Public Service Commission sets SourceGas hearing

LINCOLN, Nebraska -- The Nebraska Public Service Commission has set a hearing for June 2 on a proposal by SourceGas to reduce a surcharge for the cost of natural gas. The surcharge, which is reflected on bills as part of the base rate, would decrease by roughly 9 cents per therm of gas consumed under the company's proposal.

Commission Chairman Jerry Vap of McCook initiated an examination of SourceGas' accounting for natural gas costs in 2009. Periodic reviews of gas costs are permitted under state law. For SourceGas, the examination addressed costs of gas under the "P-0802" contract, which is for gas procured from the Bowdoin Field in Montana.

The 2009 review included a site visit by an accounting consultant hired by the Commission. The examination revealed an error of $829,000 in charges that should have been booked to the benefit of ratepayers. Subsequently, the company determined that an additional $295,000 should also be reflected in its annual adjustment.

Both errors were a result of the billing system the company was using from September 2007 to September 2009. That system has since been replaced.

Additionally, SourceGas resolved a contract dispute with Noble Energy, the seller under the P-0802 contract, generating another $529,000 for the benefit of Nebraska ratepayers. SourceGas had pursued the dispute with Noble to lessen the impact of the contract on its customers.

In response to the Commission's report, the company made its annual filing to adjust gas costs earlier than usual this year.

"It's important that this money be in the ratepayers' pockets as soon as possible," said Commissioner Vap, who represents the 5th District of the Public Service Commission. Commissioner Rod Johnson of Sutton agreed, "Part of the Commission's responsibility is ensuring accurate and timely accounting for changes in gas costs."

The hearing will be held at the Commission's offices in Lincoln. Ratepayers are represented in the case by Public Advocate Roger Cox, a Lincoln attorney.

The gas cost review is separate from an overall rate increase proposal filed by the company in 2009. The Commission decided the rate increase proposal in March, and that case is currently on appeal.