Subject of Possible Rule Making: WUTC Docket No. UG-050369, rate and accounting methods for natural gas companies that separate, or "decouple," a utility company's recovery of fixed costs from the volume of its commodity sales in order to eliminate gas conservation and energy efficiency disincentives and other revenue variables.

     Statutes Authorizing the Agency to Adopt Rules on this Subject: RCW 80.01.040 and 80.04.160.

     Reasons Why Rules on this Subject may be Needed and What They Might Accomplish: RCW 80.28.024 and 80.28.074 identify a state policy in favor of promoting energy conservation and efficiency. Existing natural gas rate structures rely primarily on volumetric commodity sales for recovery of utility fixed costs. This may create a disincentive for utilities to promote or engage in conservation and energy efficiency activities. This rule making will explore whether it is feasible to utilize an alternative pricing structure for fixed cost recovery that would disassociate or "decouple" such costs from commodity sales volumes and whether rules are necessary or appropriate in implementing an alternative pricing structure.

     Other Federal and State Agencies that Regulate this Subject and the Process Coordinating the Rule with These Agencies: Intrastate retail natural gas rates, services, facilities, and practices, which are the subject of this proposed rule making, are exclusively within the jurisdiction of the WUTC at the agency level. There are no other agencies that regulate the process under consideration.

     Process for Developing New Rule: The commission will schedule workshops with representatives of the affected constituencies in a manner designed to explore alternative approaches and develop consensus on a preferred decoupling mechanism for consideration as an administrative rule.

     Interested parties can participate in the decision to adopt the new rule and formulation of the proposed rule before publication by contacting the Secretary, Washington Utilities and Transportation Commission, P.O. Box 47250, 1300 South Evergreen Park Drive S.W., Olympia, WA 98504-7250, phone (360) 664-1174, fax (360) 586-1150. Interested parties may attend the initial workshop on this rule making to be held at the above address on May 12, 2005, from 9:30 a.m. until 4:00 p.m. in Room 206.

     STAKEHOLDER WORKSHOP: A workshop to initiate discussions among persons interested in natural gas decoupling options will be held in Room 206 of the Washington Utilities and Transportation Commission Offices, 1300 South Evergreen Park Drive S.W., Olympia, WA, on May 12, 2005, beginning at 9:30 a.m. At this workshop:

     (1) Commission staff will outline the general nature of the issues presented by this rule making,

     (2) Representatives of Cascade Natural Gas will present an overview of a possible straw man proposal that the parties may find useful as a starting point for discussion of decoupling mechanisms, and

     (3) There will be general discussion of how the parties believe it would be best to proceed with development and debate of the various issues that will need to be addressed if the parties are to reach consensus on a viable decoupling mechanism.

     Additional workshops and smaller workgroup activities are anticipated and will be scheduled as needed.

     WRITTEN COMMENTS: Opportunities to submit written comments will also be provided during the course of this rule making. Information about the schedule and other aspects of the rule making, including requests for comments, will be posted on the commission's website as it becomes available. If you wish to receive further information on this rule making you may (1) call the commission's Records Center at (360) 664-1234, (2) e-mail the commission at <records@wutc.wa.gov>, or (3) mail written comments to the address above to the attention of Carole J. Washburn, Secretary. When contacting the commission, please refer to Docket No. UG-050369 to ensure that you are placed on the appropriate service list. Questions may be addressed to Roger Braden at (360) 664-1312 or e-mail at rbraden@wutc.wa.gov or to Mike Parvinen at (360) 664-1315 or mparvine@wutc.wa.gov.

April 5, 2005

Carole J. Washburn

Executive Secretary

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