of underground supply mains and services that include pressure classifications ranging from Low Pressure up to 2 psi; Medium Pressure frvm 2 psi to 25 psi; Sixty Pound from 25 psi to 60 psi; One Hundred Pound from 60 psi to 100 psi; and Special for pressure in excess of 100 psi. In the Saint Paul Division, we have approximately 1230 miles of low pressure mains and approximately 70 miles of high pressure mains. Q. Does NSP have any other facilities to supplement the supply provided by Northern Natural Gas Company? 3 A. Yes, we have as a part of our natural gas distribution system, peak shaving facilities which Mr. Sherlock will describe in more detail. These include both the propane and liquefied natural gas (LNG) facilities at the Wescott Plant in Inver Grove Heights, and propane air facilities at the Sibley Plant located fn Mendota Heights. Q. Please describe NSP's current experience concerning trends in costs. A. I have recently testified in the Company's electric rate hearing concerning the substantial increases in costs that the company has experienced, both in the construction of its facilities and in the operation of its system over the past several years. The gas utility operations have been subjected essentially to the same inflationary pressures that we have experienced in our electric operations. In addition, the regulations implementing the Pipeline Safety Act of 1968 require heavy expenditures for corrosion control for both existing and new mains. For example, in 1974 we will spend about $173,000 for corrosion control in St Paul. Q. What is the supply situation and how does it affect NSP? A. We have been and will continue to be faced with the significant problem of diminishing supply in the gas utility industry. This means that in order to continue to provide adequate gas service to our existing customers, and also to provide service to those prospective firm gas customers who utilize this premium service for residential and small volume commercial and industrial heating and associated uses, we must provide additional peak shaving capability. The Campany has under construction a 2,000,000 Mcf liquid natural gas (LNG) storage tank, together with liquefaction and vaporization facilities at the Wescott Plant. This facility is under construction and will go into service in October 1975 and is designed to 4 give us the ability to meet peak day demands for several years. Q. What other measures have been taken by NSP to respond to the supply shortage? A. Since 1970 we have had restrictions on the size of firm gas customers that we would connect to our system. Our policy is to continue to provide firm gas utility service to the residential and small volume coamiercial customers. We are concerned about the diminishing amount of gas which is available for use by our Large Volume Interruptible customers. Our interruptible customers have agreed by contract to install and utilize stand-by systems, operated with either oil, coal or propane gas, when the Company does not have volumes available from the pipeline to serve our connected load in the winter. For several reasons, including the inability to obtain annual increases in contract demand from the pipeline supplier; direct curtailment by the pipeline company and the normal small volume load growth on our system there will be greater curtailment of these interruptible customers each season. We have also instituted a policy where we no longer will connect interruptible custamers whose daily capacity is over 200 Mcf per day. In addition, we have increased the penalty for unauthorized use of gas during curtailment from $2.00 to $5.00 per Mcf throughout our system and have filed this change with the City of Saint Paul. The reason for the change is that with the increased cost of alternative fuels, there are instances where it would be more economical for a customer to use natural gas and pay the penalty than to switch to his alternate source of fuel. Q. What gas conservation methods have been adopted? 5 A. In response to the Goverinnent's energy conservation programs and recognizing the problems of gas supply shortage, we have taken a number of steps to conserve gas. The Company has reduced heating levels in its . facilities and requested our employees and customers to do the same. We have closed the availability of gas yardlight service and in addition offer free turn-off service to our customers who own their own gas lights. We anticipate a company-wide savings of about 15 billion cubic feet of gas during 1974, directly related to the reduction in use of natural gas for electric generation. The Company has conducted conservation of energy meetings with our conunercial and industrial customers and has surveyed large user installations to point out conservation measures. We recently instituted a home insulation program that provides for financing payments on the utility bill. Q. What effect does conaervation have on costs? A. These conservation efforts reduce the sales of gas and require the utility to spread its capital costs and operating expenses over fewer Mcf sales. This results in higher costs per Mcf to the Company and ultimately requires higher prices to the consumer. Q. What effect does this have on rate levels? A. Although we are making every effort to economize our operations, to use the most efficient tools and equipment and the advances in technology that are available to us, we are unable to continue to provide quality gas service to our cuatomers without increased rates. Subsequent witness's testimony and exhibit will show, natural gas is still priced substantially under the competitive fuels, oil, and propane gas, even though its desirability to the customer is much higher. , _. . . - �..y�`R .Y=..: .,n. _. �zs .. .. .", . . . � „ ....-. ,.. t _ . .. . � . . +.r;K `,� �' �.. . . ' ., : .`.� �q�t�* . ��.. �.. � .. . � .. J f��.,�� . ... �� . . 1..�. �. l z.4 �; s. � ,. � • . . . .. > . ' �: . _. . . . :. _. . ,: . •3 ��n ..,. . . .` . . . . � . . � . . ` .. � ay �� .��;u� ��:��-, _ � . . :: ... . Y i � ' '.. � � . ` ' � �-�' . - . . , � . �� ' ,' . ,� } . � �� , �:��i� ��,'�� '�§�� t f ��;'ti � �i�'� �ltti� � � � �' � - :� `? � , , � , , - ? 5` i' :�rttier�t:��I � F�ii�er Cci�plmy .��i�xreso�e}; - Ga��•f�t� ti� - .;�ity -�� St. F,au.�:` .�� . � < , -'�. ',.� _. ,. .. , .. . �� - �:� . � t � �s' .., � � � - � � � .. � .r` � t� . � , �� : ;:>: � ° - ��- . i�S'TI fi ��tt)T1 �;��',��Pi�E I�i +�;t•i2fiT�S � <� � �_ �� . , . . �,t i � , ' � �� {��!_�I{+�_y !/�� ..y' ... � .. . ... - ��T!.i'MA� ��V , - �. . - . ..-w � ,..� . . �. � ... � . .. . . � t , ' . - - . _. ` ., i1' . ;". . . ... � .� .. ' . . . .. - , ,:'. ' .: .. .. .. � .�. . . . . -, . '. _ . .({ :. .�� - .� . .. � . �- - .�. �- (� .. � �" .,.,, �� , . . . . ♦ �: '. +... . . . � -..� . .� .. � .',. . - . . .... � ... . . . � '. ; . ._.. .:.' ,, �- -.- ...� . . ...' .. �. �. . � � .� : �. . .� . : ' ". . :. _. . . . ... � .. � . . . , . _ . . .. � :.. �... . . ; . ... . '� . t . � . . � . _ .. . .� . �� . r •... . � .�.: ' . ns. �:� �`�� .. .". . ... . . .}' ,::� . . . .. .. :'.. y .. . _ �.t `e . ' ' . � �.'4 .. . _ . . . � � . - � ` . 4i � . ' . �. . � .�..�� , , ,. �, i . . _ . . . .. .�.� .. .;,. �. . . .. . . . . . . " . .�':� , . � � � � � ,4� . � . . � � � . . . . _ •: • : . . . , .. . . .. . . � . . . . � . . . ,. v : - � . . . . � . . � r � . t. .. . . . ..., r ' .. "� . � � . . " . . . . � ��*. , . . � � `�� . . �� . .. � � '��:s��_ � �i3�iit'��_ (Pp�t=i�, ��t , ; - � ; �.� .... . : ' .�'. .� . .-. :�� .� . .., . . - :N ;� .. .�. . _ � . ::' �- � � ' � • ' -,' � ... -� ; � _ < : ��'> ,�9�4 , ,, - :; , �. ;; >. :. � { ;. �' -;< � ,. � _ . , .. '- ,, , ; ' , , � �� -, _ _ ; � . � � � . � . . . ..Y'��' ' ' . . .. . .. - � . . . .. . . . . .. .. � .� y� . . , . . � . � � ..�� . . . . . � � �'-S .. . . . ... , � . . . � .l � .... � ' � . . � � �.. j ., . ' � ' �, � � i . ..:. .. . . __� ' .i;. . .. � . ..� .:. . . . - . � � . � ��. . .. . . d� �' ' .. ... . . _ . � � k• � , Northern States Power Company (Minnesota) Gas Utility - City of St. Paul STATII�fENT OF F. P. VIXO Q. State your name and position of employment. A. My name is Frank P. Vixo. I am presently Manager of the Rate Administration Department of Northern States Power Campany. My training, business experience, background, and professional affiliations are detailed more fully on the last page of this statement. Q. What is the subject matter and scope of your prepared testimony? A. My testimony will cover the accounting aspects of the case. The books and records of Northern States Power Campany are kept in accordance with the Uniform Systezn of Accounts prescribed by the _ National Association of Regulatory Utility Commissioners. Mr. Connelly has outlined the nature of Northern States Power Company�s operations in furnishing gas utility service in the City of St. Paul. My data will account for the results of operations within the City of St. Paul as gas utility service is furnished by distributing natural gas supplied by Northern Natural Gas Company (Northern) and peak shaving gas made available through the operation of facilities owned and operated for this purpose. Q. How is your statement organized? A. My remarks will concern the data in NSP Exhibit (FPV-1). - Schedule 1 sLasmaarizes the results of operation of the gas utility in 2 the City of St. Paul as it is expected to occur for 1974 and actual for 1973. The average net operating investment at fair value dedicated to providing gas utility service in the City of St. Paul for 1974 is - shown on Schedule 2. Schedule 3 shows the net operating investment at fair value as of December 31, 1973. Schedule 4 shows the Incame Statement with proposed rates for the Test Year 1974. Q. What is a Test Year? A. As an aid for pricing utility service for tomorrow, regulation has made use of the concept of the test year. The test year is an attempt to carve out of the life of a utility a representative year of operation which is used as the basis to measure the revenues to which a utility is entitled. Q. What types of test years are used in regulat�on? A. Until recently, regulation has utilized the data for the most recently available twelve-month period as the basis for the test year. These actual data were then adjusted to remove therefrom any abnormal situation which would make it unrepresentative of an annual period of operation. Since this twelve-month period of time was to be used as a test period to measure the revenues which could be expected for the future, it was further considered appropriate to adjust this past year to take into account those conditions or situations which were anticipated to take place or exist during the year immediately ahead. After these adjustments were made for the past and for the future, the year's operations were considered as a reasonable basis for measuring rates for the future and the level of cost to which the Company was entitled was based upon this period of time. Correctly followed it would result in an appropriate matching of revenues and expenses so essential to 3 cost allocation between accounting periods and, at the same time, provide a standard for pricing. This procedure was founded upon the basic assutnption that the growth in revenues which would take place in the year ahead would fully cover all costs which would be incurred during that year to provide these additional services. Q. Does the use of an historical test year provide a reasonable basis for making rates? A. As long as the growth in revenues and increase in costs were actually progressing together on a relatively even pace, the use of the historical test year continued to provide a reasonable basis for making rates for the future. In fact, this parallel of revenues and costs reflecting growth unincumbered by the impact of significant changes in cost patterns appeared to work satisfactorily until rapid increases in inflation took over beginning about 1967. From that time on, the influence of the rising cost of labor, materials, interest costs, etc. progressed so rapidly that they began to offset the economies of larger scale operation and greater saturation, to the end that the application for rate increases became a more frequent occurrence. Even so, some of the economies of large-scale operation and greater saturation were able to counter these in-roads upon earnings by offsetting the delays met in securing increased rates. As the cost spiral increased, the delay between the time of an application for a rate increase and a final adjudication of the application became more and more significant because the costs were eroding the earnings of the Company even as it was awaiting the results of its application for a rate increase. It is clear 4 that under such circumstances, a test year based upon past operations and founded upon the assiunption that growth in revenues would compensate for increasing business was no longer realistic or suitable when establishing rates for the future. Now that the utility business has arrived at this position where costs are crowding revenues, it is abundantly clear that the utility business is entitled to and should make rates based upan costs which it will experience under the conditions when new rates are to go into effect. The inadequacy of the past test year to meet the rate�aking needs of tamorrow has been recently recognized by regulation. For example, the year end rate base was introduced as a tool to recognize the fact that earnings allowed in a rate case are seldom actually realized. Many co�a¢nissions now follow this practice. Others make a special additional allowance for "attrition" to offset this erosion of allowed earnings. Still others use the "make whole" procedure in which a recently decided case is used as the overall limits which if not exceeded in a subsequent case provide the criteria for a rapid resolution of the case following a speedy hearing and order. All of these have been real and meaningful attempts at overcaming the shortcoming of the test year based on the past, that of actually providing a full and complete measure of cost for next year. Moreover, the recent energy situation, with li.mited natural gas available, and the resulting increase in curtailment and use control by regulation, makes last year even less representative of next year, Q. In your opinion, what is the preferable test year? A. In such a setting, it would seem more appropriate than ever that utilities be regulated based upon budgets or forecasts. The utilities , 5 plan, live, and control costs by the use of budgets and forecasts and certainly such a useful and meaningful procedure should be utilized by regulation to set rates for the future. NSP has followed this practice in ratemaking in North Dakota. The Federal Power Cammission has recently adopted rules prescribing a future or projected year for ratemaking, A ntunber of other regulatory cammissions have also adopted this projected year. For example, recently the California Public Service Commission used 1975 as the test year for setting rates in an application filed August 30, 1973. In keeping with this trend to reflect the true future costs of the period for which rates are being made, I have utilized in this presentation the projected year 1974 as the test year for making rates for 1974. Q. Please explain your Iacome Statement, Schedule 1. A. Schedule 1 of Exhibit (FPV-1) is an Income Statement showing the revenues which were received in 1973 and which will be received in 1974 and the expenses which were incurred in 1973 and which will be incurred in 1974 in connection with supplying gas utility service in the City of St, Paul. The data for 1974 reflects the revenues and operating expenses for that test year, These data have been developed by personnel of the Gas Operations Departrnent. The person making the estimate is responsible in the regular course of his work for the area for which he made estimates. These data are those which the Campany utilizes in making its plans and decisions. The operating revenues are shown for the usual account classes required to be recorded by the Uniform System of Accounts. It will be seen that the total gas revenue anticipated for the City of St. Paul for 1974 is $28,951,000 and that they were $27,550,000 for 1973. 6 The operating expenses total $27,607,000 for 1974 and $26,222,000 for 1973. They have been reported in the usual functional categories specified in the Uniform System of Accounts. When these expenses are deducted from the total operating revenues, an operating income of $1,411,000 is shown for 1974 and $1,399,000 for 1973. To the operating income is added the Allowance for Funds Used During Construction to provide the total amount available for return. For 1974 this amounts to $1,555,000 and for 1973 $1,407,000. On the line immediately below the total available for return is shown the net operating investment at average fair value for 1974 and for the year end for 1973 to be $41,266,000 and $38,966,000 respectively. The composition of this net operating investment is shown on Schedules 2 _ and 3 of this Exhibit. The rate of return measured by a fair value net operating investment is shown on the bottom line to be 3.77% for 1974 and 3.61% for 1973. Q. What is the Allowance for Funds Used During Construction which appears in Schedule 1? A. I have added Allowance for Funds Used During Construction (AFDC) to the operating income. AFDC represents an amount added to the cost of plant while it is in the process of construction. Its purpose is to make provision for the recovery of cost of capital during the period of construction with the understanding that this amount would then be recovered through depreciation charges during the future as the plant is used to provide utility service. 7 Q. Describe the budgeting and projecting practice of NSP. A. In order to plan its operations and to utilize the planning sectors as a basis for cost control, the budgeting practices and procedures of NSP � were designed so that management of distinct areas of responsibility could be utilized for the purpose of minimizing costs and maximizing the efficiency of operation. To accomplish this, the cost classifications were categorized in terms of controllable types of expenses, such as labor, materials and supplies, services received, etc. Budgeting and forecasting is made on the basis of these classifications of expenses and costs so that the knowledgeable and responsible employees could make the estimates of future costs and be accountable therefor, Q. How did you use budget and forecast data in preparing your testimony? A. In order to utilize the budgeting processes for the purpose of ratemaking in terms of functional NARUC accounting, it is first necessary to convert the budget cost classifications to NARUC account classifications. This distribution of costs was made on the basis of the past experience of NSP. In other words, NSP has made its budgets on the basis of its budgetary accounting classifications over the past and the actual bookkeeping has recorded the charges historically in terms of the functional account classes of the Uniform System of Accounts. The past relationships of these classifications indicate that there has been a fairly stable relationship between the ratio of these conversions, and, therefore, these ratios have been used to convert the budget to the NARUC accounts for the year 1974. This practice utilizes the experience of the Gas Utility and divisional managers in arriving at the budgeted amounts which are, in turn, expressed in terms of Uniform accounts as the expenses are actually incurred. 8 In some instances, some items of budgetary classifications were identical with the NARUC account classifications, such as in the case of fuel, purchased energy, etc, and require no such reclassification. Once the responsibility account classifications reflected in the budgetary _ accounting were expressed in terms of the gas utility Uniform accounts, the amounts were allocated to the City of St. Paul. To the extent that expenses were incurred solely for the City of St. Paul, for example, the gross earnings fee, they were assigned directly thereto. Where allocations were required, factors reflecting causative relationships to each expense were used. Q. Please explain the Net Operating Investment shown on Schedules 2 and 3. A. Schedules 2 and 3 of this Exhibit show the fair value net operating . investment for 1974 and 1973 for the City of St. Paul. The data for 1974 is the average for the year. The data for 1973 is year end December 31, 1973. The first section of each of these schedules shows the gas utility plant in terms of the usual functional account classifications. These amounts include the construction work in progress in its account classifications. Following the gas utility plant is shown the reserve for depreciation. This is identified in the sau�e account classifications as that for gas utility plant. After deducting the total reserve for depreciation from the gas utility plant, the net plant in service is $41,667,000 for 1974 and $39,608,000 for 1973. From this net plant in service is deducted contributions in aid of construction and accumulated deferred income taxes, and there is added cash working capital, materials and supplies, . 9 gas in storage, prepayments and deferred debits, leaving a fair value net operating investment of $41,266,000 for 1974 and $38,966,000 for 1973. In these schedules, amounts were assigned directly to the City of St. Paul wherever possible to determine. In other instances, allocations were made reflecting the joint use of peak shaving and other facilities used to meet the requirements of the customers in the City. Q. How did you calculate the Fair Value rate base presented in your exhibit? A. The fair value rate base which I have used is a combination of original cost and trended original cost. Original cost has been weighted at 67% and trended original cost at 33% in arriving at the fair value. The 33% weight given trended original cost is approximately equal to the comawn equity portion of NSP's total capitalization. . The trended original cost was determined by the Depreciation and Economics Depart�nt of NSP. As Mr. John Gillett has testified, the practices followed and the procFdures observed in the development of this trended original cost used in developing a fair value are consistent with the intended use of the Handy-Whitman Indices for these purposes. Q. Why did you use a fair value rate base? A. A fair value net operating investment is the evidence of value that should be considered in determining a fair rate of return. The Minnesota Public Service Co�ission utilizes current or fair value in the regulation of telephone utility operations in the State of Minnesota. Fair value is used in other regulatory jurisdictions as the base for determining cost of service, and it should be utilized for that purpose here. 10 Q. I notice from Schedule 1 that the rate of return of the test year 1974 is 3.77%. A. Yes, it is. Q. Did you determine the revenue requirement for the test year 1974 recognizing Dr. Herz' rate of return of 8.75% on a Fair Value rate base? A. Yes, I did. Q. And haw much was that revenue require�nt? A. After recognizing that about $67,000 would come from Other Operating Revenues and $144,000 would come from AFDC, I determined that the total revenue requirement to be obtained from sales of gas would be about $33,836,000. I supplied this amount to Mr. Agrey who then designed rates based upon the budgeted Mcf sales for 1974 and supplied me the dollars shown on his Schedule 4 of Exhibit (JMA-1) which I have shown on my Schedule 4. I then proceeded to determine the changes in the income taxes and the gross earnings fee related to these revenues from proposed rates and show that they would produce a rate of return of 8.75% as shown on the bottom of Schedule 4 of my exhibit. BUSINESS EXPERIENCE AND BACKGROUND F. P. Vixo 414 Nicollet Mall Minneapolis, Minnesota 55401 I hold a B. A. Degree with a major in commerce from State College, Minot, North Dakota, and a Master's Degree in comsnerce with a ma.jor in accounting from the University of Denver. I am a Certified Public Accountant and a member of the American Institute of Certified Public Accountants. For about three and one-half years I was employed as a Special Agent for the Federal Bureau of Investigation. This work consisted chiefly of investigative accounting, including testifying on accounting matters in . Federal courts. For a number of years, I taught accounting, leaving a position as head of the Accounting Department of Western Michigan College to accept employment as chief accountant for the North Dakota Public Service Com�ission in July 1949. In this position I represented the Public Service Commission in all accounting matters, conducting examinations of utility exhibits and developing exhibits and testimony for presentation as a staff member of the Coimmission. On July 1, 1972, I assumed my present position as Manager of the Rate Administration Department. I have made and supervised the preparation of special studies relative to rate matters and conducted basic research and economic studies for the purpose of assisting management in making decisions. - I participate in hearings involving rates and other matters before regulatory bodies and assist with the preparation of exhibits and testimony presented. , Exhibit (FPV-1) Schedule 1 Northern States Power Company (Minnesota) Gas Utility - City of St. Paul INCOME STATEMENT WITH PRESENT RATES 1974 Test Year and 1973 Actual Unadjusted (In Thousands) 1974 1973 OPERATING REVENUES General Service: Residential $ 15 397 $ 14 902 Co�nercial & Industrial 6 379 5 961 Total General Service 21 776 20 863 Interruptible Service 7 175 6 687 Total Gas Revenues 28 951 27 550 Other Operating Revenues 67 71 Total Operating Revenues 29 018 27 621 OPERATING EXPENSES Production: . Gas Purchased for Resale 16 955 16 122 Other 305 438 Distribution 2 219 1 864 Customer Accounts 788 724 Sales 86 55 Administrative & General 1 426 1 274 Taxes: Real Estate & Personal Property 1 655 1 561 Gross Earnings 2 316 2 204 Payroll 135 115 Federal and State Income 223 335 Deferred Income Taxes 281 315 Provision for Depreciation and Amortization 1 218 1 215 Total Operating Expenses 27 607 26 222 OPERATING INCOME 1 411 1 399 ADD: ALL(�JANCE FOR FUNDS USED DLTRING CONSTRUGTION 144 8 " TOTAL AVAILABLE FOR RETURN 1 555 1 407 NET OPERATING INVESTMENT - FAIR VALUE 41 266 38 966 RATE OF RETURN 3.77% 3.6170 Exhibit (FPV-1) Schedule 2 Northern States Power Company (Minnesota) Gas Utility - City of St. Paul FAIR VALUE NET OPERATING INVESTMENT 1974 (In Thousands) Trended Original Original Fair Cost Cost Value GAS UTILITY PLANT Production $ 4 549 $ 8 709 $ 5 922 Distribution 31 050 69 244 43 654 General 1 321 1 413 1 351 Cou�on 2 499 5 450 3 473 Construction Work in Progress 2 604 2 604 2 604 Total 42 023 87 420 57 004 RESERVE FOR DEPRECIATION . Production 853 1 633 1 110 Distribution 9 193 20 501 12 924 General 420 449 430 - Co�on 628 1 370 873 Total 11 094 23 953 15 337 NET GAS UTILITY PLANT 30 929 63 467 41 667 Deduct; Contribution in Aid of Construction 520 Accumulated Deferred Income Taxes 1 702 Add: Cash Working Capital 608 Material and Supplies 360 Gas in Storage 793 Prepayments 33 Deferred Debits 27 NET OPERATING INVESTMENT - FAIR VALUE 41 266 , Exhibit (FPV-1) Schedule 3 Northern States Power Company (Minnesota) Gas Utility - City of St. Paul � FAIR VALUE NET OPERATING INVESTMENT December 31, 1973 (In Thousands) Trended Original Original Fair Cost Cost Value GAS UTILITY PLANT Production $ 4 974 $ 8 359 $ 6 091 Distribution 30 609 66 672 42 510 General 1 289 1 353 1 310 Common 2 385 5 441 3 394 Construction Work in Progress 849 849 849 Total 40 106 82 674 54 154 RESERVE FOR DEPRECIATION Production 842 1 415 1 031 Distribution 8 820 19 212 12 249 General 418 439 425 Co�on 591 1 348 841 Total 10 671 22 414 14 546 NET GAS UTILITY PLANT 29 435 60 260 39 608 Deduct: Contributions in Aid of Construction 519 Accumulated Deferred Incame Taxes 1 571 Add Other Capital Requirements: Cash Working Capital 544 Materials and Supplies 295 Gas in Storage 548 Prepaid Expenses 33 Deferred Debits 28 NET OPERATING INVESTMENT - FAIR VALUE 38 966 , Exhibit (FPV-1) Schedule 4 Northern States Power Company (Minnesota) Gas Utility - City of St. Paul � INCOME STATEMENT WITH PROPOSED RATES 1974 Test Year (In Thousands) Test Year 1974 OPERATING REVENUES General Service: Residential . $ 17 551 Commercial & Industrial 7 483 Total General Service 25 034 Interruptible Service 8 803 Total Gas Revenues 33 837 Other Operating Revenues 67 Total Operating Revenues 33 904 OPERATING EXPENSES Production: . Gas Purchased for Resale 16 955 Other 305 Distribution 2 219 • Customer Accounts 7$g Sales g( Administrative & General 1 426 Taxes: Real Estate & Personal Property 1 655 Gross Earnings 2 7p'1 Payroll 135 Federal and State Income 2 661 Deferred Income Taxes 281 Provision for Depreciation and Amortization 1 218 Total Operating Expenses 30 !+36 OPERATING INCOME 3 468 ADD: ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION 144 - TOTAL AVAILABLE FOR RETURN 3 612 _ NET OPERATING INVESTMENT - FAIR VALUE 41 266 RATE OF RETURN 8.75% _ - ' � � , . �- . �, . \ , � �� , _ •r - � � . • ` • _ , ;� �.,�� \��` . • , / . V� "�1 ' \ . . ; \ • t • \ .. , ' . � , . . � , i 1 . . � , � � , : � . ; , , � � . . . . ; � . , : _ ,,,�, . � . ; j i , � . , . , � Mar�h 12,,.1976 ' .• ' ` , , , ; , _ • . . l�t. A.. $eot� Dsviaa. ' '` . City At�orn� � __..� 8oc� 647. Citf'8a71 _ '� • St, Piul, 1Kimusats _ ,, _ • . � � Dasr $irs , . " ' The City Cousail today�aas in� rscaipt of a lsttar� •�►i ��ortl�rfn , _ . 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'�.7�.� n:1 a . �j ' '} .. _. . . . � -. . � s "�' �� . . _ ,t . ; : ,�. -- � . " . . , � � ' y. .. . ; � �� , . ; . _ ._ . ;.. . _ :'' i;. _ 1 5 �{ r' _ � � � � - Y`. Irr _ } t � i-F � � "1�' F ¢�� 5��tl. � _ � ..0 ..� D..e t �4 �• ,�' .5. � _ . r " ,} ..r �.1 ��; . '..r . . � i � � ._` ` ,� , .. . ,� £ ,. . . �_, , . , .N. _.,. . , .. � ..�.:L_... , __ . .... �. . . �>� ._. . . '. . .... ., x ....�•", 1�,.�...:....5+ Northern States Power Company (Minnesota) Gas Utility - City of Saint Paul Prepared Testimony of Charles J. Sherlock Q. Will you state your name and address, please? A. Charles J. Sherlock, 360 Wabasha Street, St. Paul, Minnesota. Q. What is your educational background? A. I was graduated from high school in 1943 and from Rennselaer Poly Technic Institute, Troy, New York with a Bachelor of Science Degree in 1946. I received a Bachelor of Chemical Engineering Degree from Rennselaer in 1949. Q. By whom are you employed? A. Northern States Power Company (NSP), St. Paul, Minnesota. � Q. What is your position with that Company? A. Gas Supply Manager. Q. What are your duties and responsibilities as Gas Supply Manager? A. I am responsible for all matters pertaining to NSP gas supply. This includes our contractual arrangements with our pipeline suppliers, gas dispatching activities and operation of our peak shaving plants. I also work closely with our Consumer Service Department in the determination of our gas requirements and expected usage, and thereby produce data for long term forecasts. From this data the department needs for plants and/or pipeline contract increases are forecasted. Q. Will you give your working experience with Northern States Power Company. A. I began work with NSP in our St. Paul Division in 1950. In 1953 I was appointed Division Gas Engineer. In 1954 I transferred to NSP (Wisconsin) 2 and was promoted to Superintendent of Gas Operations in 1960. In 1964 • I returned to NSP (Minnesota) as General Superintendent of Gas Planning and Supply. In 1969 I was appointed to my present position. _ Q. Have you participated in hearings before regulatory bodies? A. Yes, sir. I have participated in hearings before the Public Service Commission of Wisconsin, the Public Service Counaission of North Dakota, and the Federal Power Com�nission, Washington, DC on matters pertaining to natural gas. Q. What is the subject matter and scope of the testimony you shall present in this hearing? A. First, I will generally describe NSP's gas utility operations for background purposes. This will include NSP's distribution systems, its purchase arrangements with Northern Natural Gas Company (hereafter Northern) and the classes of custatners it serves (differentiating between firm and interruptible) . Then I will co�aent on the gas supply shortage and its immediate effects on NSP. I will explain what steps NSP has taken and is taking to deal with this shortage. Next I will describe the financial effects of these factors from an operating standpoint. Finally I will compare the proposed gas rates with the retail cost of competitive fuels. Q. Was Exhibit (CJS-1) prepared by you or under your supervision? A. Yes. Q. Would you please describe NSP's Gas Utility operations. A. NSP operates a retail gas utility business in Minnesota and North Dakota. A subsidiary of the Company (NSP Wisconsin) operates a gas utility in Wisconsin. NSP buys natural gas at wholesale under long term contracts from two natural gas pipeline companies and NSP operates gas distribution systems to sell at retail to individual customers. 3 For the most efficient operation of its various gas systems, the Company, with the approval of its pipeline suppliers, operates under three gas supply groups encompassing our distribution systems in the various areas. _ In one supply group are NSP's North Dakota properties located in Fargo and Grand Forks and environs and NSP (Wisconsin) properties located in and around Eau Claire, Chippewa Falls, and Menomonie. This gas is purchased from Midwestern Gas Transmission Company whose source of gas is from Alberta, Canada. NSP's subsidiary serves LaCrosse and Hudson, Wisconsin with natural gas from Northern under another supply group. These out of state operations are subject to the jurisdiction of the North Dakota and Wisconsin Public Service Coaanissions respectively. Q. What areas does NSP serve in Minnesota? A. Generally, NSP serves St. Paul, St. Paul suburbs, and portions of central - and southern Minnesota. Until recently NSP's operations in Minnesota were operated under Northern's supply groups E and F independently. With the advent of Montana gas into the north end of Northern's system, the FPC allowed Northern to combine these groups for operation and billing purposes. NSP has conformed its operations to this beneficial change in procedure. Q. What are the advantages derived from purchasing gas from Northern Natural Gas Company under such group billing? A. NSP has distribution systems in 59 communities within supply group EF. Northern delivers natural gas to NSP's distribution systems for service in such communities at 36 different town border stations. This gas is purchased under an arrangement which permits NSP to take delivery of the total contract demand (which I will discuss more fully later) for supply group EF in such amounts and at such locations as required to service customers in such group. This flexibility is vital in dispatching our 5 Q. What types of customers are served by these divisions? A. In these five divisions we served, at the end of 1973, the following: 163,391 Residential Gas Customers 12,968 Cmna►ercial/Industrial Gas Customers , 176,359 Total Firm Gas Customers 1,042 Interruptible Gas Customers 177,401 Total Gas Customers Q. What were the total sales in 1973? A. The annual firm sales last year to these customers amounted to 35,817,000 Mcf. The interruptible sales were 22,028,000 Mcf. Q. Turning to St. Paul, how many points of delivery (or town border stations) supply the City of St. Paul? A. The City of St. Paul is served by NSP's interconnected feeder system which is connected to Northern at 7 town border stations. Q. Turning now to supply, describe the method in which Northern States Power Company purchases natural gas. A. NSP buys all of the natural gas for this interconnected system from Northern, which has pipelines originating primarily in Texas, New Mexico, Kansas and Oklahoma and running through Kansas, Nebraska, Iowa, Minnesota, across the northern edge of Wisconsin and terminating in the Upper Peninsula of Michigan. Northern also has supply from domestic sources in Montana which is delivered by Northern to Canadian pipelines and is redelivered to Northern at Carlton, Minnesota. NSP's long term contract with Northern sets out the conditions under which gas is purchased, the demand-commodity rate NSP is to pay and the specific amount of contract demand that NSP has a right to receive. - The rates which NSP pays for natural gas are approved by the FPC and are set forth in Northern's FPC Gas Tariff. NSP purchases most of its gas from Northern under its Contract Demand Service Schedule. This is a two-part schedule consisting of (1) a monthly charge 6 based on daily contract demand and (2) a commodity charge per Mcf for gas delivered. Northern has other schedules for the sale and purchase of gas during certain seasons of the year. The contract demand schedule is enforced _ by providing for a substantial penalty for unauthorized takes of gas. Q. What is contract demand? A. Quoting from Northern's FPC Gas Tariff, "The Contract Demand shall be the maximum daily volume of natural gas Northern is obligated to deliver to the Gas Utility hereunder and shall be the Maximum daily volume of gas the Gas Utility is entitled to receive under this rate schedule . . . . The Contract Demand shall be that agreed upon by Northern and the Gas Utility and set forth in the executed Service Agreement for CD Rate Schedule." This contract demand charge, which is essentially the charge to cover a portion of the pipeline's investment in plant dedicated to provide this service and other fixed costs, must be paid whether any gas is taken or not. It is a minimum charge. Without the use of peak shaving, in order to assure our firm customers that we would have enough gas available for the coldest winter day we would have to buy contract demand for the entire year at a level sufficient to cover this maximum use on any one day. Q. For clarification, I think it would be well for you also to define firm gas customers and interruptible customers. A. Firm gas customers are those customers of NSP who are dependent upon natural gas service as the sole source of energy for the heating, processing or other use of gas involved. An example is use in a residence for heating, cooking or water heating. These are distinguished from interruptible customers who have entered into contracts with NSP for gas service but have agreed to have available adequate 7 standby facilities so that they can switch to another source of energy when directed to do so by our Company. Therefore, when I talk about firm gas customers or firm load, I am talking about that volume of gas that NSP _ must have available to provide adequate gas utility service to those custamers who are dependent solely on NSP supplying gas through the meter for space heating or other use. Q. You have covered the conditions under which NSP purchases gas, what are the conditions under which it markets this gas? A. We make sales to our firm customers under our general service rate schedules and also make sales to interruptible customers. Q. What are interruptible sales? A. Interruptible sales are those sales of gas which are made to our interruptible customers during those periods of the year when gas is not required by our firm gas customers. This generally is in the periods when we have a light heating load and quantities of gas are available to us within the limits of our contract demand for sale to those custamers who qualify for interruptible service. Q. What are these qualifications? A. The main qualifications are that the customer must contractually agree to cut off completely all use of natural gas when directed to do so by the Company; the customer must have available alternate utilization equipment, such as a gas-oil unit; and the customer must have adequate storage facilities for the alternate fuel. Also, the customers requirements must exceed 1000 cubic feet per hour. Q. What changes are occurring concerning the availability of interruptible gas? A. Because of decreasing availability of gas in the Southwest, Northern is forecasting heavy curtailment of large volume interruptible sales in 1977 and 8 complete curtailment of such sales in 1978. By complete curtailment, I mean that these customers will receive no natural gas at all. Small volume interruptible customers can also expect curtailment to increase for the next few years. Q. What generally is the relationship between firm gas rates and interruptible rates? A. The rates for interruptible service, of course, are lower because the customer has agreed to curtail service when directed and further had made the additional investment to install and maintain standby facilities to use other fuels besides natural gas when the occasion demands. I might add that at the present ti.me we have not been able to increase the level of our annual contract demand and, as a result, the amount of gas available for the interruptible customer is therefore decreasing. Northern, through the operation of paragraphs 9.2, 9.3 and 9.4 in its tariff, is reducing each year the availability of natural gas for large volume customers. These paragraphs in the tariff permit Northern to curtail gas used for electric generation and other large volume interruptible sales. Q. How does peak shaving fit into this? A. By providing peak shaving gas we keep the contract demand at a level lower than would otherwise be required and thereby reduce the cost of gas to our consumers. On the colder days of the year, we meet our firm requirements by supplementing our natural gas supply with propane air from peak shaving plants and with revaporization and injection of LNG into the distribution system. The supplementary gases require on-site storage. In supply group EF, NSP has over 14 million gallons of propane and over 1 1/2 million gallons 9 of liquefied natural gas on hand each fall and also has arrangements to purchase additional volumes of propane during the winter. Over the years, it has been more economical to add selected amounts �f peak shaving rather than to purchase contract demand in an amount to cover our entire increases in firm gas requirements. Q. Please describe for us the situation that exists relating to natural gas supply. A. In 1972, the last year in which complete figures are available, the United States consumed 22.3 trillion cubic feet (Tcf) of natural gas. Gross new discoveries of reserves totaled approximately 10.2 Tcf, or roughly 44% of actual consumption. Proven reserves in the continental U.S, at the end of 1972 totaled some 234 Tcf. Thus, if one divides the proven reserves by the 1972 consumption level of 22.3 Tcf, a life span of existing reserves � of only 10.5 years remains. If the needs or requirements of all new customers who wish to use natural gas were to be supplied, the 22.3 Tcf of annual consumption would rapidly increase to about 30 Tcf and the life span of existing reserves would drop significantly below 10 years. Under these circumstances, it is necessary to limit new customers and to offset new load by curtailment of low priority usage. This curtailment will be directed primarily toward the electric generation area, while gross consumption will be on a decreasing basis. It should be noted that production or consumption exceeded new reserve discoveries for the first time in 1968, and that the net loss of reserves has increased each year since then. Q. How do you account for this supply situation? A. The discovery of natural gas is a direct result of well drilling, and the amount of natural gas reserves found has been proportional to the number of wells drilled. There is a correlation between price at the well head and 10 drilling activity, and the gross number of wells drilled has decreased each year since 1962 from a high of approximately 6000 to a low of near 4000. Q. What has been the effect of this shortage on your supply arrangement with Northern? A. NSP was denied an increase in annual contract demand by Northern since the 1970-71 heating season. Northern has notified us to date that it has no concrete proposals for increasing either our annual contract demand or peak day deliverability. Q. Was Northern's denial of an increase in contract demand a change from past practices? A. Yes, it was. In prior years from the 50's through most of the 60's, we routinely Could request and receive increases in contract demand. - Q. What has caused this change? A. This is shown by Exhibit (CJS-1), Schedule 1, which reflects Northern's last new reserve acquisition forecast as presented to the FPC in Docket CP72-251. Note that Northern's new reserve acquisitions are projected at a level of 200 Bcf per year. Its present system requirements total about 956 Bcf per year, and that is projected to reach a low of 715 Bcf in 1980. Q. What is Northern doing about this situation? A. First, Northern is curtailing the usage of low priority consumption on its system. In fact, Northern is currently in the process of preparing an application to obtain further curtailment authority from the FPC. This � application would reduce annual volumes from 956 to 715 Bcf, a 25% reduction. Q. What effect would the proposed curtailment have upon St. Paul? A. With this reduction, present large volume customers in St. Paul (excluding 11 generation) would be subject to heavy curtailment of natural gas in 1977 (by at least 1/3 of present usage) and would suffer complete curtailment in 1978. Use of gas for electric generation will be phased out in 1976. - This would represent a loss of 15 Bcf per year to large volume consumers in our NSP distribution area and a loss of approximately 9.15 Bcf to present customers in St. Paul. Q. What other steps does Northern propose? A. In a recent filing with the FPC Northern shows that the volumes which they would deliver for residential and small volume consumers will stabilize after 1975. Exhibit (CJS-1) , Schedule 2. If NSP were to follow this program in its distribution operation, all new customer growth or attachment would halt and no new customer - residential or coimnercial - could get natural gas service. With the probability of oil and coal procurement less than good, a stagnation of development could result. _ Q. What other steps is Northern taking? A. Northern has been a forerunner in attempting to procure natural gas from areas other than the Southwest. Canadian activity resulted in the procurement of reserves in Alberta, but action by the National Energy Board in Canada prevented its export to the U.S. Northern has completed negotiations with British Petroleum Alaska Ltd. and now has a contract covering some 3 Tcf of Alaskan reserves. They are also quite active in the Arctic Islands and the McKenzie River Delta area through arrangements with other companies. We understand that applications will be filed this spring by the Arctic Study Group, a consortium formed by major interstate operators to build a 48" line from Prudhoe Bay in Alaska to a point on the Montana-Alberta border. Northern informs us that another group of pipelines will build a 12 line from there to Liedy, Penn. Northern expects to receive approximately 450 million cubic feet per day from this line. This gas will be used to offset dwindling supplies from the traditional area, and to help restore - sales to near their current level. The problem associated with this program is that the earliest completion date is currently scheduled for 1980, with 1981 probably being more realistic. Coal gasification, the process of coverting raw coal to a gas that is equivalent in all aspects to natural gas, is under way at Northern. Long term coal supply contracts have been made covering approximately 500,000,000 tons. It is important to note that while coal gasification is not new - indeed it supplied St. Paul prior to 1943 - the upgrading of coal gas to the quality needed to replace natural gas has not as yet been accomplished on a commercial scale. Full scale tests of this process are currently under way in Scotland, and preliminary results are satisfactory. Northern is currently estimating coal gasification as a major supply capability on their system in the mid-1980's. Northern is considering gasification of oil - either crude oil itself or the naptha (light distilate) cut of the refined barrel. These are proven commercially today from a technical standpoint. The problem, of course, with this approach to the supply problem is that the use of any domestic source of such liquids merely worsens an already deficit picture in the oil supply picture. Q. What does NSP propose to do in response to the supply situation? A. Facing such circumstances, loss of interruptible sales, static natural gas supplies and the economic impact of such action, NSP has received approval 13 to limit load growth to priority customers on its natural gas distribution system. We will continue to supply our small volume growth by an upgrading in the use of gas through employment of storage and peak shaving. Peak shaving was introduced at NSP in the early 50's as a means of reducing _ the cost of gas to NSP and hence to our customers. In effect it provided - by propane plant construction - the capability needed on 5 or 6 of the coldest days of the year. Daily deliverability contracts with our pipeline supplier were limited then to days �aken usage was more uniform, and the difference manufactured as needed on the few cold days. With a static supply of natural gas, new customers must be eliminated altogether or supplied during peak time periods from peaking plants. NSP anticipated this supply problem by making a major expansion of its propane storage capacity in 1971 and 1972 and by the simultaneous installation of a major LNG satellite. The propane storage addition, a 5,750,000 gallon refrigerated tank to provide storage volume, and the LNG satellite to produce large daily deliverability, has permitted some attachment of new customers in our distribution system since 1972. It will enable us to maintain some growth until 1975. In 1973, NSP also signed contracts covering a 2 Bcf LNG storage tank plus 10,000 Mcf per day liquefaction and 75 MMcf per day vaporization facilities with Chicago Bridge and Iron Company for 1975 completion. The estimated cost of this facility is $15,000,000. Q. What has been the financial effect upon NSP of these measures to solve the supply problem? A. This type of construction has been subject to the effects of inflation, just like home building or any other construction activity. For example in 14 1969, a 130 MMcf satellite LNG tank at LaCrosse required an investment of approximately $400,000. In 1972 the same sized tank built at Wescott to the same specifications required an investment of $1,000,000. This reflects an increase of 250% in the 3 year time frame from 1969 to 1972. In a similar fashion the original 5,750,000 gallon refrigerated tank at Wescott required an investment of $725,000 in 1963 and the second vessel of the same size required an investment of $1,500,000 in 1973. Operation and maintenance costs have escalated in a similar manner. Propane, which is basic to our peak shaving capability, was purchased by NSP for less than 7� per gallon in 1972. In 1973 we paid 21� per gallon for the same fuel, an increase of more than 300%. Q. Have you made a study of the competitive fuels available for residential space heating in the St. Paul area? A. Yes, sir. � Q. What competitive fuels are available? A. They would No. 1 and No. 2 Fuel oil, and propane. Q. What fuels are used most for space heating? A. Natural gas and fuel oil in that order. Q. Will you please explain Schedule 3 of your exhibit? A. Schedule 3 is a list of the competitive fuel prices for residential users in the St. Paul area. Columns A and C are the costs per unit in cents per gallon for oil. Columns B and D are the cost of the fuel on a per million Btu basis. I use this type of comparison inasmuch as our natural gas rates are, in essence, cost per million Btu. � Q. Will you please explain Schedules 4 and 5. A. Schedules 4 and 5 are the camputation and resultant answers of the residential and catmnercial fuel cost camparisons between natural gas and other fuels. Referring to Schedule 4, the line items are as follows: 15 Line 1, Column A is the total use of an average residential gas heating customer served by NSP in the St. Paul area according to our experience. Line 2, Column A is the base use of this customer for cooking and/or water heating, etc. Line 3 is the resultant heating use in Mcf or millions of Btu's. Column B is the annual cost of this gas under our present rates. Column C is the cost per Mcf and/or per millions of Btu's. Column D is the annual estimated cost with the proposed rates. Column E is the cost per Mcf or millions of Btu's with the proposed rates. In comparing natural gas to oil for space heating, we have calculated this (for the residential customers) on the basis of 10% better annual combustion efficiency with gas than oil, or a ratio of 80% gas to 70% oil. Line 4 is the cost per NlMBtu for oil adjusted for the above-mentioned efficiency. Line 5 is the calculation of the residential oil heating costs and consists of the cost/NAiBtu from Line 4 times the annual heating use in �tu's from Line 3, Column A. Line 6 is the estimated cost of residential heating with propane. Line 7 is the estimated annual heating cost under the new rates; they are the same figures as appeared in Line 3, Column D. Comparing the numbers in Lines 8 and 9, you will note we are still in good position as it relates � to competitive fuels. Q. Can you also compare the custamer preference among the competitive fuels you have just discussed? 16 A. Yes. It is our experience that natural gas is the preferred fuel because of its cleanliness and convenience. Q. In your opinion then is natural gas sold by NSP in the St. Paul area in a . favorable competitive position if this rate increase is granted? A. It certainly is: Exhibit (CJS-1) Schedule 1 r�+ r� r+ r r� r r� r� V O� t!� � W N F-� O �O 00 V O� tJ� � W N F-+ . . . . . . . . . . • . . • . . • H ",�7 � H � z H � �] ozz ►si �nfD � O O (D K � O rt N fD C P� � � w � '� a �d w rr �t �' rr r+ fD cn t2i r Ki � w amaw w m rrw � ww � �t w � w ,ro �7 w r� r� K t� t� � �7 c� n � m r a m o a � � w zst+ c� o � oa � •• � r-� w w rr cu w w � �n r-� C� � rt rt m ce C a �-n w K w o m rr r �n w ►t p - �D 'ti w r x p p ,c o 1� r� p' v� r w C rr rh G fD O 0� G ri � p ►i O f� o m w �-r r+ H a r-� w s� �+. w � z a� r A m W i"t 9 ►i �'t QQ A fD � rt O r-� � W Sb H fD '� tD fD fD f� a' ►i n n � °i � w p � m o� � a •�• �d a o �n orto � � � • ►-+ O �W A�i G � � HN a E � n H�,. a � A !-� fD t?. n fD � r► � tD rt M 'd � •• r�'t O � F�+ � W � "U C' o r► r � w m v'� C � w m r .� �., w u� z 0 c� �s i �o ( �o I� � �c I w I r r� tn .. r b � a�"' I lJ� W N V .� lJ� �O � I-� N 1-+ V F-� �O n rt fD � T NNN �OW O� OOO �GIl� NtJ� � W v �V ro \9 K � ►i rC 'a �d � C r W o w �+ rt - i �o �o v, � �D oo r+ � tn .-. r-� m � ~ � r�t � v� I w ra I o r� v� I �o � �I o n� oo rv I�o a r� bd oo w I O+ N r-� W V O� O� OOO �OMN V Oln � � H � �^ N W VW GG� ' W w n A � ffi'Ly fD �',' � �o I Qo I� � �o I �� r �n ..fr M' w r�i� � i w w �o �c O w r �o � v oo O ao w I�o m � O r-+ o �o �oo O � wn� u+ �nr-� OV� o+ � � � -� I� b � v�C N 1 I 00 00 � W 00 V lJ� � I� Vt I O� I W N I V V'i C� I F-' hr 00 � O I N �G 00 �I�D t-� 1 l.I� N O� V W � tJ� N O� O G� U1 O� � O� O� � V � O� I O IW O�I� N O IW � V � N) � 00 ll�I�p 1 �-+ W O 00 ln W r-+ C+ � O Oo ln 00 O N O� � V �v v C�7 � rr 1 N I�CNh�ltl� O� N IOONOh-' V� O�IOOO� �I� �+ O IO� O �I� O ln Ir+ NO � V� O�I00 � �I� Exhibit (CJS-1) Schedule 2 NORTHERN NATURAL GAS COMPANY Projected Gas Acquisition Rate - for Market-Supply Balance Presented in Dallas Center CP72-251 Assumptions 1. Continued overall energy shortage in the United States. 2. The Federal Power Commission will continue in effect its current and indicated regulatory policies toward producer sales to inter- state pipelines including the small producer exemption. 3. The Federal Power Commission will continue its present treatment of advance payments and other exploration incentives. 4. Gas acquired includes that obtained in the traditional areas, in Montana and through Northern's own exploration efforts in the continental United States. Reserves Year Bcf 1973 450 (Estimated) 1974 400 1975 330 1976 27p 1977 245 1978 220 1979 205 1980 200 � 1981 200 1982 200 Exhibit _ (CJS-1) Schedule 3 COMPETITIVE FUEL PRICES - ST PAUL AREA (As of February - 1974) Small Residential Commercial Column () (A) (B) (C) (D) Cost Cost Cost Cost Per Unit Per I�IlKBtu Per Unit Per MNIBtu Line � No. 1. �k2 Fuel Oil 28.9� $ 2.09 28.9� $ 2.09 2. Propane (heating only) 33.1G $ 3.62 30.1� $ 3.29 3. Btu content for ��2 Fuel Oil = 138,OOOBtu/Gal 4. Btu content for Propane = 91,500Btu/Gal , Exhibit _(CJS-1) Schedule 4 FUEL COMPARISON � CITY OF ST PAUL Residential Heating Costs on Proposed Rate Column ( ) (A) (B) (C) (D) (E) Annual Use Present Rates Prpposed Rates Mcf Annual Cost Annual Cost Line No Cost Per Mcf Cost Per Mcf 1) Residential: Total 200 $239 $1.20 $274 $1.37 2) Base Load 42 72 1.71 78 1.86 3) Heating 158 167 1.06 196 1.24 4) Cost of ��2 Oil: Annual Cost with Combustion $.289 per gallon = $2.09 per rIlKBtu efficiency of 10% less than gas: $2.09 x 80% _ �oo�o $2.39 per NA�IBtu $2.39 x 158 = $378 5) Cost of LP Gas: Annual Cost at Equal Efficiency: $.331 per gallon = $3.62 per NIlKBtu $3.62 x 158 = $572 Fuel Cost Comparisons 6) Natural gas for heating $196 7) ��2 Fuel Oil for heating $378 8) LP Gas for heating $572 . Exhibit _(CJS-1) Schedule 5 FUEL COMPARISON CITY OF ST PAUL Commercial Heating Costs on Proposed Rate Column ( ) (A) (g) ��) �D) �E) Annual Use Present Rates Proposed Rates Mcf Annual Cost Annual Cost Line No Cost Per Mcf Cost Per Mcf 1) Commercial: Total 960 $1 029 $1.07 $1 197 $1.25 2) Base Load 180 220 1.22 250 1.39 3) Heating 780 809 1.04 947 1.21 4) Cost of ��2 Oil: Annual Cost with Combustion $.289 per gallon = $2.09 per NIl�4Btu efficiency of 10% less than gas: $2.09 x 80% _ $2�39 per 1rIl�tu 70% $2.39 x 780 = $1 864 � 5) Cost of LP Gas: Annual Cost at Equal Efficiency: $.301 per gallon = $3.29 per I�tu _ $3.29 x 780 = $2 566 Fuel Cost Comparisons 6) Natural gas for heating $ 947 7) ��2 Fuel Oil for heating $1 864 8) LP Gas for heating $2 566 .. . . . � . .. � �� t � ' . . , 'N -�,i� '. _..' _' _ : .:. 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Agrey, Jr. , 414 Nicollet Mall, Minneapolis, Minnesota. Q. By whom are you employed and what is your position? A. I am employed by Northern States Pawer Company as a Rate Engineer. Q. What are your duties in that position? A. I prepare special studies relative to rate matters, design rate structures to provide adequate revenue for reasonable earnings, participate in hearings involving rates and assist with preparation of the exhibits and testimony presented. , Q. Please describe your educational background. A. I have a Bachelor of Science Degree in Electrical Engineering from North Dakota State University. I have also taken several short courses in a variety of subjects in connection with my work. Q. Outline your experience in your present employment. A. My employment with NSP began in April 1958, as a sales engineer trainee. My first assignment was in the Minneapolis Division Industrial Sales Department. In January 1959, I was transferred to Fargo, North Dakota where I served as gas and electric sales engineer for our North Dakota Divisions of Fargo, Grand Forks and Minot. I started in my present position in the Rate Department in March 1965. I have participated in hearings before the North Dakota Public Service Commission involving rates in our telephone and gas utility operations in that state. Q. What is the subject matter and scope of your testimony? 3 Q. Will you please explain the procedure you used in determining the General Service revenues. A. To determine the General Service revenues shown on Schedule 4, I utilized our computer. From the computer, I obtained an annual sumnary of number � of bills and Mcf sales by rate blocks called a frequency distribution. ilsing another computer program, I then distributed the estimated 1974 sales to the rate blocks in the same pattern as the original frequency distribution. This frequency was then priced out on present and proposed rates. You will note that because I have flattened out the end steps of the General Service rate, residential users price increase averages 14.0% and commercial and industrial increases about 17.3%. Q. Explain the procedure used in determining Interruptible Service revenues. A. Interruptible Service revenues were determined by pricing the estimated Mcf _ sales, by priority class of service, on present and proposed rates. - The Large General Service revenues were calculated on the basis of estimated sales to these customers. These are included in the Interruptible Service revenues on Schedule 4. Q. Are there other changes which you are proposing? A. Yes, there are. I have proposed these changes: First, the proposed rates in Schedule 1 have been designed to include the present cost of gas purchased at our town border stations. Until a further change in the town border rate is made, the purchased gas adjustment will be zero. In addition, you will note that the purchased gas adjustment is shown by reference in each rate schedule to the purchased gas adjustment rider; Second, the Company has experienced rapid increases in the cost of the 4 propane gas which it uses to supplement natural gas supplies during cold weather. The clause I am proposing would operate in the same manner as the purchased gas adjustment clause now operates for changing town border rates. This propane adjustment clause is shown on Schedule 1, Page 6. Third, as Mr. Connelly has discussed, Company has increased the penalty - for unauthorized use of gas during curtailment from $2.00 to $5.00 through- out our system and has filed this change with the City. I have therefore included this change in the proposed rates. Exhibit (JMA-1) Schedule 1 Page 1 of 6 Northern States Power Company (Minnesota) Gas Utility - City of St. Paul RATE SCHEDUIE FOR GENERAL SERVICE Availability Available to any residential, commercial, or industrial customer for general use of natural gas service. Rate First 2 000 cu. ft. per month @ $2.24 per Mcf Next 3 000 " " " " @ 1.35 " " Next 5 000 " " " " @ 1.25 " " Next 50 000 " " " " @ 1,22 �� Next 350 000 " " " " @ 1.21 " " EXC@SS n n n �� d 1.20 �� Purchased Gas Adiustment Bills subject to the adjustment provided for in Purchased Gas Adjustment Rider for General Service. _ Monthly Minimum Charge $2.15 Heatin� Value Natural gas with a nominal heating value of 1000 Btu per cubic _ foot. Exhibit (JMA-1) Schedule 1 Page 2 of 6 Northern States Power Company (Minnesota) Gas Utility - City of St. Paul RATE SCHEDULE FOR INTERRUPTIBLE SERVICE Availability Available on an interruptible basis to a commercial or industrial customer whose maximum hourly requirements are in excess of 1000 cubic feet and who will agree (1) to curtail his use of gas whenever requested by Company, (2) to provide and maintain suitable and adequate standby facilities, and (3) to have available at all times sufficient standby fuel to maintain continuous plant operation during periods of curtailment in the delivery of gas sold hereunder. If customer agrees to confine the use of natural gas under this rate to the months of April through October in any calendar year, requirements (2) and (3) above shall not apply. Character of Service Delivery of gas hereunder shall be subject to curtailment whenever requested by Company, such requests to be made as far in advance as possible. Rate Priority Rate Monthly Maximum Day Mcf Monthly Requirements Classi- Per Minimum Requirements for at least six months fication Mcf Charge (See Note 1) each year (See Note 1) �p, $1.03 $ 51.50 More than 1000 cu. ft. per hour but less than 50 Mcf per day A .87 155.00 50 Mcf or more but less than 200 Mcf BB .85 310.00 200 Mcf or more B .83 620.00 " " " " 5 000 to 9 999.9 C .80 1 445.00 " " " " 10 000 to 19 999.9 D .76 2 685.00 " " " " 20 000 to 49 999.9 E .73 6 090.00 " " " " 50 000 to 199 999.9 F .70 10 325.00 More than 12 000 Mcf 200 000 and more Purchased Gas Adjustment Bills subject to the adjustment provided for in Purchased Gas Adjustment Rider for Interruptible Service. (Continued on following sheet) Exhibit �.1r�-1> Schedule 1 Page 3 of 6 Northern States Power Company (Minnesota) Gas Utility - City of St. Paul RATE SCHEDULE FOR INTERRUPTIBLE SERVICE (Continued) Monthly Minimum Charge If in any month customer does not use the minimum amount provided for herein because of Company's failure to deliver gas wholly or in part, the monthly minimum charge shall be reduced proportion- ately to the amount of curtailment during such month. Where customer agrees to discontinue the use of service during the period from November 1 to March 31, inclusive, each year, the monthly minimum charges hereunder will be waived during said period. Prompt Payment Provision A charge of 5% on t he first $25.00 monthly plus 1% on the remainder will be added to net monthly bi11, computed at the rate schedule shown above, which charge shall constitute a discount from gross bi11 for payment within the discount period. � Unit of Measurement The unit of ineasurement shall be a cubic foot of gas at . an absolute pressure of 30 inches of inercury, and a temperature of 60 degrees Fahrenheit. Heating Value From 975 Btu to 1025 Btu (inclusive) per cubic foot. If in any month, the arithmetic average of hourly total heating values of the gas is less than 975 Btu per cubic foot, the volume of gas measured hereunder during such period sha11 be decreased for billing purposes in proportion to the decrease below 975 Btu per cubic foot. Priority Classification Class AA shall have first priority. Curtailment shall begin with Classification F and progress to Classification AA. Term of Agreement Service agreement shall be for a term of not less than one year. Upon expiration of term, Agreement continues in force until terminated by at least thirty days' written notice by either party. Note 1: Applies to estimated requirements until actual requirements have been ascertained. Note 2: The above rate schedules for interruptible service are also subject to Company's contract with Northern Natural Gas Company from whom the gas contemplated to be sold hereunder will be purchased. Exhibit (JMA-1) Schedule 1 Page 4 of 6 Northern States Power Company (Minnesota) Gas Utility - City of St. Paul RATE SCHEDULE FOR LARGE GENERAL SERVICE Availability Available to couQnercial and industrial customers with requirements of 50 Mcf or more per day. Rate Demand Charge $5.10 per Mcf per month of Billing Demand -plus- � Co�odity Char�e First 2 000 Mcf per month @ $.82 per Mcf Next 3 000 " " " @ .75 " " Next 15 000 " " " @ .70 " " Next 30 000 " " " @ .67 " " Excess " " " @ .65 " " _ Purchased Gas Adjustment Bills subject to the adjustment provided for in Purchased Gas Adjustment Rider for Large General Service. _ Monthly Minimum Chart�e The Demand Charge Prompt Payment Provision A charge of 5% on the first $25.00 monthly plus 1% on the remainder will be added to net monthly bill, computed at the rate schEdule shown above, which charge shall constitute a discount from gross bill for payment within the discount period. Determination of Billint� Demand The demand in Mcf for billing purposes shall be the greatest daily consumption in Mcf during the month for which bill is rendered, but in no event shall the demand to be billed be considered as less than the daily demand in Mcf Company agrees to deliver as specified in the contract between Company and customer, nor less than the demand previously billed hereunder. Heating Value Natural gas with a nominal heating value of 1000 Btu per cubic foot. Note: Gas consumed under this rate schedule must be separately metered from customer's other firm gas requirements. Exhibit (JMA-1) Schedule 1 Page 5 of 6 Northern States Power Company (Minnesota) Gas Utility - City of St. Paul PURCHASED GAS ADJUSTMENT APPLICABLE TO RATE SCHEDULES PURCHASED GAS ADJUSTMENT RIDER Applicable to General Service In the event there is a change in the town border rate under which Company purchases gas sold under the above schedule, there shall be added to or deducted from the monthly bill computed according to the above schedule the product of the monthly consumption and the amount per Mcf to the nearest 0.1� by which the average annual town border purchase cost per Mcf to Company, based on the number of days use of the contract demand necessary to serve the total General Service requirements, is more or less than the average annual town border purchase cost per Mcf computed on the same basis and on town border rates consisting of a demand charge of $2.575 per Mcf per month and a commodity charge of 43.10� per Mcf. In the event the total variation is a positive amount, such amount will be multiplied by 1.087. The average annual tawn border purchase cost per Mcf shall be computed with _ the use of the billing demand units and annual volumes of natural gas purchased from Northern Natural Gas Company for resale to General Service gas customers served by Company in its Minnesota service area, adjusted to reflect normal temperatures, for the calendar year preceding the change in the town border rate. In the event a refund is received by the Company from Northern Natural Gas Company attributable to the cost of gas which has been sold by the Company under the foregoing purchased gas adjustment clause, such attributable refund, multiplied by the factor 1.087, together with interest thereon, received by the Company will be applied as a reduction in the purchased gas adjustment until the amount �of such attributable refund and interest has been expended. Such unit reduction will be extended over a period not to exceed twelve months. Applicable to Large General Service In the event there is a change in the town border rate under which Company purchases gas sold under the above schedule, there shall be added to or deducted � from the monthly bill computed according to the above schedule the sum of (1) the product of the monthly billing demand and the amount per Mcf to the nearest 0.1� by which the town border demand charge varies from $2.575 and, (2) the product of the monthly consumption in Mcf and the amount per Mcf to the nearest 0.01� by which the town border commodity charge varies from 43.10� per Mcf. In the event the total variation is a positive amount, such amount will be multiplied by 1.087. (Continued on following sheet) Exhibit (JMA-1) Schedule 1 Page 6 of 6 Northern States Power Company (Minnesota) Gas Utility - City of St. Paul PURCHASED GAS ADJUSTMENT APPLICABLE TO RATE SCHEDULES (Continued) PURCHASED GAS ADJUSTMENT RIDER (Continued) Applicable to Interruptible Service In the event there is a change in the town border rate under which Company purchases gas sold under the above schedule, there shall be added to or deducted from the monthly bill computed according to the above schedule the product of the monthly consumption in Mcf and the amount per Mcf to the nearest 0.01� by which the town border commodity charge varies from 43.1OG per Mcf. In the event the total variation is a positive amount, such amount wi11 be multiplied by 1.087. Any revision in the purchased gas adjustment due to a change in the town border rate shall become effective on bills based on regular meter readings _ on and after 30 days from the effective date of the change in the town border rate. . In the event a refund is received by the Company from Northern Natural Gas Company attributable to the cost of gas which has been sold by the Company under the foregoing purchased gas adjustment clause, such attributable refund, multiplied by the factor 1.087, together with interest thereon, receiv�d by the Company will be applied as a reduction in the purchased gas adjustment until the amount of such attributable refund and interest has been expended. Such unit reduction will be extended over a period not to exceed twelve months. Applicable to � General Service and Large General Service If the cost of propane used by Company to supplement the supply of natural gas purchased from Northern Natural Gas Company changes from the price in effect on the effective date of these schedules, an amount will be added to or deducted from the monthly bill to reflect such change. Exhibit (JMA-1) Schedule 2 Northern States Power Company (Minnesota) Gas Utility - City of St. Paul SIJMMARY OF PRESENT AND PROPOSED GAS RATES � Present Proposed GENERAL SERVICE First 2 $2.147 $ 2.24 Next 3 1.147 1.35 Next 5 1.077 1.25 Next 40 1.037 1.22 Next 350 1.037 1.21 Next 400 1.017 1.20 Next 1 200 .987 1.20 X's .967 1.20 Minimum 2.15 2.15 INTERRUPTIBLE Class AA $ .8815 $ 1.03 - A .7215 .87 BB .7015 .85 B .6815 .83 - C .6515 .80 D .6215 .76 E .5815 .73 F .5515 .70 LARGE GENERAL Demand $4.26 $ 5.10 Co�nodity 2 000 .7515 .82 3 000 .6815 .75 15 000 .6315 .70 30 000 � .6015 .67 X's .5815 .65 Exhibit (JN1A-1) Schedule 3 Northern States Pawer Company (Minnesota) Gas Utility - City of St. Paul COMPARISON OF MONTHLY BILLS UNDER PRESENT AND PROPOSED GENERAL SERVICE RATES Monthly Present Proposed Mcf Rate Rate .5 $ 2.15 $ 2.15 1.0 2.15 2.24 3. 5.44 5.83 5. 7.34 8.53 10. 13.12 14.78 15. 18.31 20.88 20. 23.49 26.98 25. 28.68 33.08 30. 33.86 39.18 50. 54.60 63.58 100. 106.45 124.08 300. 313.85 366.08 500. 519.25 607.08 750. 773.50 907.08 1 000. 1 021.75 1 207.08 Exhibit (JMA-1) Schedule 4 Northern States Power Company (Minnesota) Gas Utility - City of St. Paul SUrIlNARY OF REVENUE - PRESENT AND PROPOSED RATES BASED ON 1974 BUDGET Increase Present Proposed Amount Percent GENERAL SERVICE Residential $15 396 500 $17 550 500 $2 154 000 14.0% Commercial & Industrial 6 379 400 7 483 000 1 103 600 17.3 Total $21 775 900 $25 033 500 $3 257 600 15.0% INTERRUPTIBLE SERVICE 7 174 500 8 803 400 1 628 900 22.7 Total $28 950 400 $33 836 900 $4 886 500 16.9% ` �� y � � ' , , ' _ �SATN'!''PAtT�LEGAIr �,F�ZlG7 � � .. . xoa�ca a� �c �gs�s� oar A1'PLiC4TION OF DT��,$�i i w BTATEB POW�1E 6'�`(Y irp�, AN IIv'C$� IPT 1T$-G1A9 '&►`4�E6 IN T$�C1TY t1!'S�A�iT PAiTI. • ' PLEta19�E T1iI�E PPOT�thad ay"ublic I hearing will bE h�lld vrith res�iect'to the �_ppliaatlon of.1�ortheTn 5tatee Power Company for an incYeaae 3n ity gas �rates. y�hfch €iieteaYe�as been �eed up� lfetvveen. the Councii.a� th! C1tY �oE'Saint Paui and Northe�► ${akess Po�ver Companq'to be: 8.4g� oveT"tY►e rates in'effeet prior to the�ling'dL� application, and whi¢h wlll be cdln�i = ered�y the Council oi tt;e Cit�o!�six�t Paul tlu�q�t83� passegr of'ea �ordfnrlaae n4w pen be4ore it.: . Said hea will be conducted'in Ithe Cou�il hm�ers on tLe 3i�d 800r, City HaI1 and•.Ccuirt �I�puse, at yO:OP I o'clock A.�9Q. on Juae 28, 1F'/4. I ''Dateti,dune IT. 19T4, , ' �Cle�. , ' , '� _ �(J'une 1$. 1874).. . ,; � lst~ .�►�t! 2na 6(�8 3rd G//q Adopted �p�j� �/ Yeas Nays CHRISTENSEN HOZZA � �� 26�36�2 ROEDLER Sn�s� � TEDESCO PRESILIII�TT (HZJNT)