North Carolina General Statutes 62-133.15. (Expires July 1, 2026 – see note) Cost recovery for natural gas economic development infrastructure
(a) Purpose. – The purpose of this section is to prescribe a methodology for cost recovery by a natural gas local distribution company that constructs natural gas economic development infrastructure to serve a project the Department of Commerce determines is an eligible project under N.C. Gen. Stat. § 143B-437.021 The Commission shall adopt rules to implement this section.
(b) Eligibility. – Cost recovery under this section is limited to natural gas economic development infrastructure the Commission determines satisfies all of the following conditions:
(1) The project will be located in an area where adequate natural gas infrastructure for the eligible project is not economically feasible.
Terms Used In North Carolina General Statutes 62-133.15
- Commission: means the North Carolina Utilities Commission. See North Carolina General Statutes 62-3
- Contract: A legal written agreement that becomes binding when signed.
- following: when used by way of reference to any section of a statute, shall be construed to mean the section next preceding or next following that in which such reference is made; unless when some other section is expressly designated in such reference. See North Carolina General Statutes 12-3
- property: shall include all property, both real and personal. See North Carolina General Statutes 12-3
- Rate: means every compensation, charge, fare, tariff, schedule, toll, rental and classification, or any of them, demanded, observed, charged or collected by any public utility, for any service product or commodity offered by it to the public, and any rules, regulations, practices or contracts affecting any such compensation, charge, fare, tariff, schedule, toll, rental or classification. See North Carolina General Statutes 62-3
- Service: means any service furnished by a public utility, including any commodity furnished as a part of such service and any ancillary service or facility used in connection with such service. See North Carolina General Statutes 62-3
- State: means the State of North Carolina; "state" means any state. See North Carolina General Statutes 62-3
(2) Either the developer, prospective customer, or the occupant of the eligible project provides, prior to initiation of construction of the natural gas economic development infrastructure, a binding commitment in the form of a commercial contract or other form acceptable to the Commission to the natural gas local distribution company regarding service needed for a period of at least 10 years from the date the gas is made available.
(3) The projected margin revenues not recoverable under N.C. Gen. Stat. § 62-133.4 from the eligible project will not be sufficient to cover the cost of the natural gas infrastructure associated with the project.
(c) Economic Feasibility. – The Commission shall permit a natural gas local distribution company to recover reasonable and prudent natural gas economic development infrastructure costs only to the extent necessary to make the construction of the infrastructure economically feasible, as determined by the Commission. In determining economic feasibility, the Commission shall employ the net present value method of analysis. Only natural gas economic development infrastructure with a negative net present value shall be determined to be economically infeasible.
(d) Costs Recoverable. – Eligible economic development infrastructure development costs are the reasonable and prudent costs determined by the Commission to be both directly related to the construction of natural gas infrastructure for an eligible project and economically infeasible. The costs may include any of the following:
(1) Planning costs.
(2) Development costs.
(3) Construction costs and an allowance for funds used during construction and a return on investment once the project is completed, calculated using the pretax overall rate of return approved by the Commission in the company’s most recent general rate case.
(4) A revenue retention factor.
(5) Depreciation.
(6) Property taxes.
(e) Rate Adjustment Surcharge Mechanism. – The Commission shall permit recovery of eligible economic development infrastructure costs in a rate adjustment surcharge mechanism. The mechanism shall allow for recovery on an annual or semiannual basis, as determined by the Commission, subject to audit and reconciliation procedures. Any rate adjustment surcharge mechanism adopted under this section shall terminate upon the earlier of the full recovery of the costs allowed under subsection (d) of this section or the natural gas local distribution company’s next general rate case in which the eligible infrastructure development costs shall be included in the natural gas distribution company’s rate base. Nothing in this section precludes the natural gas local distribution company from recovering eligible economic development infrastructure costs in a general rate case.
(f) Limitations. – A natural gas local distribution company shall not invest more than twenty-five million dollars ($25,000,000) of eligible infrastructure development costs in any year. The aggregate amount of eligible infrastructure development costs recovered under rate adjustment surcharge mechanisms for all natural gas local distribution companies in the State cannot exceed seventy-five million dollars ($75,000,000). Cumulative rate adjustments allowed under a rate adjustment surcharge mechanism approved by the Commission under this section shall not exceed five percent (5%) of the total annual service margin revenues not recoverable under N.C. Gen. Stat. § 62-133.4 approved by the Commission in the natural gas local distribution company’s last general rate case. (2016-118, s. 1; 2020-58, s. 7.3.)