278.274 Review of natural gas utility's purchasing practices in determining
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/ky/278-274A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
reasonableness of proposed rates -- Reduction of rates by commission.
(1)In determining whether proposed natural gas utility rates are just and reasonable, the
commission shall review the utility's gas purchasing practices. The commission may
disallow any costs or rates which are deemed to result from imprudent purchasing
practices on the part of the utility.
(2)When proposing new rates, the utility shall be required to prove that the proposal is
just and reasonable in accordance with the requirements of this section.
(3)It shall be presumed that natural gas purchases from affiliated companies are not
conducted at arm's length.
(a)For purposes of this subsection, affiliated companies shall be defined as those
in which one
(1)or more of the owners control or have the right to control the
business affairs of all affected companies.
(b)In instances in which a utility purchases natural gas from an intrastate affiliate,
the commission shall assume jurisdiction of the affiliated company as though
it were a utility as defined in KRS 278.010. The commission's jurisdiction
shall extend to that extent necessary to ensure that the rates charged the utility
and ultimately to the consumer are just and reasonable.
(c)If the commission determines that the rates charged by the utility are not just
and reasonable in that the cost of natural gas purchased from the affiliated
company is unjust or unreasonable, the commission may reduce the purchased
gas component of the utility's rates by the amount deemed to be unjust or
unreasonable.
(d)The commission may also reduce the rate charged by the affiliated company
by the same amount.