(1) The commission shall allow jurisdictional utilities to implement and thereafter modify gas supply cost adjustment rate schedules that reflect increases or decreases in the cost of the utility’s gas supply such as (a) federally regulated wholesale rates for energy delivered through interstate facilities, (b) direct costs for natural gas delivered, or (c) costs for fuel used in the manufacture of gas. Such costs may, in the discretion of the commission, include costs related to gas price volatility risk management activities, the costs of financial instruments purchased to hedge against gas price volatility, if prudent, and other relevant factors. Gas supply cost adjustment rate schedules in effect on May 31, 2003, shall continue in effect until changed pursuant to the provisions of the State Natural Gas Regulation Act. In each such proceeding the burden of proof shall be upon the utility.

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(2) Unless the commission otherwise orders and except as otherwise provided in this section, no change shall be made by any jurisdictional utility in any purchased gas adjustment schedule, except after thirty days’ notice to the commission and to the public as provided in this section. Such notice shall be given by filing with the commission and keeping open for public inspection new schedules or supplements stating plainly the change or changes to be made in the schedule or schedules then in force, and the time when the change or changes will go into effect, and by publication in a newspaper of general circulation of notice to ratepayers affected by such change. The utility may propose and the commission, for good cause shown, may allow changes without requiring the thirty days’ notice, by an order specifying the changes to be made and the time when they shall take effect and the manner in which they shall be filed and published. When any change is proposed in any rate or other charge to ratepayers, such proposed change shall be plainly indicated on the new schedule filed with the commission.

(3) The commission may modify a jurisdictional utility’s gas supply cost adjustment rate schedule under procedures specified in the act for setting rates by order of the commission.

(4) Once annually, the commission may initiate public hearings, upon complaint, to determine whether the gas supply cost adjustment schedule of a jurisdictional utility reflects the costs of the utility’s gas supply and whether such costs were prudently incurred and to reconcile any amounts collected from ratepayers with the actual costs of gas supplies incurred by the utility.

(5) Any refund, including interest thereon, if any, received by the jurisdictional utility with respect to services purchased under Federal Energy Regulatory Commission natural gas tariff related to increased rates paid by the utility subject to refund, and applicable to natural gas services purchased for service to Nebraska ratepayers, shall be passed along to presently served Nebraska ratepayers by an appropriate adjustment shown as a credit on subsequent bills during a period selected by the utility, not to exceed twelve months, or by a cash refund at the option of the utility. The utility shall not be required to return such refunds to ratepayers served at competitively set or negotiated rates, or under alternative rate mechanisms, when the ratepayer is paying less than the full rate determined pursuant to the gas supply cost adjustment rate schedule, or under a customer choice or unbundling program.

(6) The provisions of this section shall not be construed to modify or otherwise restrict the Public Service Commission’s authority to establish alternative rate mechanisms as authorized by the act, when such mechanisms modify a utility’s recovery of gas supply costs.