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Natural gas

Kentucky Public Service Commission Approves Delta Natural Gas Company's Proposed Pipe Replacement Program Balancing Adjustment

Strategic Insights

— 2 min read

The Kentucky Public Service Commission has issued an order on May 29, 2025, approving Delta Natural Gas Company's (Delta) proposed changes to the Pipe Replacement Program (PRP) rates. The proposed changes reflect a balancing adjustment to true up Delta's actual Pipe Replacement Program costs for the twelve months ending December 31, 2024, with its projected costs for the same period. The Commission found that Delta's proposed balancing adjustment was supported by the record and that the rider rates in Delta's proposed tariffs were fair, just, and reasonable.

Key Takeaways:

  • The Kentucky Public Service Commission approved Delta Natural Gas Company's proposed changes to the Pipe Replacement Program (PRP) rates, which reflect a balancing adjustment to true up actual costs with projected revenue requirements for the PRP 2024 year.
  • The proposed effective date for the tariff with the revised rates is June 1, 2025.
  • The Commission found that the rider rates in Delta's proposed tariffs were fair, just, and reasonable and should be approved.
  • The balancing adjustment true-up is expected to become effective in June 2025.
  • The difference in the revenue requirement arises from a decrease in return on investment of $6,276 and an increase in operating expenses of $62,724 as compared to estimated amounts used for the 2024 PRP year.
  • The decrease in return is due to a decrease of $75,444 in the net PRP rate base.
  • The increase in operating expenses was due to a decrease in property taxes due to the decrease in actual plant in service over the estimate and an increase in depreciation expense.
  • Delta's PRP rider is updated annually to reflect the expected impact on Delta's revenue requirements of forecasted net plant additions and subsequently adjusted to true up the actual costs with the projected costs.

Sources:

  • Order on Case No. 2025-00086, Kentucky Public Service Commission (May 29, 2025)
  • Application, 2025_PRP_Filing_2024_Actuals.xlsx, tab "Sch I Summary"
  • KRS 278.030(1)
  • Case No. 2023-00343, Electronic Application of Delta Natural Gas Company, Inc., for Annual Pipe Replacement Program (Ky. PSC Dec. 22, 2023)

Statistics:

  • The proposed effective date for the tariff with the revised rates is June 1, 2025.
  • The revenue requirement increase is $56,448.
  • The decrease in return on investment is $6,276.
  • The increase in operating expenses is $62,724.
  • The decrease in net PRP rate base is $75,444.
  • The increase in depreciation expense is due to an error in previous calculations.
  • The balancing adjustment true-up is expected to become effective in June 2025.

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