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| To amend section 4909.05 and to enact sections | 1 |
| 4929.16, 4929.161, 4929.162, 4929.163, 4929.164, | 2 |
| 4929.165, 4929.166, 4929.167, and 4929.168 of the | 3 |
| Revised Code to permit natural gas companies to | 4 |
| apply for an infrastructure development rider to | 5 |
| cover costs of certain economic development | 6 |
| projects. | 7 |
| Section 1. That section 4909.05 be amended and sections | 8 |
| 4929.16, 4929.161, 4929.162, 4929.163, 4929.164, 4929.165, | 9 |
| 4929.166, 4929.167, and 4929.168 of the Revised Code be enacted | 10 |
| to read as follows: | 11 |
| Sec. 4909.05. As used in this section: | 12 |
| (A) A "lease purchase agreement" is an agreement pursuant to | 13 |
| which a public utility leasing property is required to make rental | 14 |
| payments for the term of the agreement and either the utility is | 15 |
| granted the right to purchase the property upon the completion of | 16 |
| the term of the agreement and upon the payment of an additional | 17 |
| fixed sum of money or title to the property vests in the utility | 18 |
| upon the making of the final rental payment. | 19 |
| (B) A "leaseback" is the sale or transfer of property by a | 20 |
| public utility to another person contemporaneously followed by the | 21 |
| leasing of the property to the public utility on a long-term | 22 |
| basis. | 23 |
| (C) The public utilities commission shall prescribe the form | 24 |
| and details of the valuation report of the property of each public | 25 |
| utility or railroad in the state. Such report shall include all | 26 |
| the kinds and classes of property, with the value of each, owned, | 27 |
| held, or, with respect to a natural gas, water-works, or sewage | 28 |
| disposal system company, projected to be owned or held as of the | 29 |
| date certain, by each public utility or railroad used and useful, | 30 |
| or, with respect to a natural gas, water-works, or sewage disposal | 31 |
| system company, projected to be used and useful as of the date | 32 |
| certain, for the service and convenience of the public. Such | 33 |
| report shall contain the following facts in detail: | 34 |
| (1) The original cost of each parcel of land owned in fee and | 35 |
| in use, or, with respect to a natural gas, water-works, or sewage | 36 |
| disposal system company, projected to be owned in fee and in use | 37 |
| as of the date certain, determined by the commission; and also a | 38 |
| statement of the conditions of acquisition, whether by direct | 39 |
| purchase, by donation, by exercise of the power of eminent domain, | 40 |
| or otherwise; | 41 |
| (2) The actual acquisition cost, not including periodic | 42 |
| rental fees, of rights-of-way, trailways, or other land rights | 43 |
| held, or, with respect to a natural gas, water-works, or sewage | 44 |
| disposal system company, projected to be held as of the date | 45 |
| certain, by virtue of easements, leases, or other forms of grants | 46 |
| of rights as to usage; | 47 |
| (3) The original cost of all other kinds and classes of | 48 |
| property used and useful, or, with respect to a natural gas, | 49 |
| water-works, or sewage disposal system company, projected to be | 50 |
| used and useful as of the date certain, in the rendition of | 51 |
| service to the public. Such original costs of property, other than | 52 |
| land owned in fee, shall be the cost, as determined to be | 53 |
| reasonable by the commission, to the person that first dedicated | 54 |
| or dedicates the property to the public use and shall be set forth | 55 |
| in property accounts and subaccounts as prescribed by the | 56 |
| commission. To the extent that the costs of property comprising a | 57 |
| coal research and development facility, as defined in section | 58 |
| 1555.01 of the Revised Code, or a coal development project, as | 59 |
| defined in section 1551.30 of the Revised Code, have been allowed | 60 |
| for recovery as Ohio coal research and development costs under | 61 |
| section 4905.304 of the Revised Code, none of those costs shall be | 62 |
| included as a cost of property under this division. | 63 |
| (4) The cost of property constituting all or part of a | 64 |
| project leased to or used by the utility, or, with respect to a | 65 |
| natural gas, water-works, or sewage disposal system company, | 66 |
| projected to be leased to or used by the utility as of the date | 67 |
| certain, under Chapter 165., 3706., 6121., or 6123. of the Revised | 68 |
| Code and not included under division (C)(3) of this section | 69 |
| exclusive of any interest directly or indirectly paid by the | 70 |
| utility with respect thereto whether or not capitalized; | 71 |
| (5) In the discretion of the commission, the cost to a | 72 |
| utility, in an amount determined to be reasonable by the | 73 |
| commission, of property constituting all or part of a project | 74 |
| leased to the utility, or, with respect to a natural gas, | 75 |
| water-works, or sewage disposal system company, projected to be | 76 |
| leased to the utility as of the date certain, under a lease | 77 |
| purchase agreement or a leaseback and not included under division | 78 |
| (C)(3) of this section exclusive of any interest directly or | 79 |
| indirectly paid by the utility with respect thereto whether or not | 80 |
| capitalized; | 81 |
| (6) The proper and adequate reserve for depreciation, as | 82 |
| determined to be reasonable by the commission; | 83 |
| (7) Any sums of money or property that the company may have | 84 |
| received, or, with respect to a natural gas, water-works, or | 85 |
| sewage disposal system company, is projected to receive as of the | 86 |
| date certain, as total or partial defrayal of the cost of its | 87 |
| property, except that the report shall not contain either of the | 88 |
| following: | 89 |
| (a) Any sum of money that a natural gas company may have | 90 |
| received or is projected to receive as of the date certain from an | 91 |
| infrastructure development rider or rider adjustment under section | 92 |
| 4929.161 or 4929.162 of the Revised Code; | 93 |
| (b) Any sum of money that a natural gas company may have | 94 |
| received or is projected to receive as of the date certain from | 95 |
| infrastructure development, as defined in section 4929.16 of the | 96 |
| Revised Code, that is placed into service under section 4929.165 | 97 |
| of the Revised Code; | 98 |
| (8) The valuation of the property of the company, which shall | 99 |
| be the sum of the amounts contained in the report pursuant to | 100 |
| divisions (C)(1) to (5) of this section, less the sum of the | 101 |
| amounts contained in the report pursuant to divisions (C)(6) and | 102 |
| (7) of this section. | 103 |
| The report shall show separately the property used and useful | 104 |
| to such public utility or railroad in the furnishing of the | 105 |
| service to the public, the property held by such public utility or | 106 |
| railroad for other purposes, and the property projected to be used | 107 |
| and useful to or held by a natural gas, water-works, or sewage | 108 |
| disposal system company as of the date certain, and such other | 109 |
| items as the commission considers proper. The commission may | 110 |
| require an additional report showing the extent to which the | 111 |
| property is used and useful, or, with respect to a natural gas, | 112 |
| water-works, or sewage disposal system company, projected to be | 113 |
| used and useful as of the date certain. Such reports shall be | 114 |
| filed in the office of the commission for the information of the | 115 |
| governor and the general assembly. | 116 |
| Sec. 4929.16. As used in sections 4929.16 to 4929.168 of the | 117 |
| Revised Code: | 118 |
| (A) "Economically justified" is a determination based on a | 119 |
| formula that is unique for each natural gas company. | 120 |
| (B) "Infrastructure development" means constructing | 121 |
| extensions of storage, transmission, or distribution facilities | 122 |
| that a natural gas company owns and operates. | 123 |
| (C) "Infrastructure development costs" means the investment | 124 |
| in infrastructure development to which all of the following apply: | 125 |
| (1) The investment is for an economic development project | 126 |
| described in division (A)(1) or (2) of section 4929.165 of the | 127 |
| Revised Code. | 128 |
| (2) The investment is not considered economically justified | 129 |
| by the natural gas company. | 130 |
| (3) The investment is for any deposit required by the natural | 131 |
| gas company, as defined in the line-extension provision of the | 132 |
| company's tariff, less any contribution in aid of construction | 133 |
| received from the owner or developer of the project. | 134 |
| "Infrastructure development costs" includes planning, | 135 |
| development, and construction costs and, if applicable, any | 136 |
| allowance for funds used during construction. | 137 |
| Sec. 4929.161. (A) A natural gas company may file an | 138 |
| application with the public utilities commission for approval of | 139 |
| an infrastructure development rider to cover prudently incurred | 140 |
| infrastructure development costs of economic development projects | 141 |
| under section 4929.165 of the Revised Code. | 142 |
| (B) The rider shall take effect sixty days after the date of | 143 |
| the application's filing unless the commission, for good cause | 144 |
| shown, sets the matter for hearing. After the hearing, the | 145 |
| commission shall approve, modify, or deny the application. | 146 |
| (C) The commission shall not authorize the rider if the | 147 |
| proceeds to be generated by the rider are projected, in any one | 148 |
| calendar year, to exceed one per cent of the valuation of the | 149 |
| natural gas company's property, as determined under division | 150 |
| (A)(1) of section 4909.15 of the Revised Code for the company's | 151 |
| most recent rate case proceeding under section 4909.18 of the | 152 |
| Revised Code, unless the commission determines, for good cause | 153 |
| shown, that the cumulative amount should be reduced or eliminated. | 154 |
| (D) A rider approved under this section shall be a fixed, | 155 |
| monthly charge as determined by the commission for all customers | 156 |
| of the natural gas company. | 157 |
| Sec. 4929.162. (A) A natural gas company may file an | 158 |
| application with the public utilities commission to adjust a | 159 |
| previously approved infrastructure development rider. | 160 |
| (B) The rider adjustment shall take effect sixty days after | 161 |
| the date of the application's filing unless the commission, for | 162 |
| good cause shown, sets the matter for hearing. After the hearing, | 163 |
| the commission shall approve, modify, or deny the application. | 164 |
| Sec. 4929.163. Any proceeding under sections 4929.161 and | 165 |
| 4929.162 of the Revised Code shall be governed by Chapter 4903. of | 166 |
| the Revised Code. | 167 |
| Sec. 4929.164. A natural gas company that has an approved | 168 |
| infrastructure development rider shall accumulate the proceeds | 169 |
| generated from that rider to fund economic development projects | 170 |
| under section 4929.165 of the Revised Code. | 171 |
| Sec. 4929.165. (A) A natural gas company may apply to the | 172 |
| public utilities commission for approval to use proceeds generated | 173 |
| from an infrastructure development rider to fund prudently | 174 |
| incurred infrastructure development costs of one of the following | 175 |
| economic development projects: | 176 |
| (1) An eligible project, as defined in section 122.9511 of | 177 |
| the Revised Code, certified by the director of development | 178 |
| services under the SiteOhio certification program; | 179 |
| (2) An economic development project to which all of the | 180 |
| following apply: | 181 |
| (a) The project is located in an area where adequate natural | 182 |
| gas infrastructure is not available. | 183 |
| (b) Infrastructure development will provide opportunities for | 184 |
| increased natural gas usage. | 185 |
| (c) Economic-development benefits may result from | 186 |
| infrastructure development. | 187 |
| (B) The application for approval shall contain all of the | 188 |
| following: | 189 |
| (1) A description of the economic development project to be | 190 |
| funded; | 191 |
| (2) An estimate of the infrastructure development costs to | 192 |
| serve the economic development project; | 193 |
| (3) If the economic development project is the type described | 194 |
| in division (A)(2) of this section, a description of how the | 195 |
| project meets the criteria of divisions (A)(2)(a) to (c) of this | 196 |
| section. | 197 |
| (C) Before filing an application under division (A) of this | 198 |
| section, the company shall, at least thirty days before filing the | 199 |
| application, file a preapplication notification letter with the | 200 |
| commission of the company's intent to file. | 201 |
| (D) The commission shall adopt rules to provide for an | 202 |
| accelerated review of an application filed under division (A) of | 203 |
| this section. The rules shall provide for the automatic approval | 204 |
| of the application not later than thirty days after the date of | 205 |
| the application filing unless the commission suspends the | 206 |
| application for good cause shown. If the application is suspended, | 207 |
| the commission shall approve, deny, or modify the application not | 208 |
| later than fifteen days after the date of the suspension. | 209 |
| (E) A natural gas company may submit multiple applications | 210 |
| under this section if the company desires to fund multiple | 211 |
| economic development projects. The company may use its discretion | 212 |
| in determining which economic development projects to seek | 213 |
| approval to fund, subject to the requirements of this section. | 214 |
| Sec. 4929.166. In considering an application for approval to | 215 |
| fund an economic development project under section 4929.165 of the | 216 |
| Revised Code, the public utilities commission shall not consider | 217 |
| whether any property of the natural gas company that is currently | 218 |
| owned or projected to be owned is used and useful in rendering | 219 |
| utility service. | 220 |
| Sec. 4929.167. (A) A natural gas company that has an | 221 |
| approved infrastructure development rider shall file an annual | 222 |
| reconciliation report with the public utilities commission on the | 223 |
| first day of July, beginning in the calendar year immediately | 224 |
| following the calendar year in which the rider is approved. The | 225 |
| report shall include both of the following for the immediately | 226 |
| preceding calendar year: | 227 |
| (1) The amount of proceeds generated by the rider, including | 228 |
| any associated carrying costs calculated using the company's | 229 |
| short-term cost of debt; | 230 |
| (2) The amount of infrastructure development costs funded by | 231 |
| the rider. | 232 |
| (B) If the report shows that the proceeds under division | 233 |
| (A)(1) of this section exceed the amount under division (A)(2) of | 234 |
| this section, the company shall propose in the report a method for | 235 |
| the disposition of the difference, including any associated | 236 |
| carrying costs, to customers through the infrastructure | 237 |
| development rider on an annual basis. The commission shall either | 238 |
| approve the proposed method or direct that a different method be | 239 |
| used. | 240 |
| Sec. 4929.168. The public utilities commission may, at its | 241 |
| discretion, conduct a financial audit of a natural gas company | 242 |
| that is approved to fund an economic development project under | 243 |
| section 4929.165 of the Revised Code to determine if the company | 244 |
| spent proceeds from the infrastructure development rider in | 245 |
| conformance with the commission's orders. | 246 |
| Section 2. That existing section 4909.05 of the Revised Code | 247 |
| is hereby repealed. | 248 |