program manual vermont gas systems updated august 20, 2019 ... · comprehensive energy plan. 9. 1.2...
TRANSCRIPT
Program Manual
Vermont Gas Systems
Updated August 20 2019
Version 102
VGS Renewable Natural Gas Program Manual
Page i
Table of Contents Revision Log ii
About Vermont Gas 1
Section 1 Program Overview 2
11 WHAT IS VGS RENEWABLE NATURAL GAS 2
12 HOW MUCH DOES VGS RENEWABLE NATURAL GAS COST 2
13 WHERE IS VGS RENEWABLE NATURAL GAS PRODUCED 3
14 WHAT ARE THE ENVIRONMENT BENEFITS 4
Section 2 Regulation 5
KEY REGULATORY STEPS 5
21 REGULATORY SUMMARY 5
22 VGS RENEWABLE NATURAL GAS ADDER TARIFF 6
23 ANNUAL RNG REPORT 7
24 THREE-YEAR IMPLEMENTATION REVIEW 8
Section 3 Supply Procurement and Accounting 9
KEY VGS RENEWABLE NATURAL GAS SUPPLY AND ACCOUNTING STEPS 9
31 VGS RENEWABLE NATURAL GAS SUPPLY OVERVIEW 9
32 VGS RENEWABLE NATURAL GAS SUPPLY CONTRACTS 10
33 VGS RENEWABLE NATURAL GAS ACCOUNTING 10
34 RENEWABLE VERIFICATION 11
Section 4 Marketing 13
KEY MARKETING STEPS 13
41 MARKETING PLAN 13
42 MARKETING CLAIMS 13
43 VGS RENEWABLE NATURAL GAS ldquoPRODUCT CONTENT LABELrdquo 13
Section 5 Customer Information and Billing 14
KEY BILLING AND REVENUE STEPS 14
51 CUSTOMER ENROLLMENT AND BILLING PROCESS 14
52 VGS RENEWABLE NATURAL GAS WEBSITE AND FREQUENTLY ASKED QUESTIONS 14
53 VGS RENEWABLE NATURAL GAS PROGRAM GUIDELINES 15
54 VGS RENEWABLE NATURAL GAS PROGRAM ASSURANCE 15
EXHIBITShelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip16
VGS Renewable Natural Gas Program Manual
Page ii
Revision Log
Date Version Approver Custodian Comments Apr 26 2018 101 T Murray Initial issue Aug 20 2019 102 T Murray General review and updates including
clarification regarding tariff adder customer enrollment options and supplies
Shana Kane
Shana Kane
VGS Renewable Natural Gas Program Manual
Page 1
About Vermont Gas
Vermont Gas is providing Vermont households and businesses the choice and opportunity to achieve a clean energy future We offer our customers a cleaner1 more affordable heating choice2 award winning efficiency programs and energy services We are dedicated to helping you meet your energy goals with our innovative renewable natural gas program
VGS believes the natural gas industry must embrace renewable product offerings and promote innovation to address the global threat of climate change Our VGS team is dedicated to giving Vermont families and businesses the tools to help achieve Vermontrsquos carbon reduction goals We are proud members of Vermontrsquos Climate Pledge Coalition and determined to do our part to help achieve carbon reduction goals Choosing Vermont Gas over oil reduces carbon emissions of a household by almost 233 A family choosing to install a high-efficiency gas furnace or boiler can further reduce energy use by 204 mdash cutting both costs and carbon emissions Adding a smart thermostat can save an additional 55 Our energy efficiency experts can identify even more savings through our comprehensive home energy audits Our VGS Renewable Natural Gas Program gives customers the opportunity to further reduce their home or business carbon footprint Wersquore dedicated to helping our customers meet their energy goals with choices that promote efficient affordable and environmentally sustainable practices
Wersquore proud to bring these choices and opportunities to our customers Wersquore proud of what our customers have already achieved ndash tens of millions in annual cost savings6 and some 300000 metric tons of carbon7 avoided every single year and counting According
1 According to the US Energy Information Agency (httpswwweiagovenvironmentemissionsco2_vol_massphp) 2 VT Department of Public Service httppublicservicevermontgovsitesdpsfilesdocumentsPubs_Plans_ReportsFuel_Price_Report2016January20201620Fuel20Price20Reportpdf 3 Ibid 1 4According to Efficiency Vermont (httpswwwefficiencyvermontcomproducts-technologiesheating-cooling-ventilationfurnaces-boilers) 5 According to Nest smart thermostats can save 10 to 12 (httpsnestcomthermostatsreal-savings) 6 This number is based on the aggregate savings for customers conversion to Natural Gas vs using oil or propane and the cumulative savings generated by VGS Efficiency Program 7 This number is based on EIA data to determine the carbon avoided by VGSrsquo customers vs using oil and propane and the cumulative carbon savings generated from VGS Efficiency Program
VGS Renewable Natural Gas Program Manual
Page 2
to the Environmental Protection Agency (EPA) thatrsquos carbon avoidance equivalent to more than 70 wind turbines8
Section 1 Program Overview
11 WHAT IS VGS RENEWABLE NATURAL GAS ldquoVGS Renewable Natural Gasrdquo is an innovative offering that will allow Vermont Gas customers to displace the use of conventional (fossil) natural gas by purchasing the renewable attributes of renewable natural gas (RNG) production These renewable attributes correspond with the production of RNG by anaerobic digestion of organic matter at landfills waste treatment plants industrial sites and farm digesters This digestion process produces biogas which is cleaned to pipeline quality - at which point it is referred to as biomethane - and injected as RNG into the natural gas pipeline system
Our initial supply of RNG is coming from outside of Vermont where it is injected into the natural gas pipeline and commingled with conventional natural gas We are working with developers to create a local ldquoin-staterdquo supply of RNG produced in local digester facilities to then inject directly into the Vermont Gas distribution system
Vermont Gas customers have the opportunity to participate in the VGSrsquo Renewable Natural Gas Program by voluntarily signing up to purchase renewable attributes of RNG for either a percentage of their natural gas usage or for a fixed quantity per monthly billing cycle Participating customers agree to pay an additional charge referred to as an ldquoRNG Adderrdquo commensurate with the additional cost to purchase RNG supply compared to conventional natural gas This charge will be reflected on participating customersrsquo monthly bills along with the percentage of the customerrsquos gas usage or fixed monthly quantity covered by the RNG Program Every customer who participates in the program advances Vermontrsquos leadership in renewable energy innovation and furthers Vermontrsquos Comprehensive Energy Plan9
12 HOW MUCH DOES VGS RENEWABLE NATURAL GAS COST All VGS customers firm and interruptible who voluntarily enroll in the VGS Renewable Natural Gas Program will pay an additional Program ldquoRNG Adderrdquo based on the percentage of RNG the customer has subscribed or the fixed quantity allocated by the customer The RNG Adder is billed in hundred cubic feet or ldquoCCFrdquo (1 CCF equals one hundred cubic feet of gas) based on the percentage of RNG selected by the customer or fixed quantity
8 httpswwwepagovenergygreenhouse-gas-equivalencies-calculator 9 Vermont Comprehensive Energy Plan Chapter 125 (httpsoutsidevermontgovsovwebservicesShared20Documents2016CEP_Finalpdf)
VGS Renewable Natural Gas Program Manual
Page 3
The voluntary VGS Renewable Natural Gas Adder is available to all firm rate classes (R G1 G2 G3 and G4) in the percentages shown below and will apply to monthly CCF usage
Available RNG Adder Percentages (applied to monthly Ccf usage)
10
25
50
100
In addition rather than electing a percentage any customer10 may elect to purchase a fixed amount of the environmental attributes associated with RNG which falls under the approved ldquoS-RNGrdquo Tariff The RNG Adder (and S-RNG Adder) will appear as a separate line item charge on the customerrsquos bill in addition to the existing rate elements of a Daily Access Charge a Natural Gas Charge and a Distribution Charge The current RNG Adder can be found at httpswwwvermontgascomrenewablenaturalgasadder-calculator The RNG Adder will change whenever the Public Utility Commission (ldquoPUCrdquo) authorizes a change in the Natural Gas Charge portion of the tariff Currently the RNG Adder is adjusted quarterly alongside the Natural Gas Charge change The effect of these changes to the RNG Adder is that the cost of the RNG Adder will vary with the wholesale cost of conventional gas and may further vary in the future as new RNG supply contracts come into our portfolio
VGS ldquointerruptible servicerdquo customers may participate in the RNG Program through either the RNG adder or the S-RNG tariff which will permit these customers to designate how much of their annual natural gas purchases they wish to meet via the RNG Program As noted above the RNG Adder will change whenever the PUC authorizes a change in the Natural Gas Charge portion of the tariff
13 WHERE IS VGS RENEWABLE NATURAL GAS PRODUCED VGS Renewable Natural Gas can be sourced from either in-state or out-of-state producers that utilize anaerobic digestion of organic matter such as landfills waste treatment plants industrial sites and farm digesters that are connected to the natural gas pipeline system In-state RNG supply (planned for 2020) would be injected directly into Vermont Gasrsquo pipeline system after ensuring the RNG meets VGSrsquo natural gas quality standards Although out-of-state VGS Renewable Natural Gas resources may not physically flow to
10 A customer is defined as a consumer of natural gas in Vermont regardless of whether or not the customer has an account for metered natural gas service with the Company
VGS Renewable Natural Gas Program Manual
Page 4
the VGS system the environmental attributes will be dedicated to Vermont Gas customers
Much like renewable electricity that is comingled in the electric grid VGS Renewable Natural Gas is comingled with conventional natural gas supply in the pipeline system VGS Renewable Natural Gas customers are purchasing the environmental attributes of RNG There is no claim by VGS that a participating customer is directly burning an RNG or biomethane molecule
14 WHAT ARE THE ENVIRONMENT BENEFITS An average household enrolling in the VGS Renewable Natural Gas program at the 100 level will effectively nullify the corresponding carbon footprint associated with the customerrsquos direct use of natural gas For a typical VGS residential customer using 90 Mcf of conventional natural gas each year this equates to 49 metric tons11 of avoided carbon dioxide emissions each year
VGS is not making representations or claims for any additional environmental benefits of anaerobic digesters beyond the carbon reduction associated with replacing conventional natural gas with a renewable source of energy production Specifically we make no environmental claims related to the avoidance of uncontrolled fugitive methane emissions that would have gone into the atmosphere from the primary biogas feedstock (eg landfill gas manure wastewater) in the absence of anaerobic digestion and capture of the methane as RNG
11 (httpswwwepagovenergygreenhouse-gas-equivalencies-calculator)
VGS Renewable Natural Gas Program Manual
Page 5
Section 2 Regulation
KEY REGULATORY STEPS
Item Description Filing Schedule VGS RNG Adder Tariff Update
Updates required to reflect gas costs changes
Quarterly
Annual RNG Report Full Programmatic Report Annually RNG Supply Contracts Filed for VT Public Utility
Commission (PUC) approval or information
As required
Triennial Assessment Program Review with Dept of Public Service
Every three years
21 REGULATORY SUMMARY
In October 2015 Vermont Gas filed a petition with the PUC for authority to establish a Renewable Natural Gas offering The PUC initiated Docket No 8667 to evaluate VGSrsquo proposal VGS modified the program based on input from parties to the proceeding12 and resubmitted testimony in April of 2016 followed by technical hearings in September of 2016 On September 6 2017 the PUC issued the final order approving the voluntary RNG program (see Exhibit 21) The Order provided authority for VGS to sell RNG under the proposed ldquoadderrdquo structure The Order also provided the accounting guidance to inventory the renewable attributes of RNG and the ability to recoup unsold RNG costs if need be with subsequent PUC approval The order also authorizes VGS to purchase carbon offsets in the event the supply of RNG is insufficient to meet subscriber demand
The table below lists the requirements contained in the Order and VGSrsquo compliance to-date
Order Requirement Status and Compliance Date
1 When VGS has procured RNG supplyhellipit shall filea formal tariff including proposed rates for the saleof RNG
Completed - January 30 2018 See also section 22 below
2 VGS shall develop and file for Commissionapproval a separate Renewable Vehicle Fuel Tariffto serve customers using RNG as a transportationfuel
Pending ndash Due date TBD
12 Parties to Docket No were the Department of Public Service Conservation Law Foundation and Lincoln Renewable Natural Gas LLC
VGS Renewable Natural Gas Program Manual
Page 6
Order Requirement Status and Compliance Date
3 VGS shall file a marketing plan for the RNGprogram consistent with the requirements setforth in the order within one month of the issuanceof this Oder
Completed - October 6 2017
4 VGS shall file an annual report consistent withthe requirements of the Order uponimplementation of the RNG program
Initial filing completed ndash filed June 2018 and 2019
5 VGS shall file a comprehensive review of theperformance of the program with the Commissionand Department after 3 years of implementationThis review will include an environmentalaccounting protocol to quantify the environmentalbenefits of the program
Pending ndash Due by March 15 2021
6 VGS shall review proposed RNG supplyarrangements with the Department
Completed - Initial review 11618 Review of subsequent contract also completed and approved by PUC
On October 4 2018 the Company filed with the PUC for a new RNG tariff offering ldquoS-RNGrdquo Adder which has the same pricing as the RNG Adder The new offering allows customers to purchase a fixed amount of RNG per month that would be unbundled from the customerrsquos metered gas consumption and offers customers who are consumers of natural gas but do not have an account for metered gas service with the Company the ability to purchase RNG attributes The PUC approved the S-RNG Adder to take effect with bills rendered on or after December 1 2018 (see Exhibit 24)
22 VGS RENEWABLE NATURAL GAS ADDER TARIFF The PUC order provides ldquoWhen VGS has procured RNG supplyhellipit shall file a formal tariff including proposed ratesrdquo On January 30 2018 after contracting for the initial RNG supply VGS filed the VGS Renewable Natural Gas Adder Tariff (see Exhibit 22) On March 9 2018 the PUC approved the initial RNG Adder for effect with bills rendered on and after March 15 2018 (see Exhibit 23)
In simple terms the RNG Adder reflects the difference between the cost of RNG and the cost of conventional gas This is calculated by subtracting the average commodity cost for conventional natural gas from the average commodity cost for RNG as indicated in the following example
VGS Renewable Natural Gas Program Manual
Page 7
VGS Renewable Natural Gas Adder Calculation Average RNG Commodity Cost
Minus Average Natural Gas Charge Equals VGS Renewable Natural Gas Adder
Exhibit 22 provides the detailed calculations
This formula identifies the current premium to be paid per CCF of RNG This premium also represents the value of the ldquoVGS Renewable Natural Gas Attributerdquo that VGS will withdraw from the VGS Renewable Natural Gas Attribute Inventory described below
To full reflect the cost of the initial RNG supply with future RNG supply contracts the initial RNG Adder was based on a blended rate of the cost of the first and the expected costs of future RNG purchases over the next 5 years The PUC has authorized this blended approach
The RNG Adder will change whenever the PUC authorizes a change in the Natural Gas Charge portion of the tariff Currently this change occurs quarterly
23 ANNUAL RNG REPORT An Annual RNG Report will be filed with PUC and Vermont Department of Public Service (ldquoDepartmentrdquo) each year in June The first annual report was filed in June 2018 In accordance with the PUC final order approving the Program the annual report will include the following information
1 Number of subscribers by class2 Sales volume by customer class3 Sales Revenues4 Any sales or purchases of carbon offsets5 Supply Consumption matching portfolio including any shortfall or excess supply of
RNG6 True-up schedule for any imbalances7 RNG supply verification8 Quantification of the impact of any excess RNG costs flowing through the PGA if
VGS remains under alternative regulation9 Accounting of any carbon offsets or other incentives10 Status of any contracts for RNG including plans to acquire new supply contracts11 Revenue from Renewable Identification Number (ldquoRINrdquo) sales and impact on the
transport (transportation) tariff as well as any projections about the RIN marketthat are available to VGS and
12 Complete reports and environmental verifications by an independent verifier
The annual report will also address the effectiveness of the program and its affordability
VGS Renewable Natural Gas Program Manual
Page 8
24 THREE-YEAR IMPLEMENTATION REVIEW In accordance with the PUC Order in March 2021 (the third year of the Program) VGS will file a comprehensive review of the performance of the Program The review will include an environmental accounting protocol to quantify the environmental benefits of the program The three-year comprehensive program review will also address the effectiveness of the program its affordability and the feasibility of other policy options to advance the production and use of RNG in Vermont
SECTION 2 EXHIBITS
bull Exhibit 21 VT PUC Approval Orderbull Exhibit 22 VGS RNG Tariff Rate Filingbull Exhibit 23 PUC Approval of VGS RNG Ratesbull Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
VGS Renewable Natural Gas Program Manual
Page 9
Section 3 Supply Procurement and Accounting
KEY VGS RENEWABLE NATURAL GAS SUPPLY AND ACCOUNTING STEPS
Item Description Schedule Owner RNG Supply Contracts
Procuring RNG Supply As needed Gas Supply
RNG Supply True-Up
Balancing RNG supply sales and retiring attributes
Monthly Finance
RNG Supply Verification
Verifying ldquorenewabilityrdquo of RNG Supply
Annually Gas SupplyThird- Party
31 VGS RENEWABLE NATURAL GAS SUPPLY OVERVIEW
VGS intends to contract with a variety of RNG supply sources to meet its customer demand in the RNG Program RNG supply is currently available from a limited number of landfill and digester projects in Canada or US states other than Vermont In Vermont at least one local supply project is currently under development
Today there is no central ldquomarketplacerdquo for RNG suppliers and buyers to trade RNG supply contracts RNG buyers such as VGS transact with individual producersprojects or work through RNG brokers to acquire RNG supply or the environmental attributes associated with RNG in bilateral transactions VGSrsquo initial RNG supply contract in 2018 was with BP Canada Energy Group ULC and sourced from the EBI Inc13 biogas production facility located in Ste Genevieve Quebec In 2019 VGSrsquo purchased RNG supply from a waste water treatment facility in Dubuque Iowa
In 2020 VGS plans to begin receiving RNG supply from a Vermont farm digester and a Canadian digester facility The Vermont farm digester located in Salisbury Vermont is slated for completion in late 2020 producing 180000 MMbtursquos per year The Canadian digester project is located in London Ontario VGS has agreed to purchased 100 of the supply from this facility up to 120000 MMbtursquosyear for 15 years VGS sought and received PUC approval for this Ontario supply in 2018 and received approval for an amendment in 2019 To meet anticipated demand for RNG until these two resources come on line the Company purchased short-term supply of RNG from the Iowa facility in 2019 We anticipate that these supply sources will satisfy the VGS Renewable Natural Gas Program supply needs for the first few years of the Program If we are unsuccessful
13 EBIrsquos Facility was recognized in 2016 (httpswwwdesjardinscomcavideossinglejspdocName=vid-ebi-e)
VGS Renewable Natural Gas Program Manual
Page 10
in procuring supply from these sources or if demand exceeds these planned supplies VGS will seek additional RNG supply in the marketplace
32 VGS RENEWABLE NATURAL GAS SUPPLY CONTRACTS VGS will utilize standard industry or comparable contract vehicles to procure RNG supply with site-specific terms and conditions Given the unique nature of the in-state RNG project the gas supply contract is a 3 way agreement between the producer VGS and an end user Accordingly the form of the contract does not resemble industry standard supply agreements but contains all appropriate business terms The first two contracts signed by VGS utilize a gas utility standard base contract with signed transaction confirmation documents that specify the specific details of each deal These contracts will require the RNG supplier to certify the renewable attributes and that VGS has full and sole ownership of those attributes As required by the PUC Order RNG Suppliers will also be required to allow VGS independent verification of the production and transactions related to VGS supply volumes The specific PUC requirements are found in finding 21 page 7 of Exhibit 21 - VT PUC Approval Order
33 VGS RENEWABLE NATURAL GAS ACCOUNTING Like accounting practices in the renewable electric industry Vermont Gas will have the obligation to match RNG supply volumes with customer RNG purchase volumes over time As discussed in Section 22 the premium for RNG above the cost of conventional natural gas establishes the value of the renewable attribute purchased by the customer These attributes are tracked in a separate inventory account and then matched with actual retail VGS Renewable Natural Gas sales Once these renewable attributes are matched with VGS Renewable Natural Gas sales they are ldquoretiredrdquo and cannot be resold in any manner or used to satisfy another obligation by VGS As provided in the PUC order ldquoVGS will use a ldquotrue-uprdquo period of up to 12 months to balance the difference between RNG attributes sold to customers (demand) and RNG attributes purchased by VGS from suppliers (supply)rdquo This true-up period allows RNG attribute ldquooversupplyrdquo and ldquoundersupplyrdquo to be balanced as described below
In an ldquooversupplyrdquo situation where forecasted RNG attribute purchases exceed the number of RNG attributes that VGS forecasts selling to its customers through the RNG Program VGS will first seek to market the excess RNG and the environmental attributes back through the wholesale supply channels If this oversupply extends beyond the 12-month true-up window VGS may seek PUC permission to flow any remaining RNG attribute inventory amounts through the Purchase Gas Adjustment (ldquoPGArdquo) or through its cost of service if the PGA is no longer in effect at that time
An ldquoundersupplyrdquo situation would occur if customer purchases of RNG attributes exceeded the amount available under VGSrsquo RNG supply contracts in the forward looking 12-month true-up window If the RNG supply purchases are lagging the RNG sales VGS
VGS Renewable Natural Gas Program Manual
Page 11
will true-up or balance this undersupply over the upcoming 12-month period through existing or additional RNG supply purchases
If VGS is unable to eliminate an undersupply imbalance after the 12-month true-up period VGS would need to purchase carbon offsets in the dollar amount equal to VGS Renewable Natural Gas revenues collected associated with the undersupply (See Exhibit 21 Order Finding 13 and 15) Carbon offsets are listed on one of several Carbon Registries such as the American Carbon Registry If carbon offsets are not available VGS has the option to contribute these RNG revenues to the statersquos Clean Energy Development Fund or issue prorated credits to affected customers It should be noted that while purchasing offsets is a tool for VGS it is not the intent of the VGS Renewable Natural Gas Program and if an undersupply situation persisted VGS would likely petition the PUC to modify or suspend the VGS Renewable Natural Gas Program prospectively
VGS will manage the RNG Program to closely match supply and demand and utilizing our RNG wholesale cost mitigation tools to avoid RNG supply challenges
As renewable programs evolve in the energy and natural gas industry Vermont Gas will adjust its accounting procedures to reflect industry standards and revise this manual to reflect any modifications or changes
34 RENEWABLE VERIFICATION VGS is committed to transparency and the integrity of this innovative program is essential to success Toward that end no step is more essential than the verification of the renewability claims of our VGS Renewable Natural Gas supply The PUC reinforced this commitment in the RNG approval order as follows
ldquoVGS will annually verify that the RNG was produced by a renewable gas production facility that VGS is the exclusive owner of any environmental attributes associated with RNG it sells under the program that it acquired the RNG from its transferor and sold it at retail and that the RNG has not been sold twice at any point between RNG production and sale to VGS whether by sales into carbon offset markets or otherwise This verification will be based on certifications of VGSrsquos suppliers and of an independent third party retained by VGS for this purposerdquo
VGS will use an independent third-party to verify the renewable claims for the VGS Renewable Natural Gas supply including the following
bull Confirm the renewable fuel feedstock identificationbull Confirm the product renewable fuel identificationbull Review and confirm the renewable fuel production processbull Review of fuel flow measurement and quality monitoring process and equipment
VGS Renewable Natural Gas Program Manual
Page 12
bull Review of contracts and affidavits governing the transfer of the RNG from theoriginal source to the end user(s)
bull Review of evidence confirming the existence of a physical path (common carrierpipeline) for RNG transfer and distribution to end users
SECTION 3 EXHIBITS
bull Exhibit 31-Accounting Proceduresbull Exhibit 32-Verification from Suppliersbull Exhibit 33-Third Party Verification
VGS Renewable Natural Gas Program Manual
Page 13
Section 4 Marketing
KEY MARKETING STEPS Item Description Owner VGS Renewable Natural Gas Branding
Maintain product and brand integrity Communications
Product Definition Ensuring proper VGS Renewable Natural Gas description in all materials
Communications
External Review Verification of Marketing claims Communications
41 MARKETING PLAN Exhibit 41 is the 2018 version of the Marketing Plan filed with the PUC This document may be updated from time to time as we adjust our marketing strategy
42 MARKETING CLAIMS VGS is committed to making clear and accurate claims about the environmental benefits of VGS Renewable Natural Gas We have enlisted the assistance of a law firm specializing in marketing renewable products to review VGSrsquo marketing materials and claims In addition VGSrsquo annual third-party review of our program will focus on the integrity of our administration of the VGS Renewable Natural Gas program (see Section 54)
43 VGS RENEWABLE NATURAL GAS ldquoPRODUCT CONTENT LABELrdquo The Product Content Label is intended to be prominently displayed on the VGS web site and in correspondence to customers when they enroll in this program
Product Content Label
By participating in the VGS Renewable Natural Gas program you are purchasing the renewable attributes associated with the production of renewable natural gas (ldquoRNGrdquo) which may also be referred to as biogas or bio-methane A unit of VGS Renewable Natural Gas measured in hundred cubic feet (CCF) represents the environmental attribute of 1 CCF of biogas VGS reserves the right to purchase carbon offsets if RNG supply is not available VGS will notify customers if this occurs The Product Content Label is available at httpswwwvermontgascomrenewablenaturalgas
SECTION 4 EXHIBITS
bull Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)bull Exhibit 42 VGS Renewable Natural Gas Trademark
VGS Renewable Natural Gas Program Manual
Page 14
Section 5 Customer Information and Billing
KEY BILLING AND REVENUE STEPS Item Description Owner Billing Enrollment of VGS Renewable Natural Gas
Customers Contact Center
Notice Customer Notice of VGS Renewable Natural Gas Rates
Contact CenterBilling Group
Program Assurance Verification of VGS Renewable Natural Gas program procedures
Billing and Finance
51 CUSTOMER ENROLLMENT AND BILLING PROCESS The VGS Customer Care team will enroll customers and establish the VGS Renewable Natural Gas Adder on customer accounts Customers will be able to order VGS Renewable Natural Gas via VGSrsquo website (preferred method) calling VGS contact center or through the VGS Energy Services team An RNG calculator is available on VGSrsquo website httpswwwvermontgascomrenewablenaturalgasadder-calculator that can assist customers in estimating the costs of VGS Renewable Natural Gas at the various percentage levels based on the customerrsquos gas consumption VGS will inform customers of the current RNG Adder premium when they enroll Customers have two options when enrolling in the RNG program Customers may select their desired percentage of VGS Renewable Natural Gas ( 10 25 50 or 100) or they may allocate a fixed amount of RNG attributes (ldquoS-RNGrdquo) for each month that they are enrolled in Customer Care will then set up the billing on their account VGS will send an order confirmation via email or as a separate mailing (see Exhibit 51) thanking the customer for subscribing to VGS Renewable Natural Gas and informing the customer of the estimated impact on their bill As shown on Exhibit 51 the order confirmation letter will also include the RNG program guidelines These guidelines are discussed in section 53 below
52 VGS RENEWABLE NATURAL GAS WEBSITE AND FREQUENTLY ASKED QUESTIONS The VGS Renewable Natural Gas web page contains general VGS Renewable Natural Gas information an FAQ a VGS Renewable Natural Gas calculator current VGS Renewable Natural Gas Adder and an easy-to-use sign up form
For the most recent Frequently Answered Questions visit httpwwwvermontgascomVGS Renewable Natural Gas
VGS Renewable Natural Gas Program Manual
Page 15
53 VGS RENEWABLE NATURAL GAS PROGRAM GUIDELINES VGS Renewable Natural Gas customers will fall under VGSrsquo General Terms and Conditions outlined in VGSrsquo tariffs and PUC rules (ex Disconnection practices late fees taxes) VGS tariffs can be found at httpwwwvermontgascomaccountrates
VGS will notify VGS Renewable Natural Gas customers of rate changes in advance of implementation on both their individual bills and the Companyrsquos website RNG customers have the ability to cancel or modify their RNG account profile consistent with the tariff
VGSrsquo RNG customers can subscribe to VGS Renewable Natural Gas service with no term commitment and can cancel with three daysrsquo notice The RNG Adder will apply at either the percentage or fixed quantity allocated by the customer to the usage shown on the monthly bill regardless of enrollment or termination date The RNG Adder will not be pro-rated for partial-month usage
VGS customers receiving the low-income rate discount can subscribe to VGS Renewable Natural Gas however the 20 low income discount will not apply to the RNG Adder
Customers currently on a budget program will be encouraged to request a recalculation of their budget plan to adjust for the RNG Adder costs but it is not required
54 VGS RENEWABLE NATURAL GAS PROGRAM ASSURANCE
On an annual basis VGS will conduct a program review to ensure the VGS Renewable Natural Gas program is managed consistent with this manual The VGS Renewable Natural Gas program is a new product for the US natural gas utility industry and as such no industry specific standards exist VGS is working with on a national effort to develop a ldquoGreen-Erdquo certification process for Renewable Natural Gas programs that process is targeted for completion in 2020
SECTION 5 EXHIBITS
bull Exhibit 51 ECIS Customer Confirmation
VGS Renewable Natural Gas Program Manual
Page 16
EXHIBITS
Exhibit 21 VT PUC Approval Order
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Docket No 8667
Petition of Vermont Gas Systems Inc for aRenewable Natural Gas Program andOptional Tariff
)))
Hearing atMontpelier Vermont
September 22016
order entered q leacute I aon
PRBsBNI Andrea C McHugh Hearing Officer
AppeeReNcBs Peter H Zamore Esq
Owen J McClain EsqSheehey Furlong amp Behrn PCfor Vermont Gas Systems Inc
Louise C Porter EsqTimotthorn M Duggan Esq
for the Vermont Department of Public Service
Sandra Levine Esqfor Conservation Law Foundation
Gerald R Tarrant EsqTarcant Gillies amp Richardsonfor Lincoln Renewable Natural Gas LLC
I INrnooucrroN
This case involves a petition filed by Vermont Gas Systems Inc (VGS) with the
Vermont Public Utility Commission (oCommission) I for approval of a Renewable Natural Gas
(RNG) program and optional RNG tariff service for its customers The proposed RNG
progriquestigravem establishes a framework for VGS to offer its customers the option to purchase RNG for
I Pursuant to Section 9 of Act 53 of the 2017 legislafive session the Vermont Public Service Boards name waschanged to the Vermont Public Utility Commission effective July l 2017 For claity activities of the VermontPublic Service Board that occurred before the name change will be referred to in Commission documents as
activities of the Commission unless that would be conntildersing in the specific context
Docket No 8667 Page2
program establishes a framework for VGS to offer its customers the option to purchase RNG for
as a portion of their usage RNG is produced from materials such as agricultural waste manure
municipal waste plant material or compost and is also referred to as bio-methane In this
proposal for decision I recommend that the Commission approve the proposed RNG program
and require VGS to make compliance filings as set forth herein
il PnocnrunnlHrsroRY
On October 232015 VGS figraveled a petition for approval for its RNG program including
prefiled testimony and exhibits of Thomas Murray
On January 192016I held a prehearing conference and on January 252016I issued
an Order establishing a schedule
On February 122016 VGS filed a revised RNG Plan
On March 102016I held a workshop to discuss the proposed program
On March 152016I issued an Order revising the schedule
On March 222016 Conservation Law Foundation (CLF) and Lincoln Renewable
Natural Gas LLC (Lincoln) filed motions to intervene in this proceeding
On April 12016 VGS filed supplemental testimony and exhibits
On April 82016I issued an Order granting CLFs and Lincolns intervention requests
On July 72016 the Vermont Department of Public Service (Department) CLF and
Lincoln filed testimony
On August 82016 Lincoln filed supplemental testimony
A technical hearing was hthornld on September 22016
On September 30 20|6VGS filed a draft proposal for decision supported by the
Department In addition CLF filed a brief on the same date Reply briefs were filed by VGS
and CLF on October 142016
III Posnroxs oF THE PlRrlns
VGS
VGS requests approval of its proposed RNG program for the sale of RNG to customers
on a voluntary basis VGS claims that its proposal contains reasonable provisions to align its
RNG purchases with the amounts sold to its customers appropriate mechanisms to address over-
Docket No 8667 Page 3
or under-supply of RNG and verification requirements to ensure that sales in fact consist of
RNG VGS maintains that the RNG program is an appropriate first step in stimulating RNG
producer supply and customer demand and is oamply supported by Vermonts experience of
measured implementation of electric renewable pricing programs2 VGS argues that the
program is responsive to the Commissions condition in its Order in Docket 79701o develop a
proposal to promote bio-methane project development3
Department of Public Service
Although the Department did not file a brief or reply brief it did present witness
testimony and indicated its support for the draft proposal for decision filed by VGS The
Department recommends that VGS review all proposed RNG supply arrangements with the
Department (in addition to seeking 30 VSA $ 248 approval where required) and suggests that
in the event of an undersupply of RNG VGS obtain carbon offsets in an amount equivalent to
the unused customer contributions The Department recommends that the RNG program be
reviewed at the end of three years at which time the protocol regarding the purchase of offsets
would be revisited
C ons ervation Law Foundation
CLF urges that the Commission reject the RNG program and instead adopt an RNG
content standard similar to the electric renewable portfolio standarda CLF maintains that the
expected annual sales volume is not apace that is consistent with Vermonts legislative and
planning targets for meeting energy needs with renewable energy or for reducing greenhouse gas
emissionss CLF claims that the proposed voluntary tariff falls short of being a program or
strategy that promotes the increased use of RNG resources or supply or fosters bio-methane
projects in Addison county6
2 VGS reply brief aI23 In Docket 7970the Commission considered the petition of VGS for a certificate of public good (CPG) pursuant
to 30 VSA $ 248 authorizing the construction of the Addison Natural Gas Pipeline In an Order issued on
December 232013 the Commission granted the CPG As a condition of approval the Commission required VGSin consultation with the Department to file a petition with the [Commission] proposing a program to promote bio-methane project development Docket 7970 Order of l2l23ll3 at 147
a CLF brief at 12s CLF brief at 36 CLF brief at 4
Docket No 8667 Page 4
Lincoln
Lincoln maintains that itis essential to promote development of agricultural-based bio-
methane supply in VermontT Lincoln states that the Commission is not in a position to
adequately address VGSs proposed RNG program until negotiations for sale of itsoutput
involving VGS and Middlebury College are completes
IV Punrrc CounnnNrs
The Commission received three letters of support for VGSs RNG program On March 10
2016 the Chittenden County Transportation Authority filed comments indicating that it intends to
explore the possibility of utilizing RNG to cover a portion of the energy needs for its fleet of 70
buses On March 182016 Champlain College filed comments noting that it is interested in using
RNG for a portion of its energy needs that are currently met with conventional natural gas On
March 282016 Casella Waste Systems made a filing with the Commission stating its intention
to explore using RNG to meet some of its energy needs for its fleet of vehicles
V trrutrxcs
Based on the evidence of record I hereby report the following findings and
recommendations to the Commission in accordance with 30 VSA $ 8(c)
1 RNG is produced from raw materials such as agricultural waste manure municipal
waste plant material or food waste Decomposition or digestion of these materials produces
raw methane which is then cleaned or upgraded to bio-methane in order to meet the receiving
pipelines gas quality specifications prior to injection into an existing pipeline system Thomas
Murray VGS (Murray) supp pf at3
2 VGS is exploring options to purchase RNG supply from Lincoln and from landfill gas
projects located outside Vermont that would be received through the Trans-CanadaPipeline
(TCPL) system Murray supp pf at 8-9
7 Daniel Smith Lincoln Renewable Natural Gas LLC (Smith) supp pf at L8 On August 152016 Lincoln filed a motion to continue this proceeding for a period of not less than 60 days statingthat the continuance would allow [it] VGS and Middlebury College to complete discussions as to VGSsinvolvement in the RNG supply in Vermont and allow the record in this case to be properly developed VGS and
the Department opposed the request for continuance On August 222016I issued an Order denying Lincolnsrequest and determined that Lincoln did not demonstrate good cause to postpone the technical hearing
Docket No 8667 Page 5
3 Under the program retail customers would voluntarily purchase RNG in amounts equal to
l0oo25yo50o or 100 of their total monthly requirements at specified prices per Ccf as an
adder to other retail charges Customers could terminate RNG purchases upon providing three
days of advance notice to VGS Murray supp pf at l-2 exhs Pet-VGS-l and Pet-VGS-3
4 Intemrptible customers will have the opportunity to participate in the RNG program
through VGSs existing Lock Price Program which currently provides for up to a two-year
commitment Murray supp pf at 5
5 VGS will develop and file for Commission approval a separate tariff for use of RNG as a
transportation fuel This tariff will allow VGS to take advantage of the sale of the associated
Renewable Identification Numbers (ooRINs) When RNG is used as a transportation fuel it is
eligible to receive RINs under the Federal Renewable Fuel Standard RINs can be resold on the
wholesale market and would be used to offset the price of RNG to transportation customers
receiving service under the tariff Joan E White
Department (White) pf at7tr912116 at 62-
63 (White) exh Pet-VGS-5 Response 4
6 VGS will also initiate a review of the RNG program by the Commission Department and
others after three years White pf at9tr912116 (Munay) at24
7 The adder price for each Ccf of RNG will be equal to the average RNG commodity cost to
VGS less the average commodity cost of natural gas VGS will adjust the adder price per Ccf on
a quarterly basis as part of its Purchased Gas Adjustment (PGA) filing Murray supp pf at 4
8 The proposed RNG program will include a tariff that is very similar in concept to the
Green Mountain Power Corporation (GMP) Cow Power tariff However Cow Power is based
on a fixed rate per kWh no matter what the cost of the renewable energy Murray supp pf at llVhite pf at 4
9 VGSs RNG tariff will be calculated quarterly based on actual RNG and natural gas costs
and will provide accurate price signals as to the price differential between natural gas and RNG
White pf at 4
10 Based on a survey conducted by VGS 85 of its customers are willingto pay l0oo
more for a renewable product VGS projects that customers could potentially consume over
500000 Mcf of RNG over the next five years Murray supp pf at 5
DocketNo8667 Page 6
11 VGS will use a true-up period of up to 12 months in order to balance the difference
between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply)
Murray supp pf at 9
12 There is a risk that due to the voluntary nature of the RNG program supply and demand
will be mismatched White pf at41 David G Hill CLF (Hi11) pf at 9
13 If the available RNG supply during the previous 12 months is less than the amount
purchased by VGS customers the RNG program provides that VGS may use funds collected to
purchase carbon offsets from an established carbon registry such as the American Carbon
Registry VGS will purchase an amount of carbon offsets equal to the amount of the revenue
resulting from the undersupply in order to result in a revenue-neutral program At the time of the
three-year implementation review VGS will propose an environmental accounting protocol in
order to quantify the environmental benefits of the program and to evaluate the financial risk of
purchasing carbon offsets in an amount equivalent to the environmental benefits of unsold RNG
due to undersupply Murray supp pf at 6 l0 exh Pet-VGS-s Responses 1
14 The development and standardization of RNG attributes is in its infancy as compared to
the existing markets for the environmental attributes used in the electric industry (renewable
energy credits or (RECs)) Murray supp pf at 12
15 If carbon offsets are not available VGS will contribute the RNG program revenues to the
Clean Energy Development Fund or issue prorated credits to affected customers Exh Pet-
VGS-S Responses 3
16 If RNG supply exceeds customer demand VGS would seek to sell the excess RNG at
wholesale Murray supp pf at 10
17 VGS will provide proposed RNG supply contracts to the Department prior to execution
It will also consult with the Department before making decisions that could dramatically impact
price or the integrity of the RNG program Exh Pet-VGS-S Responses 2 White pf at 5
18 The estimated cost of RNG supply ranges from $l2lMcf to $25lMcf The cost of natural
gas is less than $3Mcf Murray supp pf at 8-9
19 VGS will implement an RNG Quality Assurance Plan establishing a testing and
monitoring process to ensure that RNG injected (via in-state RNG producers) into the VGS
system is pipeline quality and meets the specifications of the TCPL transportation tariff for bio-
methane gas quality Murray supp pf at 14 exh Pet-VGS-4
Docket No 8667 PageT
20 VGS will file an annual report on the RNG program with the Commission and the
Department containing the following information
1 Number of subscribers by customer class
2 Sales volume by customer class
3 Sales revenues
4 Any sales or purchases of carbon offsets
5 Supplyconsumption matching portfolio including any shortfall or excess
supply of RNG
6 True-up schedule for any imbalances
7 RNG supply verification
8 Quantification of the impact of any excess RNG costs flowing through the
PGA if VGS remains under altemative regulation
9 Accounting of any carbon ofszligets or other incentives
10 Status of any contracts for RNG including plans to acquire new supply
contracts
I 1 Revenue from Renewable Identification Number (RlN) sales and impact
on the transport tariff as well as any projections about the RIN market that are
available to VGS and
12 Complete reports and environmental verifications by an independent
verifier
Murray supp pf at 11 exh Pet-VGS-3 White pf at 8-9 tr912116 at23-24 (Munay)
21 Except as described below concerning RlN-eligible RNG VGS will annually verify that
the RNG was produced by a renewable gas production facility that VGS is the exclusive oryner
of any environmental attributes associated with RNG it sells under the program that it acquired
the RNG from its transferor and sold itatretail and that neither the RNG nor any renewable
attribute associated with the RNG has been sold twice at any point between RNG production and
sale to VGS whether by sales into carbon offset markets or otherwise This verification will be
based on certifications by VGSs suppliers and by an independent third party retained by VGS
for this purpose Exh Pet-VGS-3 exh Pet-VGS-s Response 5 White pf at 8
Docket No 8667 Page I
22 For RlN-eligible RNG used as vehicle fuel verification will be addressed in detail in the
future as part of VGSs proposed Renewable Vehicle Fuel Tariff Exh Pet VGS-5 Response 4
rr912116 at 65 (White)
23 There are few natural gas utilities currently offering RNG at retail VGS modeled its
RNG program after the program designed by FortisBC a local distribution company in British
Columbia Canada VGS also had discussions with SoCalGas in Southern California Both of
these companies are leaders in developing RNG offerings and fostering RNG supply resources
Murray supp pf at 7
24 VGS will file with the Commission and Department a marketing plan containing the
following elements
l An evaluation element that includes concrete metrics such as sales
volume targets and enrollment targets
2 Identification of target market segment(s)
3 Development of materials and language for customer-marketing efforts
that explain the RNG program in plain language easily understandable to the
average customer
4 An online bill calculator
5 An implementation plan that identifies specific activities and a timetable
and
6 Abudget
Exh Pet-VGS-5 White pf at 10 Tr912116 at22-23 (Munay)
25 VGS and the Department represent that the RNG progriquestun is responsive to the
Commissions condition in its Order in Docket 7970 rcquiring VGS to develop a proposal to
promote bio-methane project development Murray supp pf al 13-14tr912116 at 63 (Vhite)
26 VGS asserts that the RNG program represents appropriate progress toward the Vermont
Comprehensive Energy Plan (CEP) goal to meet90o of Vermonts energy needs through
renewable sources by 2050 Murray supp pf at 12-13
VI DlscussroN iexclxu Coxclustox
Vith this proposal for decision I recommend that the Commission approve the RNG
program in accordance with the findings described above and based upon the evidence in the
Docket No 8667 Page 9
record In Docket 7970 the Commission required VGS in consultation with the Department to
file a petition with the [Commission] proposing a program to promote bio-methane project
development It is reasonable to expectthat aprogram meant to stimulate development of a
specific energy source would look to stimulate demand for that resource by offering an
opportunity for customers to purchase supply from RNG producers
The RNG program proposed by VGS and supported by the Department seeks to offer
ratepayers the option to purchase renewable energy as part of their individual energy-use
portfolio Furthermore the program includes a provision requiring that VGS develop a detailed
marketing plan that will serve to educate customers on the availability costs and benefits of
such resources which could lead to increased demand for the product
VGS intends to take advantage of the existing market for RINs associated with RNG used
as transportation fuel by proposing a Renewable Vehicle Fuel Tariff As described above in the
Public Comments section the Chittenden County Transportation Authority and Casella Vaste
Systems are interested in exploring the use of RNG to fuel their vehicle fleets which
demonstrates that there is existing customer demand for this product
Unlike the markets relating to RNG supply used for transportation fuel or renewable
electric generation and the associated trading and verification of RECs the RNG market is in its
infancy At this time it would not be appropriate to expect VGS to implement an RNG program
utilizing an RNG content standard similar to the electric renewable portfolio standard as
recommended by CLF because the equivalent standards and processes do not exist However
the RNG program represents a meaningful first step in encouraging customer interest in
purchasing RNG at retail thereby stimulating supply of RNG into the market and is consistent
with the Commissions condition requiring VGS to develop a proposal to promote bio-methane
project development
VGSs RNG program includes appropriate mechanisms for periodic reporting and
verification of program activities as well as an opportunity to comprehensively review the
program after three years of implementation Furthermore determinations regarding recovery of
costs associated with the RNG program will be made in the context of future proceedings
regarding VGSs rates The RNG program should evolve with the RNG markets in the near-term
and over the course of the next several years which will allow progress towards achievement of
Vermonts 2050 CEP renewable energy goals
Docket No 8667 Page 10
Because not all parties to this proceeding have waived their rights under 3 VSA $ 811
to file written comments or present oral argument with respect to this proposal for decision I am
circulating the proposal for decision to the parties for their review and comment
Dated at Montpelier Vermont this rrtl day of QrIltt 2017a0AndreaHearing Officer
Docket No 8667 Page 11
VII Corumrssron Drscussrox
On August 22017 the Department filed a letter stating that it supports the issuance of an
Order by the Commission that adopts the proposal for decision in full
Also on August 22017 VGS filed comments on the proposal for decision requesting
that Finding 16 be modified as follows (additional text in italics) If RNG supply exceeds
customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary
flow any remaining RNG attribute inventory amounts through the PGA or through a rate case ifVGS was under traditional cost of service regulation (subject to [Commission] approval)
VGS asserts that [a]bsent such specific language it is possible that VGS would be unable [to]
defer such costs for future recovery and that removal of that component introduces uncertainty
about the potential procedural mechanisms available for cost recovery in the last resort VGS
states that with the Commissions consideraacutetion of this request it does not request oral argument
No other comments were filed on the proposal for decision
The Hearing Officer recommended that the Commission find that determinations
regarding recovery of costs associated with the RNG program will be made in the context of
future proceedings regarding VGSs rates We agree with this recommendation VGS should
have an opportunity to request rate recovery for excess RNG supply However this proceeding
is not the proper time for such a determination Accordingly Finding 16 is hereby modified as
follows If RNG supply exceeds customer demand VGS would first seek to sell the excess
RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any
remaining RNG attribute inventory amounts through the PGA or through arate case as part of
its cost of service if the PGA is no longer in effect atthat timeWe emphasize the importance of the successful implementation of the RNG program in
helping to meet the States renewable energy policy objectives The annual report on the
implementation of the RNG program will serve as a valuable tool to assess that progress In this
proceeding CLF has raised policy considerations that should serve to guide these future reviews
of the RNG program For example CLF has raised concerns regarding the effectiveness of the
voluntary nature of the program In assessing its program we expect VGS to revisit and report
on the feasibility of incorporating RNG as a portion of its supply mix in the future It is
important for VGSs RNG program to be sustainable and continue to evolve ensuring significant
DocketNo8667 Page 12
contributions toward meeting the States renewable energy goals and reducing the consumption
of fossil fuel Accordingly it is critical that the annual report and the three-year comprehensive
review address not only the effectiveness of the program but also its affordability and the
feasibility of other policy options to advance the production and use of RNG in Vermont
Docket No 8667 Page 13
VIII Onunn
Ir rs Hennsy oRDERED ADJUDGED AND DECRnnn by the Public Utility Commission of the
State of Vermont that
1 The findings conclusions and recommendations of the Hearing Officer are
adopted and the Renewable Natural Gas (RNG) program to be implemented by Vermont Gas
SystemsInc (VGS) is approved
2 When VGS has procured RNG supply in amounts reasonably estimated to be
sufficient for estimated customer demand it shall file a formal tariff including proposed rates for
sale of RNG The tariff shall be reviewedpursuantto the procedures of 30 VSA ccedilccedil225226
and227 and sales under the program shall begin after Commission approval of the tariff
3 VGS shall develop and file for Commission approval a separate Renewable
Vehicle Fuel Tariff to serve customers using RNG as a transportation fuel
4 VGS shall file a marketing plan for the RNG program consistent with the
requirements set forth above within one month of the issuance of this Order
5 VGS shall file an annual report consistent with the requirements set forth above
upon implementation of the RNG program
6 VGS shall file a comprehensive review of the performance of the program with
the Commission and the Department after three years of implementation This review will
include an environmental accounting protocol to quantiff the environmental benefits of the
progrfim
7 VGS shall review proposed RNG supply arrangements with the Department
Docket No 8667
Orprcp oF THE Crnm
Dated at Montpelier Vermont this day of+hb
Z Roisman
Cheney
Page 14
20t7
Puslrc Urrlnv
CovtriquestIssIoN
OP VERMONT
(
)))
)))
Fired otildeeglcL ( JotTAttest c
of the Commission
NorIcE To READERS This decision is subject to revision oftechnical errors Reqders are requested tonotify the Clerk of the Commission (by e-mail telephone or inwriting) or any appqrent errors in order that anynecessary corrections may be made (E-mail address pucclerkvermontgov)
Appeal of this decision to the Supreme Court of Vermont must befiledwith the Clerk of the Comnissionwithin thirty days Appeal will not stay the efect of thszlig Order absentfurther order by this Commission orappropriate actiacuteon by the Supreme Court of Vermont Motions for reconsideration or stay if any must be filed withthe Clerk of the Commissionwithin ten days of the date of this deciacutesion and Order
Exhibit 22 VGS RNG Tariff Rate Filing
Exhibit 23 PUC Approval of VGS RNG Rates
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Case No l8-03 13-TF
Petition of Vermont Gas Systems Inc fotapproval of a new tariff implementing theRenewable Natural Gas program
Order entered
OnonRAppnovINc Tiquestrurn
On January 302018 Vermont Gas Systems Inc (VGS) filed a petition for approval of
a new tariff implementing the Renewable Natural Gas (RNG) program approved by the
Vermont Public Utility Commission (Commission) in Docket No 8667 In that Docket the
Commission required VGS to file a tariff implementing the RNG program when it has procured
RNG supply in amounts reasonably estimated to be sufficient to meet customer demandl In
this Order the Commission approves the new tariff marketed under the name EcoGas with an
effective date of bills rendered on and after March 15 2018
VGS states that it has executed an RNG supply contract with deliveries scheduled for
2018 and that two additional contracts are being negotiated for deliveries beginningin2019
VGS is proposing to set its initial RNG adder at$ll749lCcf which represents a five-year
blended rate based on the three RNG supply arrangements VGS intends to account for the
difference between the cost of RNG supply and the RNG adder as a regulatory asset within gas
costs As additional lower-cost supply is added to the portfolio the regulatory asset balance will
be recovered from EcoGas participants with the goal of fully reducing the balance by the end of
five years Accordingly VGS states that the RNG program will be rate-neutral to VGS and its
non-RNG customers
On February 272018 the Vermont Department of Public Service (Department) filed a
letter recommending that the Commission approve the tariff without a hearing or further
investigation The Department states that the tariff filing and proposed accounting treatment
comply with Vermont rate-setting practices policies precedents and statutes
lslaotx
I Docket 8667 Order of 96117 at 13
Page2Case No 18-0313-TF
Based on the foregoing we hereby approve VGSs proposed RNG tariff to be effective
on a bills-rendered basis beginning on March 15 2018 Recovery of any regulatory asset
balance at the end of the fifth year would need to be approved by the Commission in a future
proceeding
So Omnnnn
Case No l8-0313-TF
8r- day of lruacuterLiquestiquest
Page 3
Dated at Montpelier Vermont this 2018
Roisman PueIrc Urlrrv
CoiriexcllriquestlssloN
Cheney
OF VERMONT
Sarah Hofmann
Onncp oF THE CLBRr
Filed huacuteveuroAacute- icirc dollAttest I
Clerk of the Commission
Notice to Readers This decision is subiect to revision oftechnical errors Readers are requested to notify
the Clerk of the Commission (by e-mail telephone or in writing) or qny qpparent errors in order that any
necessary corrections may be made (E-mail address pucclerkvermontgov)Appeal of this decisiacuteon to the Supreme Court of Yermont must be filed with the Clerk of the Commission
within 30 days Appeal will not stay the efect of this Order oslashbsent further order by this Commission or appropriate
action by the Supreme Court of Vermont Motionsthornr reconsideration or stay if any must befiledwith the Clerk ofthe Commissionwithin 28 doslashys of the date of this decision and Order
)))
))))
PUC Case No 18-0313-TF
Eileen SimollardesLauren HammerVermont Gas
85 Swift StreetSouth Burlington VT 05403
June E Tiemey CommissionerVermont Department of Public Service1 12 State StreetMontpelier VT 05620 -2601
Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
Exhibit 31 Accounting Procedures
Exhibit 31 Accounting for VGS Renewable Natural Gas (Ver-9202019)
1 Purchase of RNG Supply
RNG supply purchases are separated into the cost of the commodity and the cost of the renewable attribute The commodity portion is expensed to gas costs in the delivery month while the renewable attribute is booked to an inventory account referenced herein as the ldquoRenewable Inventory Accountrdquo Like VGSrsquo existing storage inventory accounting the Renewable Inventory Account will track both the dollar value of the renewable attribute and the renewable attribute Mcfs Renewable attribute dollar values are record to ldquo16410050 Inventory RNG Storagerdquo while Mcf values are recorded in the gas cost model maintained by accounting In the month VGS purchases the renewable attribute it is accrued in a book model and goes in to 16410150 Inventory RNG Accrued then moves to the 16410050 in a final model the following month for final
RNG may be purchased at different locations and using varying pricing structures While the accounting for RNG does not vary with the purchase location or price the determination of the value of the renewable attribute will vary depending on whether or not the supply pricing expressly values the renewable attribute as an adder or it is embedded in a fixed price Examples of each are shown below The accounting of RNG supply is intended to separate the cost of the renewable attribute from the cost of the commodity The examples below are not all inclusive of what may occur but intended to show the accounting procedures used to separate the renewable attribute from the commodity and specify ownership of each aspect
In all cases the commodity cost portion - which is the total cost of the RNG purchased excluding the renewable attribute - will be expensed in the delivery month as a cost of gas
Example 1 ndash The fixed price of RNG includes both the commodity and the renewable attribute
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The total cost of the RNG supply purchased during the month is calculated by Accounting within the gas cost model as follows
MMBtu Purchased (as validated in step 2) $ MMBtu purchase price (as provided in a supply confirmation provided by gas supply)
4 For purposes of booking the renewable attribute to inventory it is necessary to calculate the RNG cost per Mcf The RNG cost Mcf is calculated using the total cost of RNG supply as calculated in step 3 divided by the Mcf in step 1
5 The renewable attribute price per Mcf is calculated as follows
RNG cost per Mcf as determined in step 4 ndashplus ldquoother componentsrdquo as calculated pursuant to Attachment A ndash minus ldquoAverage Commodity Costrdquo as calculated pursuant to Attachment A The ldquoother componentsrdquo added to the RNG cost per Mcf will vary depending on where the RNG supply was delivered but in each case will be identified in the calculation shown on Attachment A
6 The renewable attribute price per Mcf the total RNG Mcf delivered is recorded in the Inventory RNG Storage account
7 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
Example 2 - RNG purchased at a renewable attribute price plus a daily or monthly index
Where the pricing of RNG specifically separates the commodity from the renewable attribute the renewable attribute price will be what is recorded in the Renewable Inventory Account
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The renewable attribute price per Mcf the total RNG Mcf delivered as determined in step 1 is recorded in the Renewable Inventory Account
4 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
2 Recalculating the RNG Adder
The RNG Adder paid by customers will be recalculated anytime the Natural Gas charge portion of rates changes The Manager of Gas SupplyGas control is responsible for recalculating the RNG Adder The calculation will be verified and approved by the Vice President ndash Regulatory Affairs The determination of the RNG Adder will be pursuant to the methodology shown in Attachment A The Regulatory Department will prepare the amended RNG Adder tariff for filing with the PUC Upon PUC approval of the RNG Adder the Regulatory Department will prepare a memorandum advising Accounting and Gas Supply of the new RNG Adder as approved
3 Customer purchases VGS Renewable Natural Gas
The RNG Adder at the percent selected by the customer will be applied to the entire monthrsquos usage on the customersrsquo next bill For customers utilizing the S-RNG adder the entire volume elected with be on the customersrsquo next bill The S-RNG Adder nor the RNG Adder and percentage selected will not be prorated based on enrollment or termination date
Customers may terminate or modify their RNG selection upon 3 dayrsquos notice to VGS The termination or modification will be effective on the customerrsquos next monthly bill
The customerrsquos usage for the month will be multiplied by the percentage and the approved RNG Adder For customers utilizing the S-RNG adder the volume elected will be multiplied by the approved RNG adder This amount will then be recorded to SAP accounts 4010015-40010021 depending on which rate class the customer is in The RNG Adder is the same regardless of which rate class a customer is in At the end of the month a report is run by billing from the customer information system that shows total usage and which percentage of RNG the customer has signed up for to calculate the number of MCFrsquos of renewable attribute sold during the billing period Billing also provides a report of the volumes sold through the S-RNG Tarriff The Inventory RNG Storage account maintained within the gas cost model by Accounting is reduced by these Mcf The MCFrsquos are then multiplied by the RNG Adder in effect for the billing month and an entry is made to remove that dollar amount from the Inventory RNG Storage account and into the monthly cost of gas The intent of this transaction is to ensure that cost of the renewable attribute is reflected in the cost of gas in the month it is purchased by the customer This results in a matching of the renewable attribute revenue and expense
The RNG Adder revenue and renewable attributes removed from storage will be included in the gas cost deferral calculation However because there is a matching of the renewable attribute revenue and expense the impact on the deferral calculation will be zero
The calculation of unbilled revenues will exclude RNG as a customer can cancel their participation prior to their next bill
In the event Vermont Gas issues a credit to a customer related to the RNG program the value of the renewable attribute credited and the associated Mcf will not be applied to the Renewable Inventory Account
4 Controls
A spreadsheet is maintained by accounting that shows the MCFrsquos and dollar values of the Renewable Inventory Account This is reconciled monthly by the accounting team and will be reviewed by the Manager Gas SupplyGas Control
Accounting will validate that the amount removed from the Renewable Inventory Account matches the RNG Adder revenue Any discrepancies will be reviewed and corrected
A report will be run for each bill cycle that shows any changes to the RNG percentages selected this will include customers opting to withdraw from the RNG program The customer care team will validate any changes against customer confirmation paperwork
5 Renewable Inventory Account Reconciliation and Forecast
The PUC Order approving the RNG program contains provisions describing how RNG supply and demand imbalances will be addressed These provisions and how VGS will track and comply with them are as discussed in this section The PUC Order approving the RNG Program provides that if the available RNG supply during the previous 12 months is less than the amount purchased by customers VGS may use the funds collected to purchase carbon offsets (Finding 13) If carbon offset are not available VGS will contribute the RNG program revenues to the Clean Energy Development Fund or issue prorated credits to affected customers (Finding 15) The Order also provides that in the event RNG supply exceeds customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any remaining RNG attribute inventory amounts through the PGA or through a rate case as part of its cost of service if the s PGA is no longer in effect at that time (Finding 16 as modified) Finding 11 provides that VGS will use a ldquotrue-uprdquo period of up to 12 months in order to balance the difference between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply) Taken together these provisions require VGS to evaluate the imbalance after 12-months and then true-up the imbalance over the next twelve months To provide a forecast of the supplydemand imbalance quarterly the billing area will run a report showing the expected RNG volumes based on current customer commitments by month for the next 12-months Current customers commitments will be calculated based on the previous 12 months of usage multiplied by the RNG percentage currently signed up for The marketing department will provide their forecast of new RNG sales for the next 12-months Both will be provided to the Manager Gas SupplyGas Control The Manager Gas SupplyGas Control will compare the forecasted RNG sales known and expected to RNG supply commitments and provide a 24-month forecast of the supplydemand balance The supplydemand balance will be reviewed at the risk management meeting The strategy for addressing the imbalance consistent with the PUC order will be determined by the risk management committee
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
VGS Renewable Natural Gas Program Manual
Page i
Table of Contents Revision Log ii
About Vermont Gas 1
Section 1 Program Overview 2
11 WHAT IS VGS RENEWABLE NATURAL GAS 2
12 HOW MUCH DOES VGS RENEWABLE NATURAL GAS COST 2
13 WHERE IS VGS RENEWABLE NATURAL GAS PRODUCED 3
14 WHAT ARE THE ENVIRONMENT BENEFITS 4
Section 2 Regulation 5
KEY REGULATORY STEPS 5
21 REGULATORY SUMMARY 5
22 VGS RENEWABLE NATURAL GAS ADDER TARIFF 6
23 ANNUAL RNG REPORT 7
24 THREE-YEAR IMPLEMENTATION REVIEW 8
Section 3 Supply Procurement and Accounting 9
KEY VGS RENEWABLE NATURAL GAS SUPPLY AND ACCOUNTING STEPS 9
31 VGS RENEWABLE NATURAL GAS SUPPLY OVERVIEW 9
32 VGS RENEWABLE NATURAL GAS SUPPLY CONTRACTS 10
33 VGS RENEWABLE NATURAL GAS ACCOUNTING 10
34 RENEWABLE VERIFICATION 11
Section 4 Marketing 13
KEY MARKETING STEPS 13
41 MARKETING PLAN 13
42 MARKETING CLAIMS 13
43 VGS RENEWABLE NATURAL GAS ldquoPRODUCT CONTENT LABELrdquo 13
Section 5 Customer Information and Billing 14
KEY BILLING AND REVENUE STEPS 14
51 CUSTOMER ENROLLMENT AND BILLING PROCESS 14
52 VGS RENEWABLE NATURAL GAS WEBSITE AND FREQUENTLY ASKED QUESTIONS 14
53 VGS RENEWABLE NATURAL GAS PROGRAM GUIDELINES 15
54 VGS RENEWABLE NATURAL GAS PROGRAM ASSURANCE 15
EXHIBITShelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip16
VGS Renewable Natural Gas Program Manual
Page ii
Revision Log
Date Version Approver Custodian Comments Apr 26 2018 101 T Murray Initial issue Aug 20 2019 102 T Murray General review and updates including
clarification regarding tariff adder customer enrollment options and supplies
Shana Kane
Shana Kane
VGS Renewable Natural Gas Program Manual
Page 1
About Vermont Gas
Vermont Gas is providing Vermont households and businesses the choice and opportunity to achieve a clean energy future We offer our customers a cleaner1 more affordable heating choice2 award winning efficiency programs and energy services We are dedicated to helping you meet your energy goals with our innovative renewable natural gas program
VGS believes the natural gas industry must embrace renewable product offerings and promote innovation to address the global threat of climate change Our VGS team is dedicated to giving Vermont families and businesses the tools to help achieve Vermontrsquos carbon reduction goals We are proud members of Vermontrsquos Climate Pledge Coalition and determined to do our part to help achieve carbon reduction goals Choosing Vermont Gas over oil reduces carbon emissions of a household by almost 233 A family choosing to install a high-efficiency gas furnace or boiler can further reduce energy use by 204 mdash cutting both costs and carbon emissions Adding a smart thermostat can save an additional 55 Our energy efficiency experts can identify even more savings through our comprehensive home energy audits Our VGS Renewable Natural Gas Program gives customers the opportunity to further reduce their home or business carbon footprint Wersquore dedicated to helping our customers meet their energy goals with choices that promote efficient affordable and environmentally sustainable practices
Wersquore proud to bring these choices and opportunities to our customers Wersquore proud of what our customers have already achieved ndash tens of millions in annual cost savings6 and some 300000 metric tons of carbon7 avoided every single year and counting According
1 According to the US Energy Information Agency (httpswwweiagovenvironmentemissionsco2_vol_massphp) 2 VT Department of Public Service httppublicservicevermontgovsitesdpsfilesdocumentsPubs_Plans_ReportsFuel_Price_Report2016January20201620Fuel20Price20Reportpdf 3 Ibid 1 4According to Efficiency Vermont (httpswwwefficiencyvermontcomproducts-technologiesheating-cooling-ventilationfurnaces-boilers) 5 According to Nest smart thermostats can save 10 to 12 (httpsnestcomthermostatsreal-savings) 6 This number is based on the aggregate savings for customers conversion to Natural Gas vs using oil or propane and the cumulative savings generated by VGS Efficiency Program 7 This number is based on EIA data to determine the carbon avoided by VGSrsquo customers vs using oil and propane and the cumulative carbon savings generated from VGS Efficiency Program
VGS Renewable Natural Gas Program Manual
Page 2
to the Environmental Protection Agency (EPA) thatrsquos carbon avoidance equivalent to more than 70 wind turbines8
Section 1 Program Overview
11 WHAT IS VGS RENEWABLE NATURAL GAS ldquoVGS Renewable Natural Gasrdquo is an innovative offering that will allow Vermont Gas customers to displace the use of conventional (fossil) natural gas by purchasing the renewable attributes of renewable natural gas (RNG) production These renewable attributes correspond with the production of RNG by anaerobic digestion of organic matter at landfills waste treatment plants industrial sites and farm digesters This digestion process produces biogas which is cleaned to pipeline quality - at which point it is referred to as biomethane - and injected as RNG into the natural gas pipeline system
Our initial supply of RNG is coming from outside of Vermont where it is injected into the natural gas pipeline and commingled with conventional natural gas We are working with developers to create a local ldquoin-staterdquo supply of RNG produced in local digester facilities to then inject directly into the Vermont Gas distribution system
Vermont Gas customers have the opportunity to participate in the VGSrsquo Renewable Natural Gas Program by voluntarily signing up to purchase renewable attributes of RNG for either a percentage of their natural gas usage or for a fixed quantity per monthly billing cycle Participating customers agree to pay an additional charge referred to as an ldquoRNG Adderrdquo commensurate with the additional cost to purchase RNG supply compared to conventional natural gas This charge will be reflected on participating customersrsquo monthly bills along with the percentage of the customerrsquos gas usage or fixed monthly quantity covered by the RNG Program Every customer who participates in the program advances Vermontrsquos leadership in renewable energy innovation and furthers Vermontrsquos Comprehensive Energy Plan9
12 HOW MUCH DOES VGS RENEWABLE NATURAL GAS COST All VGS customers firm and interruptible who voluntarily enroll in the VGS Renewable Natural Gas Program will pay an additional Program ldquoRNG Adderrdquo based on the percentage of RNG the customer has subscribed or the fixed quantity allocated by the customer The RNG Adder is billed in hundred cubic feet or ldquoCCFrdquo (1 CCF equals one hundred cubic feet of gas) based on the percentage of RNG selected by the customer or fixed quantity
8 httpswwwepagovenergygreenhouse-gas-equivalencies-calculator 9 Vermont Comprehensive Energy Plan Chapter 125 (httpsoutsidevermontgovsovwebservicesShared20Documents2016CEP_Finalpdf)
VGS Renewable Natural Gas Program Manual
Page 3
The voluntary VGS Renewable Natural Gas Adder is available to all firm rate classes (R G1 G2 G3 and G4) in the percentages shown below and will apply to monthly CCF usage
Available RNG Adder Percentages (applied to monthly Ccf usage)
10
25
50
100
In addition rather than electing a percentage any customer10 may elect to purchase a fixed amount of the environmental attributes associated with RNG which falls under the approved ldquoS-RNGrdquo Tariff The RNG Adder (and S-RNG Adder) will appear as a separate line item charge on the customerrsquos bill in addition to the existing rate elements of a Daily Access Charge a Natural Gas Charge and a Distribution Charge The current RNG Adder can be found at httpswwwvermontgascomrenewablenaturalgasadder-calculator The RNG Adder will change whenever the Public Utility Commission (ldquoPUCrdquo) authorizes a change in the Natural Gas Charge portion of the tariff Currently the RNG Adder is adjusted quarterly alongside the Natural Gas Charge change The effect of these changes to the RNG Adder is that the cost of the RNG Adder will vary with the wholesale cost of conventional gas and may further vary in the future as new RNG supply contracts come into our portfolio
VGS ldquointerruptible servicerdquo customers may participate in the RNG Program through either the RNG adder or the S-RNG tariff which will permit these customers to designate how much of their annual natural gas purchases they wish to meet via the RNG Program As noted above the RNG Adder will change whenever the PUC authorizes a change in the Natural Gas Charge portion of the tariff
13 WHERE IS VGS RENEWABLE NATURAL GAS PRODUCED VGS Renewable Natural Gas can be sourced from either in-state or out-of-state producers that utilize anaerobic digestion of organic matter such as landfills waste treatment plants industrial sites and farm digesters that are connected to the natural gas pipeline system In-state RNG supply (planned for 2020) would be injected directly into Vermont Gasrsquo pipeline system after ensuring the RNG meets VGSrsquo natural gas quality standards Although out-of-state VGS Renewable Natural Gas resources may not physically flow to
10 A customer is defined as a consumer of natural gas in Vermont regardless of whether or not the customer has an account for metered natural gas service with the Company
VGS Renewable Natural Gas Program Manual
Page 4
the VGS system the environmental attributes will be dedicated to Vermont Gas customers
Much like renewable electricity that is comingled in the electric grid VGS Renewable Natural Gas is comingled with conventional natural gas supply in the pipeline system VGS Renewable Natural Gas customers are purchasing the environmental attributes of RNG There is no claim by VGS that a participating customer is directly burning an RNG or biomethane molecule
14 WHAT ARE THE ENVIRONMENT BENEFITS An average household enrolling in the VGS Renewable Natural Gas program at the 100 level will effectively nullify the corresponding carbon footprint associated with the customerrsquos direct use of natural gas For a typical VGS residential customer using 90 Mcf of conventional natural gas each year this equates to 49 metric tons11 of avoided carbon dioxide emissions each year
VGS is not making representations or claims for any additional environmental benefits of anaerobic digesters beyond the carbon reduction associated with replacing conventional natural gas with a renewable source of energy production Specifically we make no environmental claims related to the avoidance of uncontrolled fugitive methane emissions that would have gone into the atmosphere from the primary biogas feedstock (eg landfill gas manure wastewater) in the absence of anaerobic digestion and capture of the methane as RNG
11 (httpswwwepagovenergygreenhouse-gas-equivalencies-calculator)
VGS Renewable Natural Gas Program Manual
Page 5
Section 2 Regulation
KEY REGULATORY STEPS
Item Description Filing Schedule VGS RNG Adder Tariff Update
Updates required to reflect gas costs changes
Quarterly
Annual RNG Report Full Programmatic Report Annually RNG Supply Contracts Filed for VT Public Utility
Commission (PUC) approval or information
As required
Triennial Assessment Program Review with Dept of Public Service
Every three years
21 REGULATORY SUMMARY
In October 2015 Vermont Gas filed a petition with the PUC for authority to establish a Renewable Natural Gas offering The PUC initiated Docket No 8667 to evaluate VGSrsquo proposal VGS modified the program based on input from parties to the proceeding12 and resubmitted testimony in April of 2016 followed by technical hearings in September of 2016 On September 6 2017 the PUC issued the final order approving the voluntary RNG program (see Exhibit 21) The Order provided authority for VGS to sell RNG under the proposed ldquoadderrdquo structure The Order also provided the accounting guidance to inventory the renewable attributes of RNG and the ability to recoup unsold RNG costs if need be with subsequent PUC approval The order also authorizes VGS to purchase carbon offsets in the event the supply of RNG is insufficient to meet subscriber demand
The table below lists the requirements contained in the Order and VGSrsquo compliance to-date
Order Requirement Status and Compliance Date
1 When VGS has procured RNG supplyhellipit shall filea formal tariff including proposed rates for the saleof RNG
Completed - January 30 2018 See also section 22 below
2 VGS shall develop and file for Commissionapproval a separate Renewable Vehicle Fuel Tariffto serve customers using RNG as a transportationfuel
Pending ndash Due date TBD
12 Parties to Docket No were the Department of Public Service Conservation Law Foundation and Lincoln Renewable Natural Gas LLC
VGS Renewable Natural Gas Program Manual
Page 6
Order Requirement Status and Compliance Date
3 VGS shall file a marketing plan for the RNGprogram consistent with the requirements setforth in the order within one month of the issuanceof this Oder
Completed - October 6 2017
4 VGS shall file an annual report consistent withthe requirements of the Order uponimplementation of the RNG program
Initial filing completed ndash filed June 2018 and 2019
5 VGS shall file a comprehensive review of theperformance of the program with the Commissionand Department after 3 years of implementationThis review will include an environmentalaccounting protocol to quantify the environmentalbenefits of the program
Pending ndash Due by March 15 2021
6 VGS shall review proposed RNG supplyarrangements with the Department
Completed - Initial review 11618 Review of subsequent contract also completed and approved by PUC
On October 4 2018 the Company filed with the PUC for a new RNG tariff offering ldquoS-RNGrdquo Adder which has the same pricing as the RNG Adder The new offering allows customers to purchase a fixed amount of RNG per month that would be unbundled from the customerrsquos metered gas consumption and offers customers who are consumers of natural gas but do not have an account for metered gas service with the Company the ability to purchase RNG attributes The PUC approved the S-RNG Adder to take effect with bills rendered on or after December 1 2018 (see Exhibit 24)
22 VGS RENEWABLE NATURAL GAS ADDER TARIFF The PUC order provides ldquoWhen VGS has procured RNG supplyhellipit shall file a formal tariff including proposed ratesrdquo On January 30 2018 after contracting for the initial RNG supply VGS filed the VGS Renewable Natural Gas Adder Tariff (see Exhibit 22) On March 9 2018 the PUC approved the initial RNG Adder for effect with bills rendered on and after March 15 2018 (see Exhibit 23)
In simple terms the RNG Adder reflects the difference between the cost of RNG and the cost of conventional gas This is calculated by subtracting the average commodity cost for conventional natural gas from the average commodity cost for RNG as indicated in the following example
VGS Renewable Natural Gas Program Manual
Page 7
VGS Renewable Natural Gas Adder Calculation Average RNG Commodity Cost
Minus Average Natural Gas Charge Equals VGS Renewable Natural Gas Adder
Exhibit 22 provides the detailed calculations
This formula identifies the current premium to be paid per CCF of RNG This premium also represents the value of the ldquoVGS Renewable Natural Gas Attributerdquo that VGS will withdraw from the VGS Renewable Natural Gas Attribute Inventory described below
To full reflect the cost of the initial RNG supply with future RNG supply contracts the initial RNG Adder was based on a blended rate of the cost of the first and the expected costs of future RNG purchases over the next 5 years The PUC has authorized this blended approach
The RNG Adder will change whenever the PUC authorizes a change in the Natural Gas Charge portion of the tariff Currently this change occurs quarterly
23 ANNUAL RNG REPORT An Annual RNG Report will be filed with PUC and Vermont Department of Public Service (ldquoDepartmentrdquo) each year in June The first annual report was filed in June 2018 In accordance with the PUC final order approving the Program the annual report will include the following information
1 Number of subscribers by class2 Sales volume by customer class3 Sales Revenues4 Any sales or purchases of carbon offsets5 Supply Consumption matching portfolio including any shortfall or excess supply of
RNG6 True-up schedule for any imbalances7 RNG supply verification8 Quantification of the impact of any excess RNG costs flowing through the PGA if
VGS remains under alternative regulation9 Accounting of any carbon offsets or other incentives10 Status of any contracts for RNG including plans to acquire new supply contracts11 Revenue from Renewable Identification Number (ldquoRINrdquo) sales and impact on the
transport (transportation) tariff as well as any projections about the RIN marketthat are available to VGS and
12 Complete reports and environmental verifications by an independent verifier
The annual report will also address the effectiveness of the program and its affordability
VGS Renewable Natural Gas Program Manual
Page 8
24 THREE-YEAR IMPLEMENTATION REVIEW In accordance with the PUC Order in March 2021 (the third year of the Program) VGS will file a comprehensive review of the performance of the Program The review will include an environmental accounting protocol to quantify the environmental benefits of the program The three-year comprehensive program review will also address the effectiveness of the program its affordability and the feasibility of other policy options to advance the production and use of RNG in Vermont
SECTION 2 EXHIBITS
bull Exhibit 21 VT PUC Approval Orderbull Exhibit 22 VGS RNG Tariff Rate Filingbull Exhibit 23 PUC Approval of VGS RNG Ratesbull Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
VGS Renewable Natural Gas Program Manual
Page 9
Section 3 Supply Procurement and Accounting
KEY VGS RENEWABLE NATURAL GAS SUPPLY AND ACCOUNTING STEPS
Item Description Schedule Owner RNG Supply Contracts
Procuring RNG Supply As needed Gas Supply
RNG Supply True-Up
Balancing RNG supply sales and retiring attributes
Monthly Finance
RNG Supply Verification
Verifying ldquorenewabilityrdquo of RNG Supply
Annually Gas SupplyThird- Party
31 VGS RENEWABLE NATURAL GAS SUPPLY OVERVIEW
VGS intends to contract with a variety of RNG supply sources to meet its customer demand in the RNG Program RNG supply is currently available from a limited number of landfill and digester projects in Canada or US states other than Vermont In Vermont at least one local supply project is currently under development
Today there is no central ldquomarketplacerdquo for RNG suppliers and buyers to trade RNG supply contracts RNG buyers such as VGS transact with individual producersprojects or work through RNG brokers to acquire RNG supply or the environmental attributes associated with RNG in bilateral transactions VGSrsquo initial RNG supply contract in 2018 was with BP Canada Energy Group ULC and sourced from the EBI Inc13 biogas production facility located in Ste Genevieve Quebec In 2019 VGSrsquo purchased RNG supply from a waste water treatment facility in Dubuque Iowa
In 2020 VGS plans to begin receiving RNG supply from a Vermont farm digester and a Canadian digester facility The Vermont farm digester located in Salisbury Vermont is slated for completion in late 2020 producing 180000 MMbtursquos per year The Canadian digester project is located in London Ontario VGS has agreed to purchased 100 of the supply from this facility up to 120000 MMbtursquosyear for 15 years VGS sought and received PUC approval for this Ontario supply in 2018 and received approval for an amendment in 2019 To meet anticipated demand for RNG until these two resources come on line the Company purchased short-term supply of RNG from the Iowa facility in 2019 We anticipate that these supply sources will satisfy the VGS Renewable Natural Gas Program supply needs for the first few years of the Program If we are unsuccessful
13 EBIrsquos Facility was recognized in 2016 (httpswwwdesjardinscomcavideossinglejspdocName=vid-ebi-e)
VGS Renewable Natural Gas Program Manual
Page 10
in procuring supply from these sources or if demand exceeds these planned supplies VGS will seek additional RNG supply in the marketplace
32 VGS RENEWABLE NATURAL GAS SUPPLY CONTRACTS VGS will utilize standard industry or comparable contract vehicles to procure RNG supply with site-specific terms and conditions Given the unique nature of the in-state RNG project the gas supply contract is a 3 way agreement between the producer VGS and an end user Accordingly the form of the contract does not resemble industry standard supply agreements but contains all appropriate business terms The first two contracts signed by VGS utilize a gas utility standard base contract with signed transaction confirmation documents that specify the specific details of each deal These contracts will require the RNG supplier to certify the renewable attributes and that VGS has full and sole ownership of those attributes As required by the PUC Order RNG Suppliers will also be required to allow VGS independent verification of the production and transactions related to VGS supply volumes The specific PUC requirements are found in finding 21 page 7 of Exhibit 21 - VT PUC Approval Order
33 VGS RENEWABLE NATURAL GAS ACCOUNTING Like accounting practices in the renewable electric industry Vermont Gas will have the obligation to match RNG supply volumes with customer RNG purchase volumes over time As discussed in Section 22 the premium for RNG above the cost of conventional natural gas establishes the value of the renewable attribute purchased by the customer These attributes are tracked in a separate inventory account and then matched with actual retail VGS Renewable Natural Gas sales Once these renewable attributes are matched with VGS Renewable Natural Gas sales they are ldquoretiredrdquo and cannot be resold in any manner or used to satisfy another obligation by VGS As provided in the PUC order ldquoVGS will use a ldquotrue-uprdquo period of up to 12 months to balance the difference between RNG attributes sold to customers (demand) and RNG attributes purchased by VGS from suppliers (supply)rdquo This true-up period allows RNG attribute ldquooversupplyrdquo and ldquoundersupplyrdquo to be balanced as described below
In an ldquooversupplyrdquo situation where forecasted RNG attribute purchases exceed the number of RNG attributes that VGS forecasts selling to its customers through the RNG Program VGS will first seek to market the excess RNG and the environmental attributes back through the wholesale supply channels If this oversupply extends beyond the 12-month true-up window VGS may seek PUC permission to flow any remaining RNG attribute inventory amounts through the Purchase Gas Adjustment (ldquoPGArdquo) or through its cost of service if the PGA is no longer in effect at that time
An ldquoundersupplyrdquo situation would occur if customer purchases of RNG attributes exceeded the amount available under VGSrsquo RNG supply contracts in the forward looking 12-month true-up window If the RNG supply purchases are lagging the RNG sales VGS
VGS Renewable Natural Gas Program Manual
Page 11
will true-up or balance this undersupply over the upcoming 12-month period through existing or additional RNG supply purchases
If VGS is unable to eliminate an undersupply imbalance after the 12-month true-up period VGS would need to purchase carbon offsets in the dollar amount equal to VGS Renewable Natural Gas revenues collected associated with the undersupply (See Exhibit 21 Order Finding 13 and 15) Carbon offsets are listed on one of several Carbon Registries such as the American Carbon Registry If carbon offsets are not available VGS has the option to contribute these RNG revenues to the statersquos Clean Energy Development Fund or issue prorated credits to affected customers It should be noted that while purchasing offsets is a tool for VGS it is not the intent of the VGS Renewable Natural Gas Program and if an undersupply situation persisted VGS would likely petition the PUC to modify or suspend the VGS Renewable Natural Gas Program prospectively
VGS will manage the RNG Program to closely match supply and demand and utilizing our RNG wholesale cost mitigation tools to avoid RNG supply challenges
As renewable programs evolve in the energy and natural gas industry Vermont Gas will adjust its accounting procedures to reflect industry standards and revise this manual to reflect any modifications or changes
34 RENEWABLE VERIFICATION VGS is committed to transparency and the integrity of this innovative program is essential to success Toward that end no step is more essential than the verification of the renewability claims of our VGS Renewable Natural Gas supply The PUC reinforced this commitment in the RNG approval order as follows
ldquoVGS will annually verify that the RNG was produced by a renewable gas production facility that VGS is the exclusive owner of any environmental attributes associated with RNG it sells under the program that it acquired the RNG from its transferor and sold it at retail and that the RNG has not been sold twice at any point between RNG production and sale to VGS whether by sales into carbon offset markets or otherwise This verification will be based on certifications of VGSrsquos suppliers and of an independent third party retained by VGS for this purposerdquo
VGS will use an independent third-party to verify the renewable claims for the VGS Renewable Natural Gas supply including the following
bull Confirm the renewable fuel feedstock identificationbull Confirm the product renewable fuel identificationbull Review and confirm the renewable fuel production processbull Review of fuel flow measurement and quality monitoring process and equipment
VGS Renewable Natural Gas Program Manual
Page 12
bull Review of contracts and affidavits governing the transfer of the RNG from theoriginal source to the end user(s)
bull Review of evidence confirming the existence of a physical path (common carrierpipeline) for RNG transfer and distribution to end users
SECTION 3 EXHIBITS
bull Exhibit 31-Accounting Proceduresbull Exhibit 32-Verification from Suppliersbull Exhibit 33-Third Party Verification
VGS Renewable Natural Gas Program Manual
Page 13
Section 4 Marketing
KEY MARKETING STEPS Item Description Owner VGS Renewable Natural Gas Branding
Maintain product and brand integrity Communications
Product Definition Ensuring proper VGS Renewable Natural Gas description in all materials
Communications
External Review Verification of Marketing claims Communications
41 MARKETING PLAN Exhibit 41 is the 2018 version of the Marketing Plan filed with the PUC This document may be updated from time to time as we adjust our marketing strategy
42 MARKETING CLAIMS VGS is committed to making clear and accurate claims about the environmental benefits of VGS Renewable Natural Gas We have enlisted the assistance of a law firm specializing in marketing renewable products to review VGSrsquo marketing materials and claims In addition VGSrsquo annual third-party review of our program will focus on the integrity of our administration of the VGS Renewable Natural Gas program (see Section 54)
43 VGS RENEWABLE NATURAL GAS ldquoPRODUCT CONTENT LABELrdquo The Product Content Label is intended to be prominently displayed on the VGS web site and in correspondence to customers when they enroll in this program
Product Content Label
By participating in the VGS Renewable Natural Gas program you are purchasing the renewable attributes associated with the production of renewable natural gas (ldquoRNGrdquo) which may also be referred to as biogas or bio-methane A unit of VGS Renewable Natural Gas measured in hundred cubic feet (CCF) represents the environmental attribute of 1 CCF of biogas VGS reserves the right to purchase carbon offsets if RNG supply is not available VGS will notify customers if this occurs The Product Content Label is available at httpswwwvermontgascomrenewablenaturalgas
SECTION 4 EXHIBITS
bull Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)bull Exhibit 42 VGS Renewable Natural Gas Trademark
VGS Renewable Natural Gas Program Manual
Page 14
Section 5 Customer Information and Billing
KEY BILLING AND REVENUE STEPS Item Description Owner Billing Enrollment of VGS Renewable Natural Gas
Customers Contact Center
Notice Customer Notice of VGS Renewable Natural Gas Rates
Contact CenterBilling Group
Program Assurance Verification of VGS Renewable Natural Gas program procedures
Billing and Finance
51 CUSTOMER ENROLLMENT AND BILLING PROCESS The VGS Customer Care team will enroll customers and establish the VGS Renewable Natural Gas Adder on customer accounts Customers will be able to order VGS Renewable Natural Gas via VGSrsquo website (preferred method) calling VGS contact center or through the VGS Energy Services team An RNG calculator is available on VGSrsquo website httpswwwvermontgascomrenewablenaturalgasadder-calculator that can assist customers in estimating the costs of VGS Renewable Natural Gas at the various percentage levels based on the customerrsquos gas consumption VGS will inform customers of the current RNG Adder premium when they enroll Customers have two options when enrolling in the RNG program Customers may select their desired percentage of VGS Renewable Natural Gas ( 10 25 50 or 100) or they may allocate a fixed amount of RNG attributes (ldquoS-RNGrdquo) for each month that they are enrolled in Customer Care will then set up the billing on their account VGS will send an order confirmation via email or as a separate mailing (see Exhibit 51) thanking the customer for subscribing to VGS Renewable Natural Gas and informing the customer of the estimated impact on their bill As shown on Exhibit 51 the order confirmation letter will also include the RNG program guidelines These guidelines are discussed in section 53 below
52 VGS RENEWABLE NATURAL GAS WEBSITE AND FREQUENTLY ASKED QUESTIONS The VGS Renewable Natural Gas web page contains general VGS Renewable Natural Gas information an FAQ a VGS Renewable Natural Gas calculator current VGS Renewable Natural Gas Adder and an easy-to-use sign up form
For the most recent Frequently Answered Questions visit httpwwwvermontgascomVGS Renewable Natural Gas
VGS Renewable Natural Gas Program Manual
Page 15
53 VGS RENEWABLE NATURAL GAS PROGRAM GUIDELINES VGS Renewable Natural Gas customers will fall under VGSrsquo General Terms and Conditions outlined in VGSrsquo tariffs and PUC rules (ex Disconnection practices late fees taxes) VGS tariffs can be found at httpwwwvermontgascomaccountrates
VGS will notify VGS Renewable Natural Gas customers of rate changes in advance of implementation on both their individual bills and the Companyrsquos website RNG customers have the ability to cancel or modify their RNG account profile consistent with the tariff
VGSrsquo RNG customers can subscribe to VGS Renewable Natural Gas service with no term commitment and can cancel with three daysrsquo notice The RNG Adder will apply at either the percentage or fixed quantity allocated by the customer to the usage shown on the monthly bill regardless of enrollment or termination date The RNG Adder will not be pro-rated for partial-month usage
VGS customers receiving the low-income rate discount can subscribe to VGS Renewable Natural Gas however the 20 low income discount will not apply to the RNG Adder
Customers currently on a budget program will be encouraged to request a recalculation of their budget plan to adjust for the RNG Adder costs but it is not required
54 VGS RENEWABLE NATURAL GAS PROGRAM ASSURANCE
On an annual basis VGS will conduct a program review to ensure the VGS Renewable Natural Gas program is managed consistent with this manual The VGS Renewable Natural Gas program is a new product for the US natural gas utility industry and as such no industry specific standards exist VGS is working with on a national effort to develop a ldquoGreen-Erdquo certification process for Renewable Natural Gas programs that process is targeted for completion in 2020
SECTION 5 EXHIBITS
bull Exhibit 51 ECIS Customer Confirmation
VGS Renewable Natural Gas Program Manual
Page 16
EXHIBITS
Exhibit 21 VT PUC Approval Order
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Docket No 8667
Petition of Vermont Gas Systems Inc for aRenewable Natural Gas Program andOptional Tariff
)))
Hearing atMontpelier Vermont
September 22016
order entered q leacute I aon
PRBsBNI Andrea C McHugh Hearing Officer
AppeeReNcBs Peter H Zamore Esq
Owen J McClain EsqSheehey Furlong amp Behrn PCfor Vermont Gas Systems Inc
Louise C Porter EsqTimotthorn M Duggan Esq
for the Vermont Department of Public Service
Sandra Levine Esqfor Conservation Law Foundation
Gerald R Tarrant EsqTarcant Gillies amp Richardsonfor Lincoln Renewable Natural Gas LLC
I INrnooucrroN
This case involves a petition filed by Vermont Gas Systems Inc (VGS) with the
Vermont Public Utility Commission (oCommission) I for approval of a Renewable Natural Gas
(RNG) program and optional RNG tariff service for its customers The proposed RNG
progriquestigravem establishes a framework for VGS to offer its customers the option to purchase RNG for
I Pursuant to Section 9 of Act 53 of the 2017 legislafive session the Vermont Public Service Boards name waschanged to the Vermont Public Utility Commission effective July l 2017 For claity activities of the VermontPublic Service Board that occurred before the name change will be referred to in Commission documents as
activities of the Commission unless that would be conntildersing in the specific context
Docket No 8667 Page2
program establishes a framework for VGS to offer its customers the option to purchase RNG for
as a portion of their usage RNG is produced from materials such as agricultural waste manure
municipal waste plant material or compost and is also referred to as bio-methane In this
proposal for decision I recommend that the Commission approve the proposed RNG program
and require VGS to make compliance filings as set forth herein
il PnocnrunnlHrsroRY
On October 232015 VGS figraveled a petition for approval for its RNG program including
prefiled testimony and exhibits of Thomas Murray
On January 192016I held a prehearing conference and on January 252016I issued
an Order establishing a schedule
On February 122016 VGS filed a revised RNG Plan
On March 102016I held a workshop to discuss the proposed program
On March 152016I issued an Order revising the schedule
On March 222016 Conservation Law Foundation (CLF) and Lincoln Renewable
Natural Gas LLC (Lincoln) filed motions to intervene in this proceeding
On April 12016 VGS filed supplemental testimony and exhibits
On April 82016I issued an Order granting CLFs and Lincolns intervention requests
On July 72016 the Vermont Department of Public Service (Department) CLF and
Lincoln filed testimony
On August 82016 Lincoln filed supplemental testimony
A technical hearing was hthornld on September 22016
On September 30 20|6VGS filed a draft proposal for decision supported by the
Department In addition CLF filed a brief on the same date Reply briefs were filed by VGS
and CLF on October 142016
III Posnroxs oF THE PlRrlns
VGS
VGS requests approval of its proposed RNG program for the sale of RNG to customers
on a voluntary basis VGS claims that its proposal contains reasonable provisions to align its
RNG purchases with the amounts sold to its customers appropriate mechanisms to address over-
Docket No 8667 Page 3
or under-supply of RNG and verification requirements to ensure that sales in fact consist of
RNG VGS maintains that the RNG program is an appropriate first step in stimulating RNG
producer supply and customer demand and is oamply supported by Vermonts experience of
measured implementation of electric renewable pricing programs2 VGS argues that the
program is responsive to the Commissions condition in its Order in Docket 79701o develop a
proposal to promote bio-methane project development3
Department of Public Service
Although the Department did not file a brief or reply brief it did present witness
testimony and indicated its support for the draft proposal for decision filed by VGS The
Department recommends that VGS review all proposed RNG supply arrangements with the
Department (in addition to seeking 30 VSA $ 248 approval where required) and suggests that
in the event of an undersupply of RNG VGS obtain carbon offsets in an amount equivalent to
the unused customer contributions The Department recommends that the RNG program be
reviewed at the end of three years at which time the protocol regarding the purchase of offsets
would be revisited
C ons ervation Law Foundation
CLF urges that the Commission reject the RNG program and instead adopt an RNG
content standard similar to the electric renewable portfolio standarda CLF maintains that the
expected annual sales volume is not apace that is consistent with Vermonts legislative and
planning targets for meeting energy needs with renewable energy or for reducing greenhouse gas
emissionss CLF claims that the proposed voluntary tariff falls short of being a program or
strategy that promotes the increased use of RNG resources or supply or fosters bio-methane
projects in Addison county6
2 VGS reply brief aI23 In Docket 7970the Commission considered the petition of VGS for a certificate of public good (CPG) pursuant
to 30 VSA $ 248 authorizing the construction of the Addison Natural Gas Pipeline In an Order issued on
December 232013 the Commission granted the CPG As a condition of approval the Commission required VGSin consultation with the Department to file a petition with the [Commission] proposing a program to promote bio-methane project development Docket 7970 Order of l2l23ll3 at 147
a CLF brief at 12s CLF brief at 36 CLF brief at 4
Docket No 8667 Page 4
Lincoln
Lincoln maintains that itis essential to promote development of agricultural-based bio-
methane supply in VermontT Lincoln states that the Commission is not in a position to
adequately address VGSs proposed RNG program until negotiations for sale of itsoutput
involving VGS and Middlebury College are completes
IV Punrrc CounnnNrs
The Commission received three letters of support for VGSs RNG program On March 10
2016 the Chittenden County Transportation Authority filed comments indicating that it intends to
explore the possibility of utilizing RNG to cover a portion of the energy needs for its fleet of 70
buses On March 182016 Champlain College filed comments noting that it is interested in using
RNG for a portion of its energy needs that are currently met with conventional natural gas On
March 282016 Casella Waste Systems made a filing with the Commission stating its intention
to explore using RNG to meet some of its energy needs for its fleet of vehicles
V trrutrxcs
Based on the evidence of record I hereby report the following findings and
recommendations to the Commission in accordance with 30 VSA $ 8(c)
1 RNG is produced from raw materials such as agricultural waste manure municipal
waste plant material or food waste Decomposition or digestion of these materials produces
raw methane which is then cleaned or upgraded to bio-methane in order to meet the receiving
pipelines gas quality specifications prior to injection into an existing pipeline system Thomas
Murray VGS (Murray) supp pf at3
2 VGS is exploring options to purchase RNG supply from Lincoln and from landfill gas
projects located outside Vermont that would be received through the Trans-CanadaPipeline
(TCPL) system Murray supp pf at 8-9
7 Daniel Smith Lincoln Renewable Natural Gas LLC (Smith) supp pf at L8 On August 152016 Lincoln filed a motion to continue this proceeding for a period of not less than 60 days statingthat the continuance would allow [it] VGS and Middlebury College to complete discussions as to VGSsinvolvement in the RNG supply in Vermont and allow the record in this case to be properly developed VGS and
the Department opposed the request for continuance On August 222016I issued an Order denying Lincolnsrequest and determined that Lincoln did not demonstrate good cause to postpone the technical hearing
Docket No 8667 Page 5
3 Under the program retail customers would voluntarily purchase RNG in amounts equal to
l0oo25yo50o or 100 of their total monthly requirements at specified prices per Ccf as an
adder to other retail charges Customers could terminate RNG purchases upon providing three
days of advance notice to VGS Murray supp pf at l-2 exhs Pet-VGS-l and Pet-VGS-3
4 Intemrptible customers will have the opportunity to participate in the RNG program
through VGSs existing Lock Price Program which currently provides for up to a two-year
commitment Murray supp pf at 5
5 VGS will develop and file for Commission approval a separate tariff for use of RNG as a
transportation fuel This tariff will allow VGS to take advantage of the sale of the associated
Renewable Identification Numbers (ooRINs) When RNG is used as a transportation fuel it is
eligible to receive RINs under the Federal Renewable Fuel Standard RINs can be resold on the
wholesale market and would be used to offset the price of RNG to transportation customers
receiving service under the tariff Joan E White
Department (White) pf at7tr912116 at 62-
63 (White) exh Pet-VGS-5 Response 4
6 VGS will also initiate a review of the RNG program by the Commission Department and
others after three years White pf at9tr912116 (Munay) at24
7 The adder price for each Ccf of RNG will be equal to the average RNG commodity cost to
VGS less the average commodity cost of natural gas VGS will adjust the adder price per Ccf on
a quarterly basis as part of its Purchased Gas Adjustment (PGA) filing Murray supp pf at 4
8 The proposed RNG program will include a tariff that is very similar in concept to the
Green Mountain Power Corporation (GMP) Cow Power tariff However Cow Power is based
on a fixed rate per kWh no matter what the cost of the renewable energy Murray supp pf at llVhite pf at 4
9 VGSs RNG tariff will be calculated quarterly based on actual RNG and natural gas costs
and will provide accurate price signals as to the price differential between natural gas and RNG
White pf at 4
10 Based on a survey conducted by VGS 85 of its customers are willingto pay l0oo
more for a renewable product VGS projects that customers could potentially consume over
500000 Mcf of RNG over the next five years Murray supp pf at 5
DocketNo8667 Page 6
11 VGS will use a true-up period of up to 12 months in order to balance the difference
between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply)
Murray supp pf at 9
12 There is a risk that due to the voluntary nature of the RNG program supply and demand
will be mismatched White pf at41 David G Hill CLF (Hi11) pf at 9
13 If the available RNG supply during the previous 12 months is less than the amount
purchased by VGS customers the RNG program provides that VGS may use funds collected to
purchase carbon offsets from an established carbon registry such as the American Carbon
Registry VGS will purchase an amount of carbon offsets equal to the amount of the revenue
resulting from the undersupply in order to result in a revenue-neutral program At the time of the
three-year implementation review VGS will propose an environmental accounting protocol in
order to quantify the environmental benefits of the program and to evaluate the financial risk of
purchasing carbon offsets in an amount equivalent to the environmental benefits of unsold RNG
due to undersupply Murray supp pf at 6 l0 exh Pet-VGS-s Responses 1
14 The development and standardization of RNG attributes is in its infancy as compared to
the existing markets for the environmental attributes used in the electric industry (renewable
energy credits or (RECs)) Murray supp pf at 12
15 If carbon offsets are not available VGS will contribute the RNG program revenues to the
Clean Energy Development Fund or issue prorated credits to affected customers Exh Pet-
VGS-S Responses 3
16 If RNG supply exceeds customer demand VGS would seek to sell the excess RNG at
wholesale Murray supp pf at 10
17 VGS will provide proposed RNG supply contracts to the Department prior to execution
It will also consult with the Department before making decisions that could dramatically impact
price or the integrity of the RNG program Exh Pet-VGS-S Responses 2 White pf at 5
18 The estimated cost of RNG supply ranges from $l2lMcf to $25lMcf The cost of natural
gas is less than $3Mcf Murray supp pf at 8-9
19 VGS will implement an RNG Quality Assurance Plan establishing a testing and
monitoring process to ensure that RNG injected (via in-state RNG producers) into the VGS
system is pipeline quality and meets the specifications of the TCPL transportation tariff for bio-
methane gas quality Murray supp pf at 14 exh Pet-VGS-4
Docket No 8667 PageT
20 VGS will file an annual report on the RNG program with the Commission and the
Department containing the following information
1 Number of subscribers by customer class
2 Sales volume by customer class
3 Sales revenues
4 Any sales or purchases of carbon offsets
5 Supplyconsumption matching portfolio including any shortfall or excess
supply of RNG
6 True-up schedule for any imbalances
7 RNG supply verification
8 Quantification of the impact of any excess RNG costs flowing through the
PGA if VGS remains under altemative regulation
9 Accounting of any carbon ofszligets or other incentives
10 Status of any contracts for RNG including plans to acquire new supply
contracts
I 1 Revenue from Renewable Identification Number (RlN) sales and impact
on the transport tariff as well as any projections about the RIN market that are
available to VGS and
12 Complete reports and environmental verifications by an independent
verifier
Murray supp pf at 11 exh Pet-VGS-3 White pf at 8-9 tr912116 at23-24 (Munay)
21 Except as described below concerning RlN-eligible RNG VGS will annually verify that
the RNG was produced by a renewable gas production facility that VGS is the exclusive oryner
of any environmental attributes associated with RNG it sells under the program that it acquired
the RNG from its transferor and sold itatretail and that neither the RNG nor any renewable
attribute associated with the RNG has been sold twice at any point between RNG production and
sale to VGS whether by sales into carbon offset markets or otherwise This verification will be
based on certifications by VGSs suppliers and by an independent third party retained by VGS
for this purpose Exh Pet-VGS-3 exh Pet-VGS-s Response 5 White pf at 8
Docket No 8667 Page I
22 For RlN-eligible RNG used as vehicle fuel verification will be addressed in detail in the
future as part of VGSs proposed Renewable Vehicle Fuel Tariff Exh Pet VGS-5 Response 4
rr912116 at 65 (White)
23 There are few natural gas utilities currently offering RNG at retail VGS modeled its
RNG program after the program designed by FortisBC a local distribution company in British
Columbia Canada VGS also had discussions with SoCalGas in Southern California Both of
these companies are leaders in developing RNG offerings and fostering RNG supply resources
Murray supp pf at 7
24 VGS will file with the Commission and Department a marketing plan containing the
following elements
l An evaluation element that includes concrete metrics such as sales
volume targets and enrollment targets
2 Identification of target market segment(s)
3 Development of materials and language for customer-marketing efforts
that explain the RNG program in plain language easily understandable to the
average customer
4 An online bill calculator
5 An implementation plan that identifies specific activities and a timetable
and
6 Abudget
Exh Pet-VGS-5 White pf at 10 Tr912116 at22-23 (Munay)
25 VGS and the Department represent that the RNG progriquestun is responsive to the
Commissions condition in its Order in Docket 7970 rcquiring VGS to develop a proposal to
promote bio-methane project development Murray supp pf al 13-14tr912116 at 63 (Vhite)
26 VGS asserts that the RNG program represents appropriate progress toward the Vermont
Comprehensive Energy Plan (CEP) goal to meet90o of Vermonts energy needs through
renewable sources by 2050 Murray supp pf at 12-13
VI DlscussroN iexclxu Coxclustox
Vith this proposal for decision I recommend that the Commission approve the RNG
program in accordance with the findings described above and based upon the evidence in the
Docket No 8667 Page 9
record In Docket 7970 the Commission required VGS in consultation with the Department to
file a petition with the [Commission] proposing a program to promote bio-methane project
development It is reasonable to expectthat aprogram meant to stimulate development of a
specific energy source would look to stimulate demand for that resource by offering an
opportunity for customers to purchase supply from RNG producers
The RNG program proposed by VGS and supported by the Department seeks to offer
ratepayers the option to purchase renewable energy as part of their individual energy-use
portfolio Furthermore the program includes a provision requiring that VGS develop a detailed
marketing plan that will serve to educate customers on the availability costs and benefits of
such resources which could lead to increased demand for the product
VGS intends to take advantage of the existing market for RINs associated with RNG used
as transportation fuel by proposing a Renewable Vehicle Fuel Tariff As described above in the
Public Comments section the Chittenden County Transportation Authority and Casella Vaste
Systems are interested in exploring the use of RNG to fuel their vehicle fleets which
demonstrates that there is existing customer demand for this product
Unlike the markets relating to RNG supply used for transportation fuel or renewable
electric generation and the associated trading and verification of RECs the RNG market is in its
infancy At this time it would not be appropriate to expect VGS to implement an RNG program
utilizing an RNG content standard similar to the electric renewable portfolio standard as
recommended by CLF because the equivalent standards and processes do not exist However
the RNG program represents a meaningful first step in encouraging customer interest in
purchasing RNG at retail thereby stimulating supply of RNG into the market and is consistent
with the Commissions condition requiring VGS to develop a proposal to promote bio-methane
project development
VGSs RNG program includes appropriate mechanisms for periodic reporting and
verification of program activities as well as an opportunity to comprehensively review the
program after three years of implementation Furthermore determinations regarding recovery of
costs associated with the RNG program will be made in the context of future proceedings
regarding VGSs rates The RNG program should evolve with the RNG markets in the near-term
and over the course of the next several years which will allow progress towards achievement of
Vermonts 2050 CEP renewable energy goals
Docket No 8667 Page 10
Because not all parties to this proceeding have waived their rights under 3 VSA $ 811
to file written comments or present oral argument with respect to this proposal for decision I am
circulating the proposal for decision to the parties for their review and comment
Dated at Montpelier Vermont this rrtl day of QrIltt 2017a0AndreaHearing Officer
Docket No 8667 Page 11
VII Corumrssron Drscussrox
On August 22017 the Department filed a letter stating that it supports the issuance of an
Order by the Commission that adopts the proposal for decision in full
Also on August 22017 VGS filed comments on the proposal for decision requesting
that Finding 16 be modified as follows (additional text in italics) If RNG supply exceeds
customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary
flow any remaining RNG attribute inventory amounts through the PGA or through a rate case ifVGS was under traditional cost of service regulation (subject to [Commission] approval)
VGS asserts that [a]bsent such specific language it is possible that VGS would be unable [to]
defer such costs for future recovery and that removal of that component introduces uncertainty
about the potential procedural mechanisms available for cost recovery in the last resort VGS
states that with the Commissions consideraacutetion of this request it does not request oral argument
No other comments were filed on the proposal for decision
The Hearing Officer recommended that the Commission find that determinations
regarding recovery of costs associated with the RNG program will be made in the context of
future proceedings regarding VGSs rates We agree with this recommendation VGS should
have an opportunity to request rate recovery for excess RNG supply However this proceeding
is not the proper time for such a determination Accordingly Finding 16 is hereby modified as
follows If RNG supply exceeds customer demand VGS would first seek to sell the excess
RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any
remaining RNG attribute inventory amounts through the PGA or through arate case as part of
its cost of service if the PGA is no longer in effect atthat timeWe emphasize the importance of the successful implementation of the RNG program in
helping to meet the States renewable energy policy objectives The annual report on the
implementation of the RNG program will serve as a valuable tool to assess that progress In this
proceeding CLF has raised policy considerations that should serve to guide these future reviews
of the RNG program For example CLF has raised concerns regarding the effectiveness of the
voluntary nature of the program In assessing its program we expect VGS to revisit and report
on the feasibility of incorporating RNG as a portion of its supply mix in the future It is
important for VGSs RNG program to be sustainable and continue to evolve ensuring significant
DocketNo8667 Page 12
contributions toward meeting the States renewable energy goals and reducing the consumption
of fossil fuel Accordingly it is critical that the annual report and the three-year comprehensive
review address not only the effectiveness of the program but also its affordability and the
feasibility of other policy options to advance the production and use of RNG in Vermont
Docket No 8667 Page 13
VIII Onunn
Ir rs Hennsy oRDERED ADJUDGED AND DECRnnn by the Public Utility Commission of the
State of Vermont that
1 The findings conclusions and recommendations of the Hearing Officer are
adopted and the Renewable Natural Gas (RNG) program to be implemented by Vermont Gas
SystemsInc (VGS) is approved
2 When VGS has procured RNG supply in amounts reasonably estimated to be
sufficient for estimated customer demand it shall file a formal tariff including proposed rates for
sale of RNG The tariff shall be reviewedpursuantto the procedures of 30 VSA ccedilccedil225226
and227 and sales under the program shall begin after Commission approval of the tariff
3 VGS shall develop and file for Commission approval a separate Renewable
Vehicle Fuel Tariff to serve customers using RNG as a transportation fuel
4 VGS shall file a marketing plan for the RNG program consistent with the
requirements set forth above within one month of the issuance of this Order
5 VGS shall file an annual report consistent with the requirements set forth above
upon implementation of the RNG program
6 VGS shall file a comprehensive review of the performance of the program with
the Commission and the Department after three years of implementation This review will
include an environmental accounting protocol to quantiff the environmental benefits of the
progrfim
7 VGS shall review proposed RNG supply arrangements with the Department
Docket No 8667
Orprcp oF THE Crnm
Dated at Montpelier Vermont this day of+hb
Z Roisman
Cheney
Page 14
20t7
Puslrc Urrlnv
CovtriquestIssIoN
OP VERMONT
(
)))
)))
Fired otildeeglcL ( JotTAttest c
of the Commission
NorIcE To READERS This decision is subject to revision oftechnical errors Reqders are requested tonotify the Clerk of the Commission (by e-mail telephone or inwriting) or any appqrent errors in order that anynecessary corrections may be made (E-mail address pucclerkvermontgov)
Appeal of this decision to the Supreme Court of Vermont must befiledwith the Clerk of the Comnissionwithin thirty days Appeal will not stay the efect of thszlig Order absentfurther order by this Commission orappropriate actiacuteon by the Supreme Court of Vermont Motions for reconsideration or stay if any must be filed withthe Clerk of the Commissionwithin ten days of the date of this deciacutesion and Order
Exhibit 22 VGS RNG Tariff Rate Filing
Exhibit 23 PUC Approval of VGS RNG Rates
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Case No l8-03 13-TF
Petition of Vermont Gas Systems Inc fotapproval of a new tariff implementing theRenewable Natural Gas program
Order entered
OnonRAppnovINc Tiquestrurn
On January 302018 Vermont Gas Systems Inc (VGS) filed a petition for approval of
a new tariff implementing the Renewable Natural Gas (RNG) program approved by the
Vermont Public Utility Commission (Commission) in Docket No 8667 In that Docket the
Commission required VGS to file a tariff implementing the RNG program when it has procured
RNG supply in amounts reasonably estimated to be sufficient to meet customer demandl In
this Order the Commission approves the new tariff marketed under the name EcoGas with an
effective date of bills rendered on and after March 15 2018
VGS states that it has executed an RNG supply contract with deliveries scheduled for
2018 and that two additional contracts are being negotiated for deliveries beginningin2019
VGS is proposing to set its initial RNG adder at$ll749lCcf which represents a five-year
blended rate based on the three RNG supply arrangements VGS intends to account for the
difference between the cost of RNG supply and the RNG adder as a regulatory asset within gas
costs As additional lower-cost supply is added to the portfolio the regulatory asset balance will
be recovered from EcoGas participants with the goal of fully reducing the balance by the end of
five years Accordingly VGS states that the RNG program will be rate-neutral to VGS and its
non-RNG customers
On February 272018 the Vermont Department of Public Service (Department) filed a
letter recommending that the Commission approve the tariff without a hearing or further
investigation The Department states that the tariff filing and proposed accounting treatment
comply with Vermont rate-setting practices policies precedents and statutes
lslaotx
I Docket 8667 Order of 96117 at 13
Page2Case No 18-0313-TF
Based on the foregoing we hereby approve VGSs proposed RNG tariff to be effective
on a bills-rendered basis beginning on March 15 2018 Recovery of any regulatory asset
balance at the end of the fifth year would need to be approved by the Commission in a future
proceeding
So Omnnnn
Case No l8-0313-TF
8r- day of lruacuterLiquestiquest
Page 3
Dated at Montpelier Vermont this 2018
Roisman PueIrc Urlrrv
CoiriexcllriquestlssloN
Cheney
OF VERMONT
Sarah Hofmann
Onncp oF THE CLBRr
Filed huacuteveuroAacute- icirc dollAttest I
Clerk of the Commission
Notice to Readers This decision is subiect to revision oftechnical errors Readers are requested to notify
the Clerk of the Commission (by e-mail telephone or in writing) or qny qpparent errors in order that any
necessary corrections may be made (E-mail address pucclerkvermontgov)Appeal of this decisiacuteon to the Supreme Court of Yermont must be filed with the Clerk of the Commission
within 30 days Appeal will not stay the efect of this Order oslashbsent further order by this Commission or appropriate
action by the Supreme Court of Vermont Motionsthornr reconsideration or stay if any must befiledwith the Clerk ofthe Commissionwithin 28 doslashys of the date of this decision and Order
)))
))))
PUC Case No 18-0313-TF
Eileen SimollardesLauren HammerVermont Gas
85 Swift StreetSouth Burlington VT 05403
June E Tiemey CommissionerVermont Department of Public Service1 12 State StreetMontpelier VT 05620 -2601
Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
Exhibit 31 Accounting Procedures
Exhibit 31 Accounting for VGS Renewable Natural Gas (Ver-9202019)
1 Purchase of RNG Supply
RNG supply purchases are separated into the cost of the commodity and the cost of the renewable attribute The commodity portion is expensed to gas costs in the delivery month while the renewable attribute is booked to an inventory account referenced herein as the ldquoRenewable Inventory Accountrdquo Like VGSrsquo existing storage inventory accounting the Renewable Inventory Account will track both the dollar value of the renewable attribute and the renewable attribute Mcfs Renewable attribute dollar values are record to ldquo16410050 Inventory RNG Storagerdquo while Mcf values are recorded in the gas cost model maintained by accounting In the month VGS purchases the renewable attribute it is accrued in a book model and goes in to 16410150 Inventory RNG Accrued then moves to the 16410050 in a final model the following month for final
RNG may be purchased at different locations and using varying pricing structures While the accounting for RNG does not vary with the purchase location or price the determination of the value of the renewable attribute will vary depending on whether or not the supply pricing expressly values the renewable attribute as an adder or it is embedded in a fixed price Examples of each are shown below The accounting of RNG supply is intended to separate the cost of the renewable attribute from the cost of the commodity The examples below are not all inclusive of what may occur but intended to show the accounting procedures used to separate the renewable attribute from the commodity and specify ownership of each aspect
In all cases the commodity cost portion - which is the total cost of the RNG purchased excluding the renewable attribute - will be expensed in the delivery month as a cost of gas
Example 1 ndash The fixed price of RNG includes both the commodity and the renewable attribute
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The total cost of the RNG supply purchased during the month is calculated by Accounting within the gas cost model as follows
MMBtu Purchased (as validated in step 2) $ MMBtu purchase price (as provided in a supply confirmation provided by gas supply)
4 For purposes of booking the renewable attribute to inventory it is necessary to calculate the RNG cost per Mcf The RNG cost Mcf is calculated using the total cost of RNG supply as calculated in step 3 divided by the Mcf in step 1
5 The renewable attribute price per Mcf is calculated as follows
RNG cost per Mcf as determined in step 4 ndashplus ldquoother componentsrdquo as calculated pursuant to Attachment A ndash minus ldquoAverage Commodity Costrdquo as calculated pursuant to Attachment A The ldquoother componentsrdquo added to the RNG cost per Mcf will vary depending on where the RNG supply was delivered but in each case will be identified in the calculation shown on Attachment A
6 The renewable attribute price per Mcf the total RNG Mcf delivered is recorded in the Inventory RNG Storage account
7 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
Example 2 - RNG purchased at a renewable attribute price plus a daily or monthly index
Where the pricing of RNG specifically separates the commodity from the renewable attribute the renewable attribute price will be what is recorded in the Renewable Inventory Account
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The renewable attribute price per Mcf the total RNG Mcf delivered as determined in step 1 is recorded in the Renewable Inventory Account
4 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
2 Recalculating the RNG Adder
The RNG Adder paid by customers will be recalculated anytime the Natural Gas charge portion of rates changes The Manager of Gas SupplyGas control is responsible for recalculating the RNG Adder The calculation will be verified and approved by the Vice President ndash Regulatory Affairs The determination of the RNG Adder will be pursuant to the methodology shown in Attachment A The Regulatory Department will prepare the amended RNG Adder tariff for filing with the PUC Upon PUC approval of the RNG Adder the Regulatory Department will prepare a memorandum advising Accounting and Gas Supply of the new RNG Adder as approved
3 Customer purchases VGS Renewable Natural Gas
The RNG Adder at the percent selected by the customer will be applied to the entire monthrsquos usage on the customersrsquo next bill For customers utilizing the S-RNG adder the entire volume elected with be on the customersrsquo next bill The S-RNG Adder nor the RNG Adder and percentage selected will not be prorated based on enrollment or termination date
Customers may terminate or modify their RNG selection upon 3 dayrsquos notice to VGS The termination or modification will be effective on the customerrsquos next monthly bill
The customerrsquos usage for the month will be multiplied by the percentage and the approved RNG Adder For customers utilizing the S-RNG adder the volume elected will be multiplied by the approved RNG adder This amount will then be recorded to SAP accounts 4010015-40010021 depending on which rate class the customer is in The RNG Adder is the same regardless of which rate class a customer is in At the end of the month a report is run by billing from the customer information system that shows total usage and which percentage of RNG the customer has signed up for to calculate the number of MCFrsquos of renewable attribute sold during the billing period Billing also provides a report of the volumes sold through the S-RNG Tarriff The Inventory RNG Storage account maintained within the gas cost model by Accounting is reduced by these Mcf The MCFrsquos are then multiplied by the RNG Adder in effect for the billing month and an entry is made to remove that dollar amount from the Inventory RNG Storage account and into the monthly cost of gas The intent of this transaction is to ensure that cost of the renewable attribute is reflected in the cost of gas in the month it is purchased by the customer This results in a matching of the renewable attribute revenue and expense
The RNG Adder revenue and renewable attributes removed from storage will be included in the gas cost deferral calculation However because there is a matching of the renewable attribute revenue and expense the impact on the deferral calculation will be zero
The calculation of unbilled revenues will exclude RNG as a customer can cancel their participation prior to their next bill
In the event Vermont Gas issues a credit to a customer related to the RNG program the value of the renewable attribute credited and the associated Mcf will not be applied to the Renewable Inventory Account
4 Controls
A spreadsheet is maintained by accounting that shows the MCFrsquos and dollar values of the Renewable Inventory Account This is reconciled monthly by the accounting team and will be reviewed by the Manager Gas SupplyGas Control
Accounting will validate that the amount removed from the Renewable Inventory Account matches the RNG Adder revenue Any discrepancies will be reviewed and corrected
A report will be run for each bill cycle that shows any changes to the RNG percentages selected this will include customers opting to withdraw from the RNG program The customer care team will validate any changes against customer confirmation paperwork
5 Renewable Inventory Account Reconciliation and Forecast
The PUC Order approving the RNG program contains provisions describing how RNG supply and demand imbalances will be addressed These provisions and how VGS will track and comply with them are as discussed in this section The PUC Order approving the RNG Program provides that if the available RNG supply during the previous 12 months is less than the amount purchased by customers VGS may use the funds collected to purchase carbon offsets (Finding 13) If carbon offset are not available VGS will contribute the RNG program revenues to the Clean Energy Development Fund or issue prorated credits to affected customers (Finding 15) The Order also provides that in the event RNG supply exceeds customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any remaining RNG attribute inventory amounts through the PGA or through a rate case as part of its cost of service if the s PGA is no longer in effect at that time (Finding 16 as modified) Finding 11 provides that VGS will use a ldquotrue-uprdquo period of up to 12 months in order to balance the difference between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply) Taken together these provisions require VGS to evaluate the imbalance after 12-months and then true-up the imbalance over the next twelve months To provide a forecast of the supplydemand imbalance quarterly the billing area will run a report showing the expected RNG volumes based on current customer commitments by month for the next 12-months Current customers commitments will be calculated based on the previous 12 months of usage multiplied by the RNG percentage currently signed up for The marketing department will provide their forecast of new RNG sales for the next 12-months Both will be provided to the Manager Gas SupplyGas Control The Manager Gas SupplyGas Control will compare the forecasted RNG sales known and expected to RNG supply commitments and provide a 24-month forecast of the supplydemand balance The supplydemand balance will be reviewed at the risk management meeting The strategy for addressing the imbalance consistent with the PUC order will be determined by the risk management committee
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
VGS Renewable Natural Gas Program Manual
Page ii
Revision Log
Date Version Approver Custodian Comments Apr 26 2018 101 T Murray Initial issue Aug 20 2019 102 T Murray General review and updates including
clarification regarding tariff adder customer enrollment options and supplies
Shana Kane
Shana Kane
VGS Renewable Natural Gas Program Manual
Page 1
About Vermont Gas
Vermont Gas is providing Vermont households and businesses the choice and opportunity to achieve a clean energy future We offer our customers a cleaner1 more affordable heating choice2 award winning efficiency programs and energy services We are dedicated to helping you meet your energy goals with our innovative renewable natural gas program
VGS believes the natural gas industry must embrace renewable product offerings and promote innovation to address the global threat of climate change Our VGS team is dedicated to giving Vermont families and businesses the tools to help achieve Vermontrsquos carbon reduction goals We are proud members of Vermontrsquos Climate Pledge Coalition and determined to do our part to help achieve carbon reduction goals Choosing Vermont Gas over oil reduces carbon emissions of a household by almost 233 A family choosing to install a high-efficiency gas furnace or boiler can further reduce energy use by 204 mdash cutting both costs and carbon emissions Adding a smart thermostat can save an additional 55 Our energy efficiency experts can identify even more savings through our comprehensive home energy audits Our VGS Renewable Natural Gas Program gives customers the opportunity to further reduce their home or business carbon footprint Wersquore dedicated to helping our customers meet their energy goals with choices that promote efficient affordable and environmentally sustainable practices
Wersquore proud to bring these choices and opportunities to our customers Wersquore proud of what our customers have already achieved ndash tens of millions in annual cost savings6 and some 300000 metric tons of carbon7 avoided every single year and counting According
1 According to the US Energy Information Agency (httpswwweiagovenvironmentemissionsco2_vol_massphp) 2 VT Department of Public Service httppublicservicevermontgovsitesdpsfilesdocumentsPubs_Plans_ReportsFuel_Price_Report2016January20201620Fuel20Price20Reportpdf 3 Ibid 1 4According to Efficiency Vermont (httpswwwefficiencyvermontcomproducts-technologiesheating-cooling-ventilationfurnaces-boilers) 5 According to Nest smart thermostats can save 10 to 12 (httpsnestcomthermostatsreal-savings) 6 This number is based on the aggregate savings for customers conversion to Natural Gas vs using oil or propane and the cumulative savings generated by VGS Efficiency Program 7 This number is based on EIA data to determine the carbon avoided by VGSrsquo customers vs using oil and propane and the cumulative carbon savings generated from VGS Efficiency Program
VGS Renewable Natural Gas Program Manual
Page 2
to the Environmental Protection Agency (EPA) thatrsquos carbon avoidance equivalent to more than 70 wind turbines8
Section 1 Program Overview
11 WHAT IS VGS RENEWABLE NATURAL GAS ldquoVGS Renewable Natural Gasrdquo is an innovative offering that will allow Vermont Gas customers to displace the use of conventional (fossil) natural gas by purchasing the renewable attributes of renewable natural gas (RNG) production These renewable attributes correspond with the production of RNG by anaerobic digestion of organic matter at landfills waste treatment plants industrial sites and farm digesters This digestion process produces biogas which is cleaned to pipeline quality - at which point it is referred to as biomethane - and injected as RNG into the natural gas pipeline system
Our initial supply of RNG is coming from outside of Vermont where it is injected into the natural gas pipeline and commingled with conventional natural gas We are working with developers to create a local ldquoin-staterdquo supply of RNG produced in local digester facilities to then inject directly into the Vermont Gas distribution system
Vermont Gas customers have the opportunity to participate in the VGSrsquo Renewable Natural Gas Program by voluntarily signing up to purchase renewable attributes of RNG for either a percentage of their natural gas usage or for a fixed quantity per monthly billing cycle Participating customers agree to pay an additional charge referred to as an ldquoRNG Adderrdquo commensurate with the additional cost to purchase RNG supply compared to conventional natural gas This charge will be reflected on participating customersrsquo monthly bills along with the percentage of the customerrsquos gas usage or fixed monthly quantity covered by the RNG Program Every customer who participates in the program advances Vermontrsquos leadership in renewable energy innovation and furthers Vermontrsquos Comprehensive Energy Plan9
12 HOW MUCH DOES VGS RENEWABLE NATURAL GAS COST All VGS customers firm and interruptible who voluntarily enroll in the VGS Renewable Natural Gas Program will pay an additional Program ldquoRNG Adderrdquo based on the percentage of RNG the customer has subscribed or the fixed quantity allocated by the customer The RNG Adder is billed in hundred cubic feet or ldquoCCFrdquo (1 CCF equals one hundred cubic feet of gas) based on the percentage of RNG selected by the customer or fixed quantity
8 httpswwwepagovenergygreenhouse-gas-equivalencies-calculator 9 Vermont Comprehensive Energy Plan Chapter 125 (httpsoutsidevermontgovsovwebservicesShared20Documents2016CEP_Finalpdf)
VGS Renewable Natural Gas Program Manual
Page 3
The voluntary VGS Renewable Natural Gas Adder is available to all firm rate classes (R G1 G2 G3 and G4) in the percentages shown below and will apply to monthly CCF usage
Available RNG Adder Percentages (applied to monthly Ccf usage)
10
25
50
100
In addition rather than electing a percentage any customer10 may elect to purchase a fixed amount of the environmental attributes associated with RNG which falls under the approved ldquoS-RNGrdquo Tariff The RNG Adder (and S-RNG Adder) will appear as a separate line item charge on the customerrsquos bill in addition to the existing rate elements of a Daily Access Charge a Natural Gas Charge and a Distribution Charge The current RNG Adder can be found at httpswwwvermontgascomrenewablenaturalgasadder-calculator The RNG Adder will change whenever the Public Utility Commission (ldquoPUCrdquo) authorizes a change in the Natural Gas Charge portion of the tariff Currently the RNG Adder is adjusted quarterly alongside the Natural Gas Charge change The effect of these changes to the RNG Adder is that the cost of the RNG Adder will vary with the wholesale cost of conventional gas and may further vary in the future as new RNG supply contracts come into our portfolio
VGS ldquointerruptible servicerdquo customers may participate in the RNG Program through either the RNG adder or the S-RNG tariff which will permit these customers to designate how much of their annual natural gas purchases they wish to meet via the RNG Program As noted above the RNG Adder will change whenever the PUC authorizes a change in the Natural Gas Charge portion of the tariff
13 WHERE IS VGS RENEWABLE NATURAL GAS PRODUCED VGS Renewable Natural Gas can be sourced from either in-state or out-of-state producers that utilize anaerobic digestion of organic matter such as landfills waste treatment plants industrial sites and farm digesters that are connected to the natural gas pipeline system In-state RNG supply (planned for 2020) would be injected directly into Vermont Gasrsquo pipeline system after ensuring the RNG meets VGSrsquo natural gas quality standards Although out-of-state VGS Renewable Natural Gas resources may not physically flow to
10 A customer is defined as a consumer of natural gas in Vermont regardless of whether or not the customer has an account for metered natural gas service with the Company
VGS Renewable Natural Gas Program Manual
Page 4
the VGS system the environmental attributes will be dedicated to Vermont Gas customers
Much like renewable electricity that is comingled in the electric grid VGS Renewable Natural Gas is comingled with conventional natural gas supply in the pipeline system VGS Renewable Natural Gas customers are purchasing the environmental attributes of RNG There is no claim by VGS that a participating customer is directly burning an RNG or biomethane molecule
14 WHAT ARE THE ENVIRONMENT BENEFITS An average household enrolling in the VGS Renewable Natural Gas program at the 100 level will effectively nullify the corresponding carbon footprint associated with the customerrsquos direct use of natural gas For a typical VGS residential customer using 90 Mcf of conventional natural gas each year this equates to 49 metric tons11 of avoided carbon dioxide emissions each year
VGS is not making representations or claims for any additional environmental benefits of anaerobic digesters beyond the carbon reduction associated with replacing conventional natural gas with a renewable source of energy production Specifically we make no environmental claims related to the avoidance of uncontrolled fugitive methane emissions that would have gone into the atmosphere from the primary biogas feedstock (eg landfill gas manure wastewater) in the absence of anaerobic digestion and capture of the methane as RNG
11 (httpswwwepagovenergygreenhouse-gas-equivalencies-calculator)
VGS Renewable Natural Gas Program Manual
Page 5
Section 2 Regulation
KEY REGULATORY STEPS
Item Description Filing Schedule VGS RNG Adder Tariff Update
Updates required to reflect gas costs changes
Quarterly
Annual RNG Report Full Programmatic Report Annually RNG Supply Contracts Filed for VT Public Utility
Commission (PUC) approval or information
As required
Triennial Assessment Program Review with Dept of Public Service
Every three years
21 REGULATORY SUMMARY
In October 2015 Vermont Gas filed a petition with the PUC for authority to establish a Renewable Natural Gas offering The PUC initiated Docket No 8667 to evaluate VGSrsquo proposal VGS modified the program based on input from parties to the proceeding12 and resubmitted testimony in April of 2016 followed by technical hearings in September of 2016 On September 6 2017 the PUC issued the final order approving the voluntary RNG program (see Exhibit 21) The Order provided authority for VGS to sell RNG under the proposed ldquoadderrdquo structure The Order also provided the accounting guidance to inventory the renewable attributes of RNG and the ability to recoup unsold RNG costs if need be with subsequent PUC approval The order also authorizes VGS to purchase carbon offsets in the event the supply of RNG is insufficient to meet subscriber demand
The table below lists the requirements contained in the Order and VGSrsquo compliance to-date
Order Requirement Status and Compliance Date
1 When VGS has procured RNG supplyhellipit shall filea formal tariff including proposed rates for the saleof RNG
Completed - January 30 2018 See also section 22 below
2 VGS shall develop and file for Commissionapproval a separate Renewable Vehicle Fuel Tariffto serve customers using RNG as a transportationfuel
Pending ndash Due date TBD
12 Parties to Docket No were the Department of Public Service Conservation Law Foundation and Lincoln Renewable Natural Gas LLC
VGS Renewable Natural Gas Program Manual
Page 6
Order Requirement Status and Compliance Date
3 VGS shall file a marketing plan for the RNGprogram consistent with the requirements setforth in the order within one month of the issuanceof this Oder
Completed - October 6 2017
4 VGS shall file an annual report consistent withthe requirements of the Order uponimplementation of the RNG program
Initial filing completed ndash filed June 2018 and 2019
5 VGS shall file a comprehensive review of theperformance of the program with the Commissionand Department after 3 years of implementationThis review will include an environmentalaccounting protocol to quantify the environmentalbenefits of the program
Pending ndash Due by March 15 2021
6 VGS shall review proposed RNG supplyarrangements with the Department
Completed - Initial review 11618 Review of subsequent contract also completed and approved by PUC
On October 4 2018 the Company filed with the PUC for a new RNG tariff offering ldquoS-RNGrdquo Adder which has the same pricing as the RNG Adder The new offering allows customers to purchase a fixed amount of RNG per month that would be unbundled from the customerrsquos metered gas consumption and offers customers who are consumers of natural gas but do not have an account for metered gas service with the Company the ability to purchase RNG attributes The PUC approved the S-RNG Adder to take effect with bills rendered on or after December 1 2018 (see Exhibit 24)
22 VGS RENEWABLE NATURAL GAS ADDER TARIFF The PUC order provides ldquoWhen VGS has procured RNG supplyhellipit shall file a formal tariff including proposed ratesrdquo On January 30 2018 after contracting for the initial RNG supply VGS filed the VGS Renewable Natural Gas Adder Tariff (see Exhibit 22) On March 9 2018 the PUC approved the initial RNG Adder for effect with bills rendered on and after March 15 2018 (see Exhibit 23)
In simple terms the RNG Adder reflects the difference between the cost of RNG and the cost of conventional gas This is calculated by subtracting the average commodity cost for conventional natural gas from the average commodity cost for RNG as indicated in the following example
VGS Renewable Natural Gas Program Manual
Page 7
VGS Renewable Natural Gas Adder Calculation Average RNG Commodity Cost
Minus Average Natural Gas Charge Equals VGS Renewable Natural Gas Adder
Exhibit 22 provides the detailed calculations
This formula identifies the current premium to be paid per CCF of RNG This premium also represents the value of the ldquoVGS Renewable Natural Gas Attributerdquo that VGS will withdraw from the VGS Renewable Natural Gas Attribute Inventory described below
To full reflect the cost of the initial RNG supply with future RNG supply contracts the initial RNG Adder was based on a blended rate of the cost of the first and the expected costs of future RNG purchases over the next 5 years The PUC has authorized this blended approach
The RNG Adder will change whenever the PUC authorizes a change in the Natural Gas Charge portion of the tariff Currently this change occurs quarterly
23 ANNUAL RNG REPORT An Annual RNG Report will be filed with PUC and Vermont Department of Public Service (ldquoDepartmentrdquo) each year in June The first annual report was filed in June 2018 In accordance with the PUC final order approving the Program the annual report will include the following information
1 Number of subscribers by class2 Sales volume by customer class3 Sales Revenues4 Any sales or purchases of carbon offsets5 Supply Consumption matching portfolio including any shortfall or excess supply of
RNG6 True-up schedule for any imbalances7 RNG supply verification8 Quantification of the impact of any excess RNG costs flowing through the PGA if
VGS remains under alternative regulation9 Accounting of any carbon offsets or other incentives10 Status of any contracts for RNG including plans to acquire new supply contracts11 Revenue from Renewable Identification Number (ldquoRINrdquo) sales and impact on the
transport (transportation) tariff as well as any projections about the RIN marketthat are available to VGS and
12 Complete reports and environmental verifications by an independent verifier
The annual report will also address the effectiveness of the program and its affordability
VGS Renewable Natural Gas Program Manual
Page 8
24 THREE-YEAR IMPLEMENTATION REVIEW In accordance with the PUC Order in March 2021 (the third year of the Program) VGS will file a comprehensive review of the performance of the Program The review will include an environmental accounting protocol to quantify the environmental benefits of the program The three-year comprehensive program review will also address the effectiveness of the program its affordability and the feasibility of other policy options to advance the production and use of RNG in Vermont
SECTION 2 EXHIBITS
bull Exhibit 21 VT PUC Approval Orderbull Exhibit 22 VGS RNG Tariff Rate Filingbull Exhibit 23 PUC Approval of VGS RNG Ratesbull Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
VGS Renewable Natural Gas Program Manual
Page 9
Section 3 Supply Procurement and Accounting
KEY VGS RENEWABLE NATURAL GAS SUPPLY AND ACCOUNTING STEPS
Item Description Schedule Owner RNG Supply Contracts
Procuring RNG Supply As needed Gas Supply
RNG Supply True-Up
Balancing RNG supply sales and retiring attributes
Monthly Finance
RNG Supply Verification
Verifying ldquorenewabilityrdquo of RNG Supply
Annually Gas SupplyThird- Party
31 VGS RENEWABLE NATURAL GAS SUPPLY OVERVIEW
VGS intends to contract with a variety of RNG supply sources to meet its customer demand in the RNG Program RNG supply is currently available from a limited number of landfill and digester projects in Canada or US states other than Vermont In Vermont at least one local supply project is currently under development
Today there is no central ldquomarketplacerdquo for RNG suppliers and buyers to trade RNG supply contracts RNG buyers such as VGS transact with individual producersprojects or work through RNG brokers to acquire RNG supply or the environmental attributes associated with RNG in bilateral transactions VGSrsquo initial RNG supply contract in 2018 was with BP Canada Energy Group ULC and sourced from the EBI Inc13 biogas production facility located in Ste Genevieve Quebec In 2019 VGSrsquo purchased RNG supply from a waste water treatment facility in Dubuque Iowa
In 2020 VGS plans to begin receiving RNG supply from a Vermont farm digester and a Canadian digester facility The Vermont farm digester located in Salisbury Vermont is slated for completion in late 2020 producing 180000 MMbtursquos per year The Canadian digester project is located in London Ontario VGS has agreed to purchased 100 of the supply from this facility up to 120000 MMbtursquosyear for 15 years VGS sought and received PUC approval for this Ontario supply in 2018 and received approval for an amendment in 2019 To meet anticipated demand for RNG until these two resources come on line the Company purchased short-term supply of RNG from the Iowa facility in 2019 We anticipate that these supply sources will satisfy the VGS Renewable Natural Gas Program supply needs for the first few years of the Program If we are unsuccessful
13 EBIrsquos Facility was recognized in 2016 (httpswwwdesjardinscomcavideossinglejspdocName=vid-ebi-e)
VGS Renewable Natural Gas Program Manual
Page 10
in procuring supply from these sources or if demand exceeds these planned supplies VGS will seek additional RNG supply in the marketplace
32 VGS RENEWABLE NATURAL GAS SUPPLY CONTRACTS VGS will utilize standard industry or comparable contract vehicles to procure RNG supply with site-specific terms and conditions Given the unique nature of the in-state RNG project the gas supply contract is a 3 way agreement between the producer VGS and an end user Accordingly the form of the contract does not resemble industry standard supply agreements but contains all appropriate business terms The first two contracts signed by VGS utilize a gas utility standard base contract with signed transaction confirmation documents that specify the specific details of each deal These contracts will require the RNG supplier to certify the renewable attributes and that VGS has full and sole ownership of those attributes As required by the PUC Order RNG Suppliers will also be required to allow VGS independent verification of the production and transactions related to VGS supply volumes The specific PUC requirements are found in finding 21 page 7 of Exhibit 21 - VT PUC Approval Order
33 VGS RENEWABLE NATURAL GAS ACCOUNTING Like accounting practices in the renewable electric industry Vermont Gas will have the obligation to match RNG supply volumes with customer RNG purchase volumes over time As discussed in Section 22 the premium for RNG above the cost of conventional natural gas establishes the value of the renewable attribute purchased by the customer These attributes are tracked in a separate inventory account and then matched with actual retail VGS Renewable Natural Gas sales Once these renewable attributes are matched with VGS Renewable Natural Gas sales they are ldquoretiredrdquo and cannot be resold in any manner or used to satisfy another obligation by VGS As provided in the PUC order ldquoVGS will use a ldquotrue-uprdquo period of up to 12 months to balance the difference between RNG attributes sold to customers (demand) and RNG attributes purchased by VGS from suppliers (supply)rdquo This true-up period allows RNG attribute ldquooversupplyrdquo and ldquoundersupplyrdquo to be balanced as described below
In an ldquooversupplyrdquo situation where forecasted RNG attribute purchases exceed the number of RNG attributes that VGS forecasts selling to its customers through the RNG Program VGS will first seek to market the excess RNG and the environmental attributes back through the wholesale supply channels If this oversupply extends beyond the 12-month true-up window VGS may seek PUC permission to flow any remaining RNG attribute inventory amounts through the Purchase Gas Adjustment (ldquoPGArdquo) or through its cost of service if the PGA is no longer in effect at that time
An ldquoundersupplyrdquo situation would occur if customer purchases of RNG attributes exceeded the amount available under VGSrsquo RNG supply contracts in the forward looking 12-month true-up window If the RNG supply purchases are lagging the RNG sales VGS
VGS Renewable Natural Gas Program Manual
Page 11
will true-up or balance this undersupply over the upcoming 12-month period through existing or additional RNG supply purchases
If VGS is unable to eliminate an undersupply imbalance after the 12-month true-up period VGS would need to purchase carbon offsets in the dollar amount equal to VGS Renewable Natural Gas revenues collected associated with the undersupply (See Exhibit 21 Order Finding 13 and 15) Carbon offsets are listed on one of several Carbon Registries such as the American Carbon Registry If carbon offsets are not available VGS has the option to contribute these RNG revenues to the statersquos Clean Energy Development Fund or issue prorated credits to affected customers It should be noted that while purchasing offsets is a tool for VGS it is not the intent of the VGS Renewable Natural Gas Program and if an undersupply situation persisted VGS would likely petition the PUC to modify or suspend the VGS Renewable Natural Gas Program prospectively
VGS will manage the RNG Program to closely match supply and demand and utilizing our RNG wholesale cost mitigation tools to avoid RNG supply challenges
As renewable programs evolve in the energy and natural gas industry Vermont Gas will adjust its accounting procedures to reflect industry standards and revise this manual to reflect any modifications or changes
34 RENEWABLE VERIFICATION VGS is committed to transparency and the integrity of this innovative program is essential to success Toward that end no step is more essential than the verification of the renewability claims of our VGS Renewable Natural Gas supply The PUC reinforced this commitment in the RNG approval order as follows
ldquoVGS will annually verify that the RNG was produced by a renewable gas production facility that VGS is the exclusive owner of any environmental attributes associated with RNG it sells under the program that it acquired the RNG from its transferor and sold it at retail and that the RNG has not been sold twice at any point between RNG production and sale to VGS whether by sales into carbon offset markets or otherwise This verification will be based on certifications of VGSrsquos suppliers and of an independent third party retained by VGS for this purposerdquo
VGS will use an independent third-party to verify the renewable claims for the VGS Renewable Natural Gas supply including the following
bull Confirm the renewable fuel feedstock identificationbull Confirm the product renewable fuel identificationbull Review and confirm the renewable fuel production processbull Review of fuel flow measurement and quality monitoring process and equipment
VGS Renewable Natural Gas Program Manual
Page 12
bull Review of contracts and affidavits governing the transfer of the RNG from theoriginal source to the end user(s)
bull Review of evidence confirming the existence of a physical path (common carrierpipeline) for RNG transfer and distribution to end users
SECTION 3 EXHIBITS
bull Exhibit 31-Accounting Proceduresbull Exhibit 32-Verification from Suppliersbull Exhibit 33-Third Party Verification
VGS Renewable Natural Gas Program Manual
Page 13
Section 4 Marketing
KEY MARKETING STEPS Item Description Owner VGS Renewable Natural Gas Branding
Maintain product and brand integrity Communications
Product Definition Ensuring proper VGS Renewable Natural Gas description in all materials
Communications
External Review Verification of Marketing claims Communications
41 MARKETING PLAN Exhibit 41 is the 2018 version of the Marketing Plan filed with the PUC This document may be updated from time to time as we adjust our marketing strategy
42 MARKETING CLAIMS VGS is committed to making clear and accurate claims about the environmental benefits of VGS Renewable Natural Gas We have enlisted the assistance of a law firm specializing in marketing renewable products to review VGSrsquo marketing materials and claims In addition VGSrsquo annual third-party review of our program will focus on the integrity of our administration of the VGS Renewable Natural Gas program (see Section 54)
43 VGS RENEWABLE NATURAL GAS ldquoPRODUCT CONTENT LABELrdquo The Product Content Label is intended to be prominently displayed on the VGS web site and in correspondence to customers when they enroll in this program
Product Content Label
By participating in the VGS Renewable Natural Gas program you are purchasing the renewable attributes associated with the production of renewable natural gas (ldquoRNGrdquo) which may also be referred to as biogas or bio-methane A unit of VGS Renewable Natural Gas measured in hundred cubic feet (CCF) represents the environmental attribute of 1 CCF of biogas VGS reserves the right to purchase carbon offsets if RNG supply is not available VGS will notify customers if this occurs The Product Content Label is available at httpswwwvermontgascomrenewablenaturalgas
SECTION 4 EXHIBITS
bull Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)bull Exhibit 42 VGS Renewable Natural Gas Trademark
VGS Renewable Natural Gas Program Manual
Page 14
Section 5 Customer Information and Billing
KEY BILLING AND REVENUE STEPS Item Description Owner Billing Enrollment of VGS Renewable Natural Gas
Customers Contact Center
Notice Customer Notice of VGS Renewable Natural Gas Rates
Contact CenterBilling Group
Program Assurance Verification of VGS Renewable Natural Gas program procedures
Billing and Finance
51 CUSTOMER ENROLLMENT AND BILLING PROCESS The VGS Customer Care team will enroll customers and establish the VGS Renewable Natural Gas Adder on customer accounts Customers will be able to order VGS Renewable Natural Gas via VGSrsquo website (preferred method) calling VGS contact center or through the VGS Energy Services team An RNG calculator is available on VGSrsquo website httpswwwvermontgascomrenewablenaturalgasadder-calculator that can assist customers in estimating the costs of VGS Renewable Natural Gas at the various percentage levels based on the customerrsquos gas consumption VGS will inform customers of the current RNG Adder premium when they enroll Customers have two options when enrolling in the RNG program Customers may select their desired percentage of VGS Renewable Natural Gas ( 10 25 50 or 100) or they may allocate a fixed amount of RNG attributes (ldquoS-RNGrdquo) for each month that they are enrolled in Customer Care will then set up the billing on their account VGS will send an order confirmation via email or as a separate mailing (see Exhibit 51) thanking the customer for subscribing to VGS Renewable Natural Gas and informing the customer of the estimated impact on their bill As shown on Exhibit 51 the order confirmation letter will also include the RNG program guidelines These guidelines are discussed in section 53 below
52 VGS RENEWABLE NATURAL GAS WEBSITE AND FREQUENTLY ASKED QUESTIONS The VGS Renewable Natural Gas web page contains general VGS Renewable Natural Gas information an FAQ a VGS Renewable Natural Gas calculator current VGS Renewable Natural Gas Adder and an easy-to-use sign up form
For the most recent Frequently Answered Questions visit httpwwwvermontgascomVGS Renewable Natural Gas
VGS Renewable Natural Gas Program Manual
Page 15
53 VGS RENEWABLE NATURAL GAS PROGRAM GUIDELINES VGS Renewable Natural Gas customers will fall under VGSrsquo General Terms and Conditions outlined in VGSrsquo tariffs and PUC rules (ex Disconnection practices late fees taxes) VGS tariffs can be found at httpwwwvermontgascomaccountrates
VGS will notify VGS Renewable Natural Gas customers of rate changes in advance of implementation on both their individual bills and the Companyrsquos website RNG customers have the ability to cancel or modify their RNG account profile consistent with the tariff
VGSrsquo RNG customers can subscribe to VGS Renewable Natural Gas service with no term commitment and can cancel with three daysrsquo notice The RNG Adder will apply at either the percentage or fixed quantity allocated by the customer to the usage shown on the monthly bill regardless of enrollment or termination date The RNG Adder will not be pro-rated for partial-month usage
VGS customers receiving the low-income rate discount can subscribe to VGS Renewable Natural Gas however the 20 low income discount will not apply to the RNG Adder
Customers currently on a budget program will be encouraged to request a recalculation of their budget plan to adjust for the RNG Adder costs but it is not required
54 VGS RENEWABLE NATURAL GAS PROGRAM ASSURANCE
On an annual basis VGS will conduct a program review to ensure the VGS Renewable Natural Gas program is managed consistent with this manual The VGS Renewable Natural Gas program is a new product for the US natural gas utility industry and as such no industry specific standards exist VGS is working with on a national effort to develop a ldquoGreen-Erdquo certification process for Renewable Natural Gas programs that process is targeted for completion in 2020
SECTION 5 EXHIBITS
bull Exhibit 51 ECIS Customer Confirmation
VGS Renewable Natural Gas Program Manual
Page 16
EXHIBITS
Exhibit 21 VT PUC Approval Order
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Docket No 8667
Petition of Vermont Gas Systems Inc for aRenewable Natural Gas Program andOptional Tariff
)))
Hearing atMontpelier Vermont
September 22016
order entered q leacute I aon
PRBsBNI Andrea C McHugh Hearing Officer
AppeeReNcBs Peter H Zamore Esq
Owen J McClain EsqSheehey Furlong amp Behrn PCfor Vermont Gas Systems Inc
Louise C Porter EsqTimotthorn M Duggan Esq
for the Vermont Department of Public Service
Sandra Levine Esqfor Conservation Law Foundation
Gerald R Tarrant EsqTarcant Gillies amp Richardsonfor Lincoln Renewable Natural Gas LLC
I INrnooucrroN
This case involves a petition filed by Vermont Gas Systems Inc (VGS) with the
Vermont Public Utility Commission (oCommission) I for approval of a Renewable Natural Gas
(RNG) program and optional RNG tariff service for its customers The proposed RNG
progriquestigravem establishes a framework for VGS to offer its customers the option to purchase RNG for
I Pursuant to Section 9 of Act 53 of the 2017 legislafive session the Vermont Public Service Boards name waschanged to the Vermont Public Utility Commission effective July l 2017 For claity activities of the VermontPublic Service Board that occurred before the name change will be referred to in Commission documents as
activities of the Commission unless that would be conntildersing in the specific context
Docket No 8667 Page2
program establishes a framework for VGS to offer its customers the option to purchase RNG for
as a portion of their usage RNG is produced from materials such as agricultural waste manure
municipal waste plant material or compost and is also referred to as bio-methane In this
proposal for decision I recommend that the Commission approve the proposed RNG program
and require VGS to make compliance filings as set forth herein
il PnocnrunnlHrsroRY
On October 232015 VGS figraveled a petition for approval for its RNG program including
prefiled testimony and exhibits of Thomas Murray
On January 192016I held a prehearing conference and on January 252016I issued
an Order establishing a schedule
On February 122016 VGS filed a revised RNG Plan
On March 102016I held a workshop to discuss the proposed program
On March 152016I issued an Order revising the schedule
On March 222016 Conservation Law Foundation (CLF) and Lincoln Renewable
Natural Gas LLC (Lincoln) filed motions to intervene in this proceeding
On April 12016 VGS filed supplemental testimony and exhibits
On April 82016I issued an Order granting CLFs and Lincolns intervention requests
On July 72016 the Vermont Department of Public Service (Department) CLF and
Lincoln filed testimony
On August 82016 Lincoln filed supplemental testimony
A technical hearing was hthornld on September 22016
On September 30 20|6VGS filed a draft proposal for decision supported by the
Department In addition CLF filed a brief on the same date Reply briefs were filed by VGS
and CLF on October 142016
III Posnroxs oF THE PlRrlns
VGS
VGS requests approval of its proposed RNG program for the sale of RNG to customers
on a voluntary basis VGS claims that its proposal contains reasonable provisions to align its
RNG purchases with the amounts sold to its customers appropriate mechanisms to address over-
Docket No 8667 Page 3
or under-supply of RNG and verification requirements to ensure that sales in fact consist of
RNG VGS maintains that the RNG program is an appropriate first step in stimulating RNG
producer supply and customer demand and is oamply supported by Vermonts experience of
measured implementation of electric renewable pricing programs2 VGS argues that the
program is responsive to the Commissions condition in its Order in Docket 79701o develop a
proposal to promote bio-methane project development3
Department of Public Service
Although the Department did not file a brief or reply brief it did present witness
testimony and indicated its support for the draft proposal for decision filed by VGS The
Department recommends that VGS review all proposed RNG supply arrangements with the
Department (in addition to seeking 30 VSA $ 248 approval where required) and suggests that
in the event of an undersupply of RNG VGS obtain carbon offsets in an amount equivalent to
the unused customer contributions The Department recommends that the RNG program be
reviewed at the end of three years at which time the protocol regarding the purchase of offsets
would be revisited
C ons ervation Law Foundation
CLF urges that the Commission reject the RNG program and instead adopt an RNG
content standard similar to the electric renewable portfolio standarda CLF maintains that the
expected annual sales volume is not apace that is consistent with Vermonts legislative and
planning targets for meeting energy needs with renewable energy or for reducing greenhouse gas
emissionss CLF claims that the proposed voluntary tariff falls short of being a program or
strategy that promotes the increased use of RNG resources or supply or fosters bio-methane
projects in Addison county6
2 VGS reply brief aI23 In Docket 7970the Commission considered the petition of VGS for a certificate of public good (CPG) pursuant
to 30 VSA $ 248 authorizing the construction of the Addison Natural Gas Pipeline In an Order issued on
December 232013 the Commission granted the CPG As a condition of approval the Commission required VGSin consultation with the Department to file a petition with the [Commission] proposing a program to promote bio-methane project development Docket 7970 Order of l2l23ll3 at 147
a CLF brief at 12s CLF brief at 36 CLF brief at 4
Docket No 8667 Page 4
Lincoln
Lincoln maintains that itis essential to promote development of agricultural-based bio-
methane supply in VermontT Lincoln states that the Commission is not in a position to
adequately address VGSs proposed RNG program until negotiations for sale of itsoutput
involving VGS and Middlebury College are completes
IV Punrrc CounnnNrs
The Commission received three letters of support for VGSs RNG program On March 10
2016 the Chittenden County Transportation Authority filed comments indicating that it intends to
explore the possibility of utilizing RNG to cover a portion of the energy needs for its fleet of 70
buses On March 182016 Champlain College filed comments noting that it is interested in using
RNG for a portion of its energy needs that are currently met with conventional natural gas On
March 282016 Casella Waste Systems made a filing with the Commission stating its intention
to explore using RNG to meet some of its energy needs for its fleet of vehicles
V trrutrxcs
Based on the evidence of record I hereby report the following findings and
recommendations to the Commission in accordance with 30 VSA $ 8(c)
1 RNG is produced from raw materials such as agricultural waste manure municipal
waste plant material or food waste Decomposition or digestion of these materials produces
raw methane which is then cleaned or upgraded to bio-methane in order to meet the receiving
pipelines gas quality specifications prior to injection into an existing pipeline system Thomas
Murray VGS (Murray) supp pf at3
2 VGS is exploring options to purchase RNG supply from Lincoln and from landfill gas
projects located outside Vermont that would be received through the Trans-CanadaPipeline
(TCPL) system Murray supp pf at 8-9
7 Daniel Smith Lincoln Renewable Natural Gas LLC (Smith) supp pf at L8 On August 152016 Lincoln filed a motion to continue this proceeding for a period of not less than 60 days statingthat the continuance would allow [it] VGS and Middlebury College to complete discussions as to VGSsinvolvement in the RNG supply in Vermont and allow the record in this case to be properly developed VGS and
the Department opposed the request for continuance On August 222016I issued an Order denying Lincolnsrequest and determined that Lincoln did not demonstrate good cause to postpone the technical hearing
Docket No 8667 Page 5
3 Under the program retail customers would voluntarily purchase RNG in amounts equal to
l0oo25yo50o or 100 of their total monthly requirements at specified prices per Ccf as an
adder to other retail charges Customers could terminate RNG purchases upon providing three
days of advance notice to VGS Murray supp pf at l-2 exhs Pet-VGS-l and Pet-VGS-3
4 Intemrptible customers will have the opportunity to participate in the RNG program
through VGSs existing Lock Price Program which currently provides for up to a two-year
commitment Murray supp pf at 5
5 VGS will develop and file for Commission approval a separate tariff for use of RNG as a
transportation fuel This tariff will allow VGS to take advantage of the sale of the associated
Renewable Identification Numbers (ooRINs) When RNG is used as a transportation fuel it is
eligible to receive RINs under the Federal Renewable Fuel Standard RINs can be resold on the
wholesale market and would be used to offset the price of RNG to transportation customers
receiving service under the tariff Joan E White
Department (White) pf at7tr912116 at 62-
63 (White) exh Pet-VGS-5 Response 4
6 VGS will also initiate a review of the RNG program by the Commission Department and
others after three years White pf at9tr912116 (Munay) at24
7 The adder price for each Ccf of RNG will be equal to the average RNG commodity cost to
VGS less the average commodity cost of natural gas VGS will adjust the adder price per Ccf on
a quarterly basis as part of its Purchased Gas Adjustment (PGA) filing Murray supp pf at 4
8 The proposed RNG program will include a tariff that is very similar in concept to the
Green Mountain Power Corporation (GMP) Cow Power tariff However Cow Power is based
on a fixed rate per kWh no matter what the cost of the renewable energy Murray supp pf at llVhite pf at 4
9 VGSs RNG tariff will be calculated quarterly based on actual RNG and natural gas costs
and will provide accurate price signals as to the price differential between natural gas and RNG
White pf at 4
10 Based on a survey conducted by VGS 85 of its customers are willingto pay l0oo
more for a renewable product VGS projects that customers could potentially consume over
500000 Mcf of RNG over the next five years Murray supp pf at 5
DocketNo8667 Page 6
11 VGS will use a true-up period of up to 12 months in order to balance the difference
between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply)
Murray supp pf at 9
12 There is a risk that due to the voluntary nature of the RNG program supply and demand
will be mismatched White pf at41 David G Hill CLF (Hi11) pf at 9
13 If the available RNG supply during the previous 12 months is less than the amount
purchased by VGS customers the RNG program provides that VGS may use funds collected to
purchase carbon offsets from an established carbon registry such as the American Carbon
Registry VGS will purchase an amount of carbon offsets equal to the amount of the revenue
resulting from the undersupply in order to result in a revenue-neutral program At the time of the
three-year implementation review VGS will propose an environmental accounting protocol in
order to quantify the environmental benefits of the program and to evaluate the financial risk of
purchasing carbon offsets in an amount equivalent to the environmental benefits of unsold RNG
due to undersupply Murray supp pf at 6 l0 exh Pet-VGS-s Responses 1
14 The development and standardization of RNG attributes is in its infancy as compared to
the existing markets for the environmental attributes used in the electric industry (renewable
energy credits or (RECs)) Murray supp pf at 12
15 If carbon offsets are not available VGS will contribute the RNG program revenues to the
Clean Energy Development Fund or issue prorated credits to affected customers Exh Pet-
VGS-S Responses 3
16 If RNG supply exceeds customer demand VGS would seek to sell the excess RNG at
wholesale Murray supp pf at 10
17 VGS will provide proposed RNG supply contracts to the Department prior to execution
It will also consult with the Department before making decisions that could dramatically impact
price or the integrity of the RNG program Exh Pet-VGS-S Responses 2 White pf at 5
18 The estimated cost of RNG supply ranges from $l2lMcf to $25lMcf The cost of natural
gas is less than $3Mcf Murray supp pf at 8-9
19 VGS will implement an RNG Quality Assurance Plan establishing a testing and
monitoring process to ensure that RNG injected (via in-state RNG producers) into the VGS
system is pipeline quality and meets the specifications of the TCPL transportation tariff for bio-
methane gas quality Murray supp pf at 14 exh Pet-VGS-4
Docket No 8667 PageT
20 VGS will file an annual report on the RNG program with the Commission and the
Department containing the following information
1 Number of subscribers by customer class
2 Sales volume by customer class
3 Sales revenues
4 Any sales or purchases of carbon offsets
5 Supplyconsumption matching portfolio including any shortfall or excess
supply of RNG
6 True-up schedule for any imbalances
7 RNG supply verification
8 Quantification of the impact of any excess RNG costs flowing through the
PGA if VGS remains under altemative regulation
9 Accounting of any carbon ofszligets or other incentives
10 Status of any contracts for RNG including plans to acquire new supply
contracts
I 1 Revenue from Renewable Identification Number (RlN) sales and impact
on the transport tariff as well as any projections about the RIN market that are
available to VGS and
12 Complete reports and environmental verifications by an independent
verifier
Murray supp pf at 11 exh Pet-VGS-3 White pf at 8-9 tr912116 at23-24 (Munay)
21 Except as described below concerning RlN-eligible RNG VGS will annually verify that
the RNG was produced by a renewable gas production facility that VGS is the exclusive oryner
of any environmental attributes associated with RNG it sells under the program that it acquired
the RNG from its transferor and sold itatretail and that neither the RNG nor any renewable
attribute associated with the RNG has been sold twice at any point between RNG production and
sale to VGS whether by sales into carbon offset markets or otherwise This verification will be
based on certifications by VGSs suppliers and by an independent third party retained by VGS
for this purpose Exh Pet-VGS-3 exh Pet-VGS-s Response 5 White pf at 8
Docket No 8667 Page I
22 For RlN-eligible RNG used as vehicle fuel verification will be addressed in detail in the
future as part of VGSs proposed Renewable Vehicle Fuel Tariff Exh Pet VGS-5 Response 4
rr912116 at 65 (White)
23 There are few natural gas utilities currently offering RNG at retail VGS modeled its
RNG program after the program designed by FortisBC a local distribution company in British
Columbia Canada VGS also had discussions with SoCalGas in Southern California Both of
these companies are leaders in developing RNG offerings and fostering RNG supply resources
Murray supp pf at 7
24 VGS will file with the Commission and Department a marketing plan containing the
following elements
l An evaluation element that includes concrete metrics such as sales
volume targets and enrollment targets
2 Identification of target market segment(s)
3 Development of materials and language for customer-marketing efforts
that explain the RNG program in plain language easily understandable to the
average customer
4 An online bill calculator
5 An implementation plan that identifies specific activities and a timetable
and
6 Abudget
Exh Pet-VGS-5 White pf at 10 Tr912116 at22-23 (Munay)
25 VGS and the Department represent that the RNG progriquestun is responsive to the
Commissions condition in its Order in Docket 7970 rcquiring VGS to develop a proposal to
promote bio-methane project development Murray supp pf al 13-14tr912116 at 63 (Vhite)
26 VGS asserts that the RNG program represents appropriate progress toward the Vermont
Comprehensive Energy Plan (CEP) goal to meet90o of Vermonts energy needs through
renewable sources by 2050 Murray supp pf at 12-13
VI DlscussroN iexclxu Coxclustox
Vith this proposal for decision I recommend that the Commission approve the RNG
program in accordance with the findings described above and based upon the evidence in the
Docket No 8667 Page 9
record In Docket 7970 the Commission required VGS in consultation with the Department to
file a petition with the [Commission] proposing a program to promote bio-methane project
development It is reasonable to expectthat aprogram meant to stimulate development of a
specific energy source would look to stimulate demand for that resource by offering an
opportunity for customers to purchase supply from RNG producers
The RNG program proposed by VGS and supported by the Department seeks to offer
ratepayers the option to purchase renewable energy as part of their individual energy-use
portfolio Furthermore the program includes a provision requiring that VGS develop a detailed
marketing plan that will serve to educate customers on the availability costs and benefits of
such resources which could lead to increased demand for the product
VGS intends to take advantage of the existing market for RINs associated with RNG used
as transportation fuel by proposing a Renewable Vehicle Fuel Tariff As described above in the
Public Comments section the Chittenden County Transportation Authority and Casella Vaste
Systems are interested in exploring the use of RNG to fuel their vehicle fleets which
demonstrates that there is existing customer demand for this product
Unlike the markets relating to RNG supply used for transportation fuel or renewable
electric generation and the associated trading and verification of RECs the RNG market is in its
infancy At this time it would not be appropriate to expect VGS to implement an RNG program
utilizing an RNG content standard similar to the electric renewable portfolio standard as
recommended by CLF because the equivalent standards and processes do not exist However
the RNG program represents a meaningful first step in encouraging customer interest in
purchasing RNG at retail thereby stimulating supply of RNG into the market and is consistent
with the Commissions condition requiring VGS to develop a proposal to promote bio-methane
project development
VGSs RNG program includes appropriate mechanisms for periodic reporting and
verification of program activities as well as an opportunity to comprehensively review the
program after three years of implementation Furthermore determinations regarding recovery of
costs associated with the RNG program will be made in the context of future proceedings
regarding VGSs rates The RNG program should evolve with the RNG markets in the near-term
and over the course of the next several years which will allow progress towards achievement of
Vermonts 2050 CEP renewable energy goals
Docket No 8667 Page 10
Because not all parties to this proceeding have waived their rights under 3 VSA $ 811
to file written comments or present oral argument with respect to this proposal for decision I am
circulating the proposal for decision to the parties for their review and comment
Dated at Montpelier Vermont this rrtl day of QrIltt 2017a0AndreaHearing Officer
Docket No 8667 Page 11
VII Corumrssron Drscussrox
On August 22017 the Department filed a letter stating that it supports the issuance of an
Order by the Commission that adopts the proposal for decision in full
Also on August 22017 VGS filed comments on the proposal for decision requesting
that Finding 16 be modified as follows (additional text in italics) If RNG supply exceeds
customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary
flow any remaining RNG attribute inventory amounts through the PGA or through a rate case ifVGS was under traditional cost of service regulation (subject to [Commission] approval)
VGS asserts that [a]bsent such specific language it is possible that VGS would be unable [to]
defer such costs for future recovery and that removal of that component introduces uncertainty
about the potential procedural mechanisms available for cost recovery in the last resort VGS
states that with the Commissions consideraacutetion of this request it does not request oral argument
No other comments were filed on the proposal for decision
The Hearing Officer recommended that the Commission find that determinations
regarding recovery of costs associated with the RNG program will be made in the context of
future proceedings regarding VGSs rates We agree with this recommendation VGS should
have an opportunity to request rate recovery for excess RNG supply However this proceeding
is not the proper time for such a determination Accordingly Finding 16 is hereby modified as
follows If RNG supply exceeds customer demand VGS would first seek to sell the excess
RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any
remaining RNG attribute inventory amounts through the PGA or through arate case as part of
its cost of service if the PGA is no longer in effect atthat timeWe emphasize the importance of the successful implementation of the RNG program in
helping to meet the States renewable energy policy objectives The annual report on the
implementation of the RNG program will serve as a valuable tool to assess that progress In this
proceeding CLF has raised policy considerations that should serve to guide these future reviews
of the RNG program For example CLF has raised concerns regarding the effectiveness of the
voluntary nature of the program In assessing its program we expect VGS to revisit and report
on the feasibility of incorporating RNG as a portion of its supply mix in the future It is
important for VGSs RNG program to be sustainable and continue to evolve ensuring significant
DocketNo8667 Page 12
contributions toward meeting the States renewable energy goals and reducing the consumption
of fossil fuel Accordingly it is critical that the annual report and the three-year comprehensive
review address not only the effectiveness of the program but also its affordability and the
feasibility of other policy options to advance the production and use of RNG in Vermont
Docket No 8667 Page 13
VIII Onunn
Ir rs Hennsy oRDERED ADJUDGED AND DECRnnn by the Public Utility Commission of the
State of Vermont that
1 The findings conclusions and recommendations of the Hearing Officer are
adopted and the Renewable Natural Gas (RNG) program to be implemented by Vermont Gas
SystemsInc (VGS) is approved
2 When VGS has procured RNG supply in amounts reasonably estimated to be
sufficient for estimated customer demand it shall file a formal tariff including proposed rates for
sale of RNG The tariff shall be reviewedpursuantto the procedures of 30 VSA ccedilccedil225226
and227 and sales under the program shall begin after Commission approval of the tariff
3 VGS shall develop and file for Commission approval a separate Renewable
Vehicle Fuel Tariff to serve customers using RNG as a transportation fuel
4 VGS shall file a marketing plan for the RNG program consistent with the
requirements set forth above within one month of the issuance of this Order
5 VGS shall file an annual report consistent with the requirements set forth above
upon implementation of the RNG program
6 VGS shall file a comprehensive review of the performance of the program with
the Commission and the Department after three years of implementation This review will
include an environmental accounting protocol to quantiff the environmental benefits of the
progrfim
7 VGS shall review proposed RNG supply arrangements with the Department
Docket No 8667
Orprcp oF THE Crnm
Dated at Montpelier Vermont this day of+hb
Z Roisman
Cheney
Page 14
20t7
Puslrc Urrlnv
CovtriquestIssIoN
OP VERMONT
(
)))
)))
Fired otildeeglcL ( JotTAttest c
of the Commission
NorIcE To READERS This decision is subject to revision oftechnical errors Reqders are requested tonotify the Clerk of the Commission (by e-mail telephone or inwriting) or any appqrent errors in order that anynecessary corrections may be made (E-mail address pucclerkvermontgov)
Appeal of this decision to the Supreme Court of Vermont must befiledwith the Clerk of the Comnissionwithin thirty days Appeal will not stay the efect of thszlig Order absentfurther order by this Commission orappropriate actiacuteon by the Supreme Court of Vermont Motions for reconsideration or stay if any must be filed withthe Clerk of the Commissionwithin ten days of the date of this deciacutesion and Order
Exhibit 22 VGS RNG Tariff Rate Filing
Exhibit 23 PUC Approval of VGS RNG Rates
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Case No l8-03 13-TF
Petition of Vermont Gas Systems Inc fotapproval of a new tariff implementing theRenewable Natural Gas program
Order entered
OnonRAppnovINc Tiquestrurn
On January 302018 Vermont Gas Systems Inc (VGS) filed a petition for approval of
a new tariff implementing the Renewable Natural Gas (RNG) program approved by the
Vermont Public Utility Commission (Commission) in Docket No 8667 In that Docket the
Commission required VGS to file a tariff implementing the RNG program when it has procured
RNG supply in amounts reasonably estimated to be sufficient to meet customer demandl In
this Order the Commission approves the new tariff marketed under the name EcoGas with an
effective date of bills rendered on and after March 15 2018
VGS states that it has executed an RNG supply contract with deliveries scheduled for
2018 and that two additional contracts are being negotiated for deliveries beginningin2019
VGS is proposing to set its initial RNG adder at$ll749lCcf which represents a five-year
blended rate based on the three RNG supply arrangements VGS intends to account for the
difference between the cost of RNG supply and the RNG adder as a regulatory asset within gas
costs As additional lower-cost supply is added to the portfolio the regulatory asset balance will
be recovered from EcoGas participants with the goal of fully reducing the balance by the end of
five years Accordingly VGS states that the RNG program will be rate-neutral to VGS and its
non-RNG customers
On February 272018 the Vermont Department of Public Service (Department) filed a
letter recommending that the Commission approve the tariff without a hearing or further
investigation The Department states that the tariff filing and proposed accounting treatment
comply with Vermont rate-setting practices policies precedents and statutes
lslaotx
I Docket 8667 Order of 96117 at 13
Page2Case No 18-0313-TF
Based on the foregoing we hereby approve VGSs proposed RNG tariff to be effective
on a bills-rendered basis beginning on March 15 2018 Recovery of any regulatory asset
balance at the end of the fifth year would need to be approved by the Commission in a future
proceeding
So Omnnnn
Case No l8-0313-TF
8r- day of lruacuterLiquestiquest
Page 3
Dated at Montpelier Vermont this 2018
Roisman PueIrc Urlrrv
CoiriexcllriquestlssloN
Cheney
OF VERMONT
Sarah Hofmann
Onncp oF THE CLBRr
Filed huacuteveuroAacute- icirc dollAttest I
Clerk of the Commission
Notice to Readers This decision is subiect to revision oftechnical errors Readers are requested to notify
the Clerk of the Commission (by e-mail telephone or in writing) or qny qpparent errors in order that any
necessary corrections may be made (E-mail address pucclerkvermontgov)Appeal of this decisiacuteon to the Supreme Court of Yermont must be filed with the Clerk of the Commission
within 30 days Appeal will not stay the efect of this Order oslashbsent further order by this Commission or appropriate
action by the Supreme Court of Vermont Motionsthornr reconsideration or stay if any must befiledwith the Clerk ofthe Commissionwithin 28 doslashys of the date of this decision and Order
)))
))))
PUC Case No 18-0313-TF
Eileen SimollardesLauren HammerVermont Gas
85 Swift StreetSouth Burlington VT 05403
June E Tiemey CommissionerVermont Department of Public Service1 12 State StreetMontpelier VT 05620 -2601
Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
Exhibit 31 Accounting Procedures
Exhibit 31 Accounting for VGS Renewable Natural Gas (Ver-9202019)
1 Purchase of RNG Supply
RNG supply purchases are separated into the cost of the commodity and the cost of the renewable attribute The commodity portion is expensed to gas costs in the delivery month while the renewable attribute is booked to an inventory account referenced herein as the ldquoRenewable Inventory Accountrdquo Like VGSrsquo existing storage inventory accounting the Renewable Inventory Account will track both the dollar value of the renewable attribute and the renewable attribute Mcfs Renewable attribute dollar values are record to ldquo16410050 Inventory RNG Storagerdquo while Mcf values are recorded in the gas cost model maintained by accounting In the month VGS purchases the renewable attribute it is accrued in a book model and goes in to 16410150 Inventory RNG Accrued then moves to the 16410050 in a final model the following month for final
RNG may be purchased at different locations and using varying pricing structures While the accounting for RNG does not vary with the purchase location or price the determination of the value of the renewable attribute will vary depending on whether or not the supply pricing expressly values the renewable attribute as an adder or it is embedded in a fixed price Examples of each are shown below The accounting of RNG supply is intended to separate the cost of the renewable attribute from the cost of the commodity The examples below are not all inclusive of what may occur but intended to show the accounting procedures used to separate the renewable attribute from the commodity and specify ownership of each aspect
In all cases the commodity cost portion - which is the total cost of the RNG purchased excluding the renewable attribute - will be expensed in the delivery month as a cost of gas
Example 1 ndash The fixed price of RNG includes both the commodity and the renewable attribute
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The total cost of the RNG supply purchased during the month is calculated by Accounting within the gas cost model as follows
MMBtu Purchased (as validated in step 2) $ MMBtu purchase price (as provided in a supply confirmation provided by gas supply)
4 For purposes of booking the renewable attribute to inventory it is necessary to calculate the RNG cost per Mcf The RNG cost Mcf is calculated using the total cost of RNG supply as calculated in step 3 divided by the Mcf in step 1
5 The renewable attribute price per Mcf is calculated as follows
RNG cost per Mcf as determined in step 4 ndashplus ldquoother componentsrdquo as calculated pursuant to Attachment A ndash minus ldquoAverage Commodity Costrdquo as calculated pursuant to Attachment A The ldquoother componentsrdquo added to the RNG cost per Mcf will vary depending on where the RNG supply was delivered but in each case will be identified in the calculation shown on Attachment A
6 The renewable attribute price per Mcf the total RNG Mcf delivered is recorded in the Inventory RNG Storage account
7 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
Example 2 - RNG purchased at a renewable attribute price plus a daily or monthly index
Where the pricing of RNG specifically separates the commodity from the renewable attribute the renewable attribute price will be what is recorded in the Renewable Inventory Account
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The renewable attribute price per Mcf the total RNG Mcf delivered as determined in step 1 is recorded in the Renewable Inventory Account
4 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
2 Recalculating the RNG Adder
The RNG Adder paid by customers will be recalculated anytime the Natural Gas charge portion of rates changes The Manager of Gas SupplyGas control is responsible for recalculating the RNG Adder The calculation will be verified and approved by the Vice President ndash Regulatory Affairs The determination of the RNG Adder will be pursuant to the methodology shown in Attachment A The Regulatory Department will prepare the amended RNG Adder tariff for filing with the PUC Upon PUC approval of the RNG Adder the Regulatory Department will prepare a memorandum advising Accounting and Gas Supply of the new RNG Adder as approved
3 Customer purchases VGS Renewable Natural Gas
The RNG Adder at the percent selected by the customer will be applied to the entire monthrsquos usage on the customersrsquo next bill For customers utilizing the S-RNG adder the entire volume elected with be on the customersrsquo next bill The S-RNG Adder nor the RNG Adder and percentage selected will not be prorated based on enrollment or termination date
Customers may terminate or modify their RNG selection upon 3 dayrsquos notice to VGS The termination or modification will be effective on the customerrsquos next monthly bill
The customerrsquos usage for the month will be multiplied by the percentage and the approved RNG Adder For customers utilizing the S-RNG adder the volume elected will be multiplied by the approved RNG adder This amount will then be recorded to SAP accounts 4010015-40010021 depending on which rate class the customer is in The RNG Adder is the same regardless of which rate class a customer is in At the end of the month a report is run by billing from the customer information system that shows total usage and which percentage of RNG the customer has signed up for to calculate the number of MCFrsquos of renewable attribute sold during the billing period Billing also provides a report of the volumes sold through the S-RNG Tarriff The Inventory RNG Storage account maintained within the gas cost model by Accounting is reduced by these Mcf The MCFrsquos are then multiplied by the RNG Adder in effect for the billing month and an entry is made to remove that dollar amount from the Inventory RNG Storage account and into the monthly cost of gas The intent of this transaction is to ensure that cost of the renewable attribute is reflected in the cost of gas in the month it is purchased by the customer This results in a matching of the renewable attribute revenue and expense
The RNG Adder revenue and renewable attributes removed from storage will be included in the gas cost deferral calculation However because there is a matching of the renewable attribute revenue and expense the impact on the deferral calculation will be zero
The calculation of unbilled revenues will exclude RNG as a customer can cancel their participation prior to their next bill
In the event Vermont Gas issues a credit to a customer related to the RNG program the value of the renewable attribute credited and the associated Mcf will not be applied to the Renewable Inventory Account
4 Controls
A spreadsheet is maintained by accounting that shows the MCFrsquos and dollar values of the Renewable Inventory Account This is reconciled monthly by the accounting team and will be reviewed by the Manager Gas SupplyGas Control
Accounting will validate that the amount removed from the Renewable Inventory Account matches the RNG Adder revenue Any discrepancies will be reviewed and corrected
A report will be run for each bill cycle that shows any changes to the RNG percentages selected this will include customers opting to withdraw from the RNG program The customer care team will validate any changes against customer confirmation paperwork
5 Renewable Inventory Account Reconciliation and Forecast
The PUC Order approving the RNG program contains provisions describing how RNG supply and demand imbalances will be addressed These provisions and how VGS will track and comply with them are as discussed in this section The PUC Order approving the RNG Program provides that if the available RNG supply during the previous 12 months is less than the amount purchased by customers VGS may use the funds collected to purchase carbon offsets (Finding 13) If carbon offset are not available VGS will contribute the RNG program revenues to the Clean Energy Development Fund or issue prorated credits to affected customers (Finding 15) The Order also provides that in the event RNG supply exceeds customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any remaining RNG attribute inventory amounts through the PGA or through a rate case as part of its cost of service if the s PGA is no longer in effect at that time (Finding 16 as modified) Finding 11 provides that VGS will use a ldquotrue-uprdquo period of up to 12 months in order to balance the difference between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply) Taken together these provisions require VGS to evaluate the imbalance after 12-months and then true-up the imbalance over the next twelve months To provide a forecast of the supplydemand imbalance quarterly the billing area will run a report showing the expected RNG volumes based on current customer commitments by month for the next 12-months Current customers commitments will be calculated based on the previous 12 months of usage multiplied by the RNG percentage currently signed up for The marketing department will provide their forecast of new RNG sales for the next 12-months Both will be provided to the Manager Gas SupplyGas Control The Manager Gas SupplyGas Control will compare the forecasted RNG sales known and expected to RNG supply commitments and provide a 24-month forecast of the supplydemand balance The supplydemand balance will be reviewed at the risk management meeting The strategy for addressing the imbalance consistent with the PUC order will be determined by the risk management committee
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
VGS Renewable Natural Gas Program Manual
Page 1
About Vermont Gas
Vermont Gas is providing Vermont households and businesses the choice and opportunity to achieve a clean energy future We offer our customers a cleaner1 more affordable heating choice2 award winning efficiency programs and energy services We are dedicated to helping you meet your energy goals with our innovative renewable natural gas program
VGS believes the natural gas industry must embrace renewable product offerings and promote innovation to address the global threat of climate change Our VGS team is dedicated to giving Vermont families and businesses the tools to help achieve Vermontrsquos carbon reduction goals We are proud members of Vermontrsquos Climate Pledge Coalition and determined to do our part to help achieve carbon reduction goals Choosing Vermont Gas over oil reduces carbon emissions of a household by almost 233 A family choosing to install a high-efficiency gas furnace or boiler can further reduce energy use by 204 mdash cutting both costs and carbon emissions Adding a smart thermostat can save an additional 55 Our energy efficiency experts can identify even more savings through our comprehensive home energy audits Our VGS Renewable Natural Gas Program gives customers the opportunity to further reduce their home or business carbon footprint Wersquore dedicated to helping our customers meet their energy goals with choices that promote efficient affordable and environmentally sustainable practices
Wersquore proud to bring these choices and opportunities to our customers Wersquore proud of what our customers have already achieved ndash tens of millions in annual cost savings6 and some 300000 metric tons of carbon7 avoided every single year and counting According
1 According to the US Energy Information Agency (httpswwweiagovenvironmentemissionsco2_vol_massphp) 2 VT Department of Public Service httppublicservicevermontgovsitesdpsfilesdocumentsPubs_Plans_ReportsFuel_Price_Report2016January20201620Fuel20Price20Reportpdf 3 Ibid 1 4According to Efficiency Vermont (httpswwwefficiencyvermontcomproducts-technologiesheating-cooling-ventilationfurnaces-boilers) 5 According to Nest smart thermostats can save 10 to 12 (httpsnestcomthermostatsreal-savings) 6 This number is based on the aggregate savings for customers conversion to Natural Gas vs using oil or propane and the cumulative savings generated by VGS Efficiency Program 7 This number is based on EIA data to determine the carbon avoided by VGSrsquo customers vs using oil and propane and the cumulative carbon savings generated from VGS Efficiency Program
VGS Renewable Natural Gas Program Manual
Page 2
to the Environmental Protection Agency (EPA) thatrsquos carbon avoidance equivalent to more than 70 wind turbines8
Section 1 Program Overview
11 WHAT IS VGS RENEWABLE NATURAL GAS ldquoVGS Renewable Natural Gasrdquo is an innovative offering that will allow Vermont Gas customers to displace the use of conventional (fossil) natural gas by purchasing the renewable attributes of renewable natural gas (RNG) production These renewable attributes correspond with the production of RNG by anaerobic digestion of organic matter at landfills waste treatment plants industrial sites and farm digesters This digestion process produces biogas which is cleaned to pipeline quality - at which point it is referred to as biomethane - and injected as RNG into the natural gas pipeline system
Our initial supply of RNG is coming from outside of Vermont where it is injected into the natural gas pipeline and commingled with conventional natural gas We are working with developers to create a local ldquoin-staterdquo supply of RNG produced in local digester facilities to then inject directly into the Vermont Gas distribution system
Vermont Gas customers have the opportunity to participate in the VGSrsquo Renewable Natural Gas Program by voluntarily signing up to purchase renewable attributes of RNG for either a percentage of their natural gas usage or for a fixed quantity per monthly billing cycle Participating customers agree to pay an additional charge referred to as an ldquoRNG Adderrdquo commensurate with the additional cost to purchase RNG supply compared to conventional natural gas This charge will be reflected on participating customersrsquo monthly bills along with the percentage of the customerrsquos gas usage or fixed monthly quantity covered by the RNG Program Every customer who participates in the program advances Vermontrsquos leadership in renewable energy innovation and furthers Vermontrsquos Comprehensive Energy Plan9
12 HOW MUCH DOES VGS RENEWABLE NATURAL GAS COST All VGS customers firm and interruptible who voluntarily enroll in the VGS Renewable Natural Gas Program will pay an additional Program ldquoRNG Adderrdquo based on the percentage of RNG the customer has subscribed or the fixed quantity allocated by the customer The RNG Adder is billed in hundred cubic feet or ldquoCCFrdquo (1 CCF equals one hundred cubic feet of gas) based on the percentage of RNG selected by the customer or fixed quantity
8 httpswwwepagovenergygreenhouse-gas-equivalencies-calculator 9 Vermont Comprehensive Energy Plan Chapter 125 (httpsoutsidevermontgovsovwebservicesShared20Documents2016CEP_Finalpdf)
VGS Renewable Natural Gas Program Manual
Page 3
The voluntary VGS Renewable Natural Gas Adder is available to all firm rate classes (R G1 G2 G3 and G4) in the percentages shown below and will apply to monthly CCF usage
Available RNG Adder Percentages (applied to monthly Ccf usage)
10
25
50
100
In addition rather than electing a percentage any customer10 may elect to purchase a fixed amount of the environmental attributes associated with RNG which falls under the approved ldquoS-RNGrdquo Tariff The RNG Adder (and S-RNG Adder) will appear as a separate line item charge on the customerrsquos bill in addition to the existing rate elements of a Daily Access Charge a Natural Gas Charge and a Distribution Charge The current RNG Adder can be found at httpswwwvermontgascomrenewablenaturalgasadder-calculator The RNG Adder will change whenever the Public Utility Commission (ldquoPUCrdquo) authorizes a change in the Natural Gas Charge portion of the tariff Currently the RNG Adder is adjusted quarterly alongside the Natural Gas Charge change The effect of these changes to the RNG Adder is that the cost of the RNG Adder will vary with the wholesale cost of conventional gas and may further vary in the future as new RNG supply contracts come into our portfolio
VGS ldquointerruptible servicerdquo customers may participate in the RNG Program through either the RNG adder or the S-RNG tariff which will permit these customers to designate how much of their annual natural gas purchases they wish to meet via the RNG Program As noted above the RNG Adder will change whenever the PUC authorizes a change in the Natural Gas Charge portion of the tariff
13 WHERE IS VGS RENEWABLE NATURAL GAS PRODUCED VGS Renewable Natural Gas can be sourced from either in-state or out-of-state producers that utilize anaerobic digestion of organic matter such as landfills waste treatment plants industrial sites and farm digesters that are connected to the natural gas pipeline system In-state RNG supply (planned for 2020) would be injected directly into Vermont Gasrsquo pipeline system after ensuring the RNG meets VGSrsquo natural gas quality standards Although out-of-state VGS Renewable Natural Gas resources may not physically flow to
10 A customer is defined as a consumer of natural gas in Vermont regardless of whether or not the customer has an account for metered natural gas service with the Company
VGS Renewable Natural Gas Program Manual
Page 4
the VGS system the environmental attributes will be dedicated to Vermont Gas customers
Much like renewable electricity that is comingled in the electric grid VGS Renewable Natural Gas is comingled with conventional natural gas supply in the pipeline system VGS Renewable Natural Gas customers are purchasing the environmental attributes of RNG There is no claim by VGS that a participating customer is directly burning an RNG or biomethane molecule
14 WHAT ARE THE ENVIRONMENT BENEFITS An average household enrolling in the VGS Renewable Natural Gas program at the 100 level will effectively nullify the corresponding carbon footprint associated with the customerrsquos direct use of natural gas For a typical VGS residential customer using 90 Mcf of conventional natural gas each year this equates to 49 metric tons11 of avoided carbon dioxide emissions each year
VGS is not making representations or claims for any additional environmental benefits of anaerobic digesters beyond the carbon reduction associated with replacing conventional natural gas with a renewable source of energy production Specifically we make no environmental claims related to the avoidance of uncontrolled fugitive methane emissions that would have gone into the atmosphere from the primary biogas feedstock (eg landfill gas manure wastewater) in the absence of anaerobic digestion and capture of the methane as RNG
11 (httpswwwepagovenergygreenhouse-gas-equivalencies-calculator)
VGS Renewable Natural Gas Program Manual
Page 5
Section 2 Regulation
KEY REGULATORY STEPS
Item Description Filing Schedule VGS RNG Adder Tariff Update
Updates required to reflect gas costs changes
Quarterly
Annual RNG Report Full Programmatic Report Annually RNG Supply Contracts Filed for VT Public Utility
Commission (PUC) approval or information
As required
Triennial Assessment Program Review with Dept of Public Service
Every three years
21 REGULATORY SUMMARY
In October 2015 Vermont Gas filed a petition with the PUC for authority to establish a Renewable Natural Gas offering The PUC initiated Docket No 8667 to evaluate VGSrsquo proposal VGS modified the program based on input from parties to the proceeding12 and resubmitted testimony in April of 2016 followed by technical hearings in September of 2016 On September 6 2017 the PUC issued the final order approving the voluntary RNG program (see Exhibit 21) The Order provided authority for VGS to sell RNG under the proposed ldquoadderrdquo structure The Order also provided the accounting guidance to inventory the renewable attributes of RNG and the ability to recoup unsold RNG costs if need be with subsequent PUC approval The order also authorizes VGS to purchase carbon offsets in the event the supply of RNG is insufficient to meet subscriber demand
The table below lists the requirements contained in the Order and VGSrsquo compliance to-date
Order Requirement Status and Compliance Date
1 When VGS has procured RNG supplyhellipit shall filea formal tariff including proposed rates for the saleof RNG
Completed - January 30 2018 See also section 22 below
2 VGS shall develop and file for Commissionapproval a separate Renewable Vehicle Fuel Tariffto serve customers using RNG as a transportationfuel
Pending ndash Due date TBD
12 Parties to Docket No were the Department of Public Service Conservation Law Foundation and Lincoln Renewable Natural Gas LLC
VGS Renewable Natural Gas Program Manual
Page 6
Order Requirement Status and Compliance Date
3 VGS shall file a marketing plan for the RNGprogram consistent with the requirements setforth in the order within one month of the issuanceof this Oder
Completed - October 6 2017
4 VGS shall file an annual report consistent withthe requirements of the Order uponimplementation of the RNG program
Initial filing completed ndash filed June 2018 and 2019
5 VGS shall file a comprehensive review of theperformance of the program with the Commissionand Department after 3 years of implementationThis review will include an environmentalaccounting protocol to quantify the environmentalbenefits of the program
Pending ndash Due by March 15 2021
6 VGS shall review proposed RNG supplyarrangements with the Department
Completed - Initial review 11618 Review of subsequent contract also completed and approved by PUC
On October 4 2018 the Company filed with the PUC for a new RNG tariff offering ldquoS-RNGrdquo Adder which has the same pricing as the RNG Adder The new offering allows customers to purchase a fixed amount of RNG per month that would be unbundled from the customerrsquos metered gas consumption and offers customers who are consumers of natural gas but do not have an account for metered gas service with the Company the ability to purchase RNG attributes The PUC approved the S-RNG Adder to take effect with bills rendered on or after December 1 2018 (see Exhibit 24)
22 VGS RENEWABLE NATURAL GAS ADDER TARIFF The PUC order provides ldquoWhen VGS has procured RNG supplyhellipit shall file a formal tariff including proposed ratesrdquo On January 30 2018 after contracting for the initial RNG supply VGS filed the VGS Renewable Natural Gas Adder Tariff (see Exhibit 22) On March 9 2018 the PUC approved the initial RNG Adder for effect with bills rendered on and after March 15 2018 (see Exhibit 23)
In simple terms the RNG Adder reflects the difference between the cost of RNG and the cost of conventional gas This is calculated by subtracting the average commodity cost for conventional natural gas from the average commodity cost for RNG as indicated in the following example
VGS Renewable Natural Gas Program Manual
Page 7
VGS Renewable Natural Gas Adder Calculation Average RNG Commodity Cost
Minus Average Natural Gas Charge Equals VGS Renewable Natural Gas Adder
Exhibit 22 provides the detailed calculations
This formula identifies the current premium to be paid per CCF of RNG This premium also represents the value of the ldquoVGS Renewable Natural Gas Attributerdquo that VGS will withdraw from the VGS Renewable Natural Gas Attribute Inventory described below
To full reflect the cost of the initial RNG supply with future RNG supply contracts the initial RNG Adder was based on a blended rate of the cost of the first and the expected costs of future RNG purchases over the next 5 years The PUC has authorized this blended approach
The RNG Adder will change whenever the PUC authorizes a change in the Natural Gas Charge portion of the tariff Currently this change occurs quarterly
23 ANNUAL RNG REPORT An Annual RNG Report will be filed with PUC and Vermont Department of Public Service (ldquoDepartmentrdquo) each year in June The first annual report was filed in June 2018 In accordance with the PUC final order approving the Program the annual report will include the following information
1 Number of subscribers by class2 Sales volume by customer class3 Sales Revenues4 Any sales or purchases of carbon offsets5 Supply Consumption matching portfolio including any shortfall or excess supply of
RNG6 True-up schedule for any imbalances7 RNG supply verification8 Quantification of the impact of any excess RNG costs flowing through the PGA if
VGS remains under alternative regulation9 Accounting of any carbon offsets or other incentives10 Status of any contracts for RNG including plans to acquire new supply contracts11 Revenue from Renewable Identification Number (ldquoRINrdquo) sales and impact on the
transport (transportation) tariff as well as any projections about the RIN marketthat are available to VGS and
12 Complete reports and environmental verifications by an independent verifier
The annual report will also address the effectiveness of the program and its affordability
VGS Renewable Natural Gas Program Manual
Page 8
24 THREE-YEAR IMPLEMENTATION REVIEW In accordance with the PUC Order in March 2021 (the third year of the Program) VGS will file a comprehensive review of the performance of the Program The review will include an environmental accounting protocol to quantify the environmental benefits of the program The three-year comprehensive program review will also address the effectiveness of the program its affordability and the feasibility of other policy options to advance the production and use of RNG in Vermont
SECTION 2 EXHIBITS
bull Exhibit 21 VT PUC Approval Orderbull Exhibit 22 VGS RNG Tariff Rate Filingbull Exhibit 23 PUC Approval of VGS RNG Ratesbull Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
VGS Renewable Natural Gas Program Manual
Page 9
Section 3 Supply Procurement and Accounting
KEY VGS RENEWABLE NATURAL GAS SUPPLY AND ACCOUNTING STEPS
Item Description Schedule Owner RNG Supply Contracts
Procuring RNG Supply As needed Gas Supply
RNG Supply True-Up
Balancing RNG supply sales and retiring attributes
Monthly Finance
RNG Supply Verification
Verifying ldquorenewabilityrdquo of RNG Supply
Annually Gas SupplyThird- Party
31 VGS RENEWABLE NATURAL GAS SUPPLY OVERVIEW
VGS intends to contract with a variety of RNG supply sources to meet its customer demand in the RNG Program RNG supply is currently available from a limited number of landfill and digester projects in Canada or US states other than Vermont In Vermont at least one local supply project is currently under development
Today there is no central ldquomarketplacerdquo for RNG suppliers and buyers to trade RNG supply contracts RNG buyers such as VGS transact with individual producersprojects or work through RNG brokers to acquire RNG supply or the environmental attributes associated with RNG in bilateral transactions VGSrsquo initial RNG supply contract in 2018 was with BP Canada Energy Group ULC and sourced from the EBI Inc13 biogas production facility located in Ste Genevieve Quebec In 2019 VGSrsquo purchased RNG supply from a waste water treatment facility in Dubuque Iowa
In 2020 VGS plans to begin receiving RNG supply from a Vermont farm digester and a Canadian digester facility The Vermont farm digester located in Salisbury Vermont is slated for completion in late 2020 producing 180000 MMbtursquos per year The Canadian digester project is located in London Ontario VGS has agreed to purchased 100 of the supply from this facility up to 120000 MMbtursquosyear for 15 years VGS sought and received PUC approval for this Ontario supply in 2018 and received approval for an amendment in 2019 To meet anticipated demand for RNG until these two resources come on line the Company purchased short-term supply of RNG from the Iowa facility in 2019 We anticipate that these supply sources will satisfy the VGS Renewable Natural Gas Program supply needs for the first few years of the Program If we are unsuccessful
13 EBIrsquos Facility was recognized in 2016 (httpswwwdesjardinscomcavideossinglejspdocName=vid-ebi-e)
VGS Renewable Natural Gas Program Manual
Page 10
in procuring supply from these sources or if demand exceeds these planned supplies VGS will seek additional RNG supply in the marketplace
32 VGS RENEWABLE NATURAL GAS SUPPLY CONTRACTS VGS will utilize standard industry or comparable contract vehicles to procure RNG supply with site-specific terms and conditions Given the unique nature of the in-state RNG project the gas supply contract is a 3 way agreement between the producer VGS and an end user Accordingly the form of the contract does not resemble industry standard supply agreements but contains all appropriate business terms The first two contracts signed by VGS utilize a gas utility standard base contract with signed transaction confirmation documents that specify the specific details of each deal These contracts will require the RNG supplier to certify the renewable attributes and that VGS has full and sole ownership of those attributes As required by the PUC Order RNG Suppliers will also be required to allow VGS independent verification of the production and transactions related to VGS supply volumes The specific PUC requirements are found in finding 21 page 7 of Exhibit 21 - VT PUC Approval Order
33 VGS RENEWABLE NATURAL GAS ACCOUNTING Like accounting practices in the renewable electric industry Vermont Gas will have the obligation to match RNG supply volumes with customer RNG purchase volumes over time As discussed in Section 22 the premium for RNG above the cost of conventional natural gas establishes the value of the renewable attribute purchased by the customer These attributes are tracked in a separate inventory account and then matched with actual retail VGS Renewable Natural Gas sales Once these renewable attributes are matched with VGS Renewable Natural Gas sales they are ldquoretiredrdquo and cannot be resold in any manner or used to satisfy another obligation by VGS As provided in the PUC order ldquoVGS will use a ldquotrue-uprdquo period of up to 12 months to balance the difference between RNG attributes sold to customers (demand) and RNG attributes purchased by VGS from suppliers (supply)rdquo This true-up period allows RNG attribute ldquooversupplyrdquo and ldquoundersupplyrdquo to be balanced as described below
In an ldquooversupplyrdquo situation where forecasted RNG attribute purchases exceed the number of RNG attributes that VGS forecasts selling to its customers through the RNG Program VGS will first seek to market the excess RNG and the environmental attributes back through the wholesale supply channels If this oversupply extends beyond the 12-month true-up window VGS may seek PUC permission to flow any remaining RNG attribute inventory amounts through the Purchase Gas Adjustment (ldquoPGArdquo) or through its cost of service if the PGA is no longer in effect at that time
An ldquoundersupplyrdquo situation would occur if customer purchases of RNG attributes exceeded the amount available under VGSrsquo RNG supply contracts in the forward looking 12-month true-up window If the RNG supply purchases are lagging the RNG sales VGS
VGS Renewable Natural Gas Program Manual
Page 11
will true-up or balance this undersupply over the upcoming 12-month period through existing or additional RNG supply purchases
If VGS is unable to eliminate an undersupply imbalance after the 12-month true-up period VGS would need to purchase carbon offsets in the dollar amount equal to VGS Renewable Natural Gas revenues collected associated with the undersupply (See Exhibit 21 Order Finding 13 and 15) Carbon offsets are listed on one of several Carbon Registries such as the American Carbon Registry If carbon offsets are not available VGS has the option to contribute these RNG revenues to the statersquos Clean Energy Development Fund or issue prorated credits to affected customers It should be noted that while purchasing offsets is a tool for VGS it is not the intent of the VGS Renewable Natural Gas Program and if an undersupply situation persisted VGS would likely petition the PUC to modify or suspend the VGS Renewable Natural Gas Program prospectively
VGS will manage the RNG Program to closely match supply and demand and utilizing our RNG wholesale cost mitigation tools to avoid RNG supply challenges
As renewable programs evolve in the energy and natural gas industry Vermont Gas will adjust its accounting procedures to reflect industry standards and revise this manual to reflect any modifications or changes
34 RENEWABLE VERIFICATION VGS is committed to transparency and the integrity of this innovative program is essential to success Toward that end no step is more essential than the verification of the renewability claims of our VGS Renewable Natural Gas supply The PUC reinforced this commitment in the RNG approval order as follows
ldquoVGS will annually verify that the RNG was produced by a renewable gas production facility that VGS is the exclusive owner of any environmental attributes associated with RNG it sells under the program that it acquired the RNG from its transferor and sold it at retail and that the RNG has not been sold twice at any point between RNG production and sale to VGS whether by sales into carbon offset markets or otherwise This verification will be based on certifications of VGSrsquos suppliers and of an independent third party retained by VGS for this purposerdquo
VGS will use an independent third-party to verify the renewable claims for the VGS Renewable Natural Gas supply including the following
bull Confirm the renewable fuel feedstock identificationbull Confirm the product renewable fuel identificationbull Review and confirm the renewable fuel production processbull Review of fuel flow measurement and quality monitoring process and equipment
VGS Renewable Natural Gas Program Manual
Page 12
bull Review of contracts and affidavits governing the transfer of the RNG from theoriginal source to the end user(s)
bull Review of evidence confirming the existence of a physical path (common carrierpipeline) for RNG transfer and distribution to end users
SECTION 3 EXHIBITS
bull Exhibit 31-Accounting Proceduresbull Exhibit 32-Verification from Suppliersbull Exhibit 33-Third Party Verification
VGS Renewable Natural Gas Program Manual
Page 13
Section 4 Marketing
KEY MARKETING STEPS Item Description Owner VGS Renewable Natural Gas Branding
Maintain product and brand integrity Communications
Product Definition Ensuring proper VGS Renewable Natural Gas description in all materials
Communications
External Review Verification of Marketing claims Communications
41 MARKETING PLAN Exhibit 41 is the 2018 version of the Marketing Plan filed with the PUC This document may be updated from time to time as we adjust our marketing strategy
42 MARKETING CLAIMS VGS is committed to making clear and accurate claims about the environmental benefits of VGS Renewable Natural Gas We have enlisted the assistance of a law firm specializing in marketing renewable products to review VGSrsquo marketing materials and claims In addition VGSrsquo annual third-party review of our program will focus on the integrity of our administration of the VGS Renewable Natural Gas program (see Section 54)
43 VGS RENEWABLE NATURAL GAS ldquoPRODUCT CONTENT LABELrdquo The Product Content Label is intended to be prominently displayed on the VGS web site and in correspondence to customers when they enroll in this program
Product Content Label
By participating in the VGS Renewable Natural Gas program you are purchasing the renewable attributes associated with the production of renewable natural gas (ldquoRNGrdquo) which may also be referred to as biogas or bio-methane A unit of VGS Renewable Natural Gas measured in hundred cubic feet (CCF) represents the environmental attribute of 1 CCF of biogas VGS reserves the right to purchase carbon offsets if RNG supply is not available VGS will notify customers if this occurs The Product Content Label is available at httpswwwvermontgascomrenewablenaturalgas
SECTION 4 EXHIBITS
bull Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)bull Exhibit 42 VGS Renewable Natural Gas Trademark
VGS Renewable Natural Gas Program Manual
Page 14
Section 5 Customer Information and Billing
KEY BILLING AND REVENUE STEPS Item Description Owner Billing Enrollment of VGS Renewable Natural Gas
Customers Contact Center
Notice Customer Notice of VGS Renewable Natural Gas Rates
Contact CenterBilling Group
Program Assurance Verification of VGS Renewable Natural Gas program procedures
Billing and Finance
51 CUSTOMER ENROLLMENT AND BILLING PROCESS The VGS Customer Care team will enroll customers and establish the VGS Renewable Natural Gas Adder on customer accounts Customers will be able to order VGS Renewable Natural Gas via VGSrsquo website (preferred method) calling VGS contact center or through the VGS Energy Services team An RNG calculator is available on VGSrsquo website httpswwwvermontgascomrenewablenaturalgasadder-calculator that can assist customers in estimating the costs of VGS Renewable Natural Gas at the various percentage levels based on the customerrsquos gas consumption VGS will inform customers of the current RNG Adder premium when they enroll Customers have two options when enrolling in the RNG program Customers may select their desired percentage of VGS Renewable Natural Gas ( 10 25 50 or 100) or they may allocate a fixed amount of RNG attributes (ldquoS-RNGrdquo) for each month that they are enrolled in Customer Care will then set up the billing on their account VGS will send an order confirmation via email or as a separate mailing (see Exhibit 51) thanking the customer for subscribing to VGS Renewable Natural Gas and informing the customer of the estimated impact on their bill As shown on Exhibit 51 the order confirmation letter will also include the RNG program guidelines These guidelines are discussed in section 53 below
52 VGS RENEWABLE NATURAL GAS WEBSITE AND FREQUENTLY ASKED QUESTIONS The VGS Renewable Natural Gas web page contains general VGS Renewable Natural Gas information an FAQ a VGS Renewable Natural Gas calculator current VGS Renewable Natural Gas Adder and an easy-to-use sign up form
For the most recent Frequently Answered Questions visit httpwwwvermontgascomVGS Renewable Natural Gas
VGS Renewable Natural Gas Program Manual
Page 15
53 VGS RENEWABLE NATURAL GAS PROGRAM GUIDELINES VGS Renewable Natural Gas customers will fall under VGSrsquo General Terms and Conditions outlined in VGSrsquo tariffs and PUC rules (ex Disconnection practices late fees taxes) VGS tariffs can be found at httpwwwvermontgascomaccountrates
VGS will notify VGS Renewable Natural Gas customers of rate changes in advance of implementation on both their individual bills and the Companyrsquos website RNG customers have the ability to cancel or modify their RNG account profile consistent with the tariff
VGSrsquo RNG customers can subscribe to VGS Renewable Natural Gas service with no term commitment and can cancel with three daysrsquo notice The RNG Adder will apply at either the percentage or fixed quantity allocated by the customer to the usage shown on the monthly bill regardless of enrollment or termination date The RNG Adder will not be pro-rated for partial-month usage
VGS customers receiving the low-income rate discount can subscribe to VGS Renewable Natural Gas however the 20 low income discount will not apply to the RNG Adder
Customers currently on a budget program will be encouraged to request a recalculation of their budget plan to adjust for the RNG Adder costs but it is not required
54 VGS RENEWABLE NATURAL GAS PROGRAM ASSURANCE
On an annual basis VGS will conduct a program review to ensure the VGS Renewable Natural Gas program is managed consistent with this manual The VGS Renewable Natural Gas program is a new product for the US natural gas utility industry and as such no industry specific standards exist VGS is working with on a national effort to develop a ldquoGreen-Erdquo certification process for Renewable Natural Gas programs that process is targeted for completion in 2020
SECTION 5 EXHIBITS
bull Exhibit 51 ECIS Customer Confirmation
VGS Renewable Natural Gas Program Manual
Page 16
EXHIBITS
Exhibit 21 VT PUC Approval Order
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Docket No 8667
Petition of Vermont Gas Systems Inc for aRenewable Natural Gas Program andOptional Tariff
)))
Hearing atMontpelier Vermont
September 22016
order entered q leacute I aon
PRBsBNI Andrea C McHugh Hearing Officer
AppeeReNcBs Peter H Zamore Esq
Owen J McClain EsqSheehey Furlong amp Behrn PCfor Vermont Gas Systems Inc
Louise C Porter EsqTimotthorn M Duggan Esq
for the Vermont Department of Public Service
Sandra Levine Esqfor Conservation Law Foundation
Gerald R Tarrant EsqTarcant Gillies amp Richardsonfor Lincoln Renewable Natural Gas LLC
I INrnooucrroN
This case involves a petition filed by Vermont Gas Systems Inc (VGS) with the
Vermont Public Utility Commission (oCommission) I for approval of a Renewable Natural Gas
(RNG) program and optional RNG tariff service for its customers The proposed RNG
progriquestigravem establishes a framework for VGS to offer its customers the option to purchase RNG for
I Pursuant to Section 9 of Act 53 of the 2017 legislafive session the Vermont Public Service Boards name waschanged to the Vermont Public Utility Commission effective July l 2017 For claity activities of the VermontPublic Service Board that occurred before the name change will be referred to in Commission documents as
activities of the Commission unless that would be conntildersing in the specific context
Docket No 8667 Page2
program establishes a framework for VGS to offer its customers the option to purchase RNG for
as a portion of their usage RNG is produced from materials such as agricultural waste manure
municipal waste plant material or compost and is also referred to as bio-methane In this
proposal for decision I recommend that the Commission approve the proposed RNG program
and require VGS to make compliance filings as set forth herein
il PnocnrunnlHrsroRY
On October 232015 VGS figraveled a petition for approval for its RNG program including
prefiled testimony and exhibits of Thomas Murray
On January 192016I held a prehearing conference and on January 252016I issued
an Order establishing a schedule
On February 122016 VGS filed a revised RNG Plan
On March 102016I held a workshop to discuss the proposed program
On March 152016I issued an Order revising the schedule
On March 222016 Conservation Law Foundation (CLF) and Lincoln Renewable
Natural Gas LLC (Lincoln) filed motions to intervene in this proceeding
On April 12016 VGS filed supplemental testimony and exhibits
On April 82016I issued an Order granting CLFs and Lincolns intervention requests
On July 72016 the Vermont Department of Public Service (Department) CLF and
Lincoln filed testimony
On August 82016 Lincoln filed supplemental testimony
A technical hearing was hthornld on September 22016
On September 30 20|6VGS filed a draft proposal for decision supported by the
Department In addition CLF filed a brief on the same date Reply briefs were filed by VGS
and CLF on October 142016
III Posnroxs oF THE PlRrlns
VGS
VGS requests approval of its proposed RNG program for the sale of RNG to customers
on a voluntary basis VGS claims that its proposal contains reasonable provisions to align its
RNG purchases with the amounts sold to its customers appropriate mechanisms to address over-
Docket No 8667 Page 3
or under-supply of RNG and verification requirements to ensure that sales in fact consist of
RNG VGS maintains that the RNG program is an appropriate first step in stimulating RNG
producer supply and customer demand and is oamply supported by Vermonts experience of
measured implementation of electric renewable pricing programs2 VGS argues that the
program is responsive to the Commissions condition in its Order in Docket 79701o develop a
proposal to promote bio-methane project development3
Department of Public Service
Although the Department did not file a brief or reply brief it did present witness
testimony and indicated its support for the draft proposal for decision filed by VGS The
Department recommends that VGS review all proposed RNG supply arrangements with the
Department (in addition to seeking 30 VSA $ 248 approval where required) and suggests that
in the event of an undersupply of RNG VGS obtain carbon offsets in an amount equivalent to
the unused customer contributions The Department recommends that the RNG program be
reviewed at the end of three years at which time the protocol regarding the purchase of offsets
would be revisited
C ons ervation Law Foundation
CLF urges that the Commission reject the RNG program and instead adopt an RNG
content standard similar to the electric renewable portfolio standarda CLF maintains that the
expected annual sales volume is not apace that is consistent with Vermonts legislative and
planning targets for meeting energy needs with renewable energy or for reducing greenhouse gas
emissionss CLF claims that the proposed voluntary tariff falls short of being a program or
strategy that promotes the increased use of RNG resources or supply or fosters bio-methane
projects in Addison county6
2 VGS reply brief aI23 In Docket 7970the Commission considered the petition of VGS for a certificate of public good (CPG) pursuant
to 30 VSA $ 248 authorizing the construction of the Addison Natural Gas Pipeline In an Order issued on
December 232013 the Commission granted the CPG As a condition of approval the Commission required VGSin consultation with the Department to file a petition with the [Commission] proposing a program to promote bio-methane project development Docket 7970 Order of l2l23ll3 at 147
a CLF brief at 12s CLF brief at 36 CLF brief at 4
Docket No 8667 Page 4
Lincoln
Lincoln maintains that itis essential to promote development of agricultural-based bio-
methane supply in VermontT Lincoln states that the Commission is not in a position to
adequately address VGSs proposed RNG program until negotiations for sale of itsoutput
involving VGS and Middlebury College are completes
IV Punrrc CounnnNrs
The Commission received three letters of support for VGSs RNG program On March 10
2016 the Chittenden County Transportation Authority filed comments indicating that it intends to
explore the possibility of utilizing RNG to cover a portion of the energy needs for its fleet of 70
buses On March 182016 Champlain College filed comments noting that it is interested in using
RNG for a portion of its energy needs that are currently met with conventional natural gas On
March 282016 Casella Waste Systems made a filing with the Commission stating its intention
to explore using RNG to meet some of its energy needs for its fleet of vehicles
V trrutrxcs
Based on the evidence of record I hereby report the following findings and
recommendations to the Commission in accordance with 30 VSA $ 8(c)
1 RNG is produced from raw materials such as agricultural waste manure municipal
waste plant material or food waste Decomposition or digestion of these materials produces
raw methane which is then cleaned or upgraded to bio-methane in order to meet the receiving
pipelines gas quality specifications prior to injection into an existing pipeline system Thomas
Murray VGS (Murray) supp pf at3
2 VGS is exploring options to purchase RNG supply from Lincoln and from landfill gas
projects located outside Vermont that would be received through the Trans-CanadaPipeline
(TCPL) system Murray supp pf at 8-9
7 Daniel Smith Lincoln Renewable Natural Gas LLC (Smith) supp pf at L8 On August 152016 Lincoln filed a motion to continue this proceeding for a period of not less than 60 days statingthat the continuance would allow [it] VGS and Middlebury College to complete discussions as to VGSsinvolvement in the RNG supply in Vermont and allow the record in this case to be properly developed VGS and
the Department opposed the request for continuance On August 222016I issued an Order denying Lincolnsrequest and determined that Lincoln did not demonstrate good cause to postpone the technical hearing
Docket No 8667 Page 5
3 Under the program retail customers would voluntarily purchase RNG in amounts equal to
l0oo25yo50o or 100 of their total monthly requirements at specified prices per Ccf as an
adder to other retail charges Customers could terminate RNG purchases upon providing three
days of advance notice to VGS Murray supp pf at l-2 exhs Pet-VGS-l and Pet-VGS-3
4 Intemrptible customers will have the opportunity to participate in the RNG program
through VGSs existing Lock Price Program which currently provides for up to a two-year
commitment Murray supp pf at 5
5 VGS will develop and file for Commission approval a separate tariff for use of RNG as a
transportation fuel This tariff will allow VGS to take advantage of the sale of the associated
Renewable Identification Numbers (ooRINs) When RNG is used as a transportation fuel it is
eligible to receive RINs under the Federal Renewable Fuel Standard RINs can be resold on the
wholesale market and would be used to offset the price of RNG to transportation customers
receiving service under the tariff Joan E White
Department (White) pf at7tr912116 at 62-
63 (White) exh Pet-VGS-5 Response 4
6 VGS will also initiate a review of the RNG program by the Commission Department and
others after three years White pf at9tr912116 (Munay) at24
7 The adder price for each Ccf of RNG will be equal to the average RNG commodity cost to
VGS less the average commodity cost of natural gas VGS will adjust the adder price per Ccf on
a quarterly basis as part of its Purchased Gas Adjustment (PGA) filing Murray supp pf at 4
8 The proposed RNG program will include a tariff that is very similar in concept to the
Green Mountain Power Corporation (GMP) Cow Power tariff However Cow Power is based
on a fixed rate per kWh no matter what the cost of the renewable energy Murray supp pf at llVhite pf at 4
9 VGSs RNG tariff will be calculated quarterly based on actual RNG and natural gas costs
and will provide accurate price signals as to the price differential between natural gas and RNG
White pf at 4
10 Based on a survey conducted by VGS 85 of its customers are willingto pay l0oo
more for a renewable product VGS projects that customers could potentially consume over
500000 Mcf of RNG over the next five years Murray supp pf at 5
DocketNo8667 Page 6
11 VGS will use a true-up period of up to 12 months in order to balance the difference
between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply)
Murray supp pf at 9
12 There is a risk that due to the voluntary nature of the RNG program supply and demand
will be mismatched White pf at41 David G Hill CLF (Hi11) pf at 9
13 If the available RNG supply during the previous 12 months is less than the amount
purchased by VGS customers the RNG program provides that VGS may use funds collected to
purchase carbon offsets from an established carbon registry such as the American Carbon
Registry VGS will purchase an amount of carbon offsets equal to the amount of the revenue
resulting from the undersupply in order to result in a revenue-neutral program At the time of the
three-year implementation review VGS will propose an environmental accounting protocol in
order to quantify the environmental benefits of the program and to evaluate the financial risk of
purchasing carbon offsets in an amount equivalent to the environmental benefits of unsold RNG
due to undersupply Murray supp pf at 6 l0 exh Pet-VGS-s Responses 1
14 The development and standardization of RNG attributes is in its infancy as compared to
the existing markets for the environmental attributes used in the electric industry (renewable
energy credits or (RECs)) Murray supp pf at 12
15 If carbon offsets are not available VGS will contribute the RNG program revenues to the
Clean Energy Development Fund or issue prorated credits to affected customers Exh Pet-
VGS-S Responses 3
16 If RNG supply exceeds customer demand VGS would seek to sell the excess RNG at
wholesale Murray supp pf at 10
17 VGS will provide proposed RNG supply contracts to the Department prior to execution
It will also consult with the Department before making decisions that could dramatically impact
price or the integrity of the RNG program Exh Pet-VGS-S Responses 2 White pf at 5
18 The estimated cost of RNG supply ranges from $l2lMcf to $25lMcf The cost of natural
gas is less than $3Mcf Murray supp pf at 8-9
19 VGS will implement an RNG Quality Assurance Plan establishing a testing and
monitoring process to ensure that RNG injected (via in-state RNG producers) into the VGS
system is pipeline quality and meets the specifications of the TCPL transportation tariff for bio-
methane gas quality Murray supp pf at 14 exh Pet-VGS-4
Docket No 8667 PageT
20 VGS will file an annual report on the RNG program with the Commission and the
Department containing the following information
1 Number of subscribers by customer class
2 Sales volume by customer class
3 Sales revenues
4 Any sales or purchases of carbon offsets
5 Supplyconsumption matching portfolio including any shortfall or excess
supply of RNG
6 True-up schedule for any imbalances
7 RNG supply verification
8 Quantification of the impact of any excess RNG costs flowing through the
PGA if VGS remains under altemative regulation
9 Accounting of any carbon ofszligets or other incentives
10 Status of any contracts for RNG including plans to acquire new supply
contracts
I 1 Revenue from Renewable Identification Number (RlN) sales and impact
on the transport tariff as well as any projections about the RIN market that are
available to VGS and
12 Complete reports and environmental verifications by an independent
verifier
Murray supp pf at 11 exh Pet-VGS-3 White pf at 8-9 tr912116 at23-24 (Munay)
21 Except as described below concerning RlN-eligible RNG VGS will annually verify that
the RNG was produced by a renewable gas production facility that VGS is the exclusive oryner
of any environmental attributes associated with RNG it sells under the program that it acquired
the RNG from its transferor and sold itatretail and that neither the RNG nor any renewable
attribute associated with the RNG has been sold twice at any point between RNG production and
sale to VGS whether by sales into carbon offset markets or otherwise This verification will be
based on certifications by VGSs suppliers and by an independent third party retained by VGS
for this purpose Exh Pet-VGS-3 exh Pet-VGS-s Response 5 White pf at 8
Docket No 8667 Page I
22 For RlN-eligible RNG used as vehicle fuel verification will be addressed in detail in the
future as part of VGSs proposed Renewable Vehicle Fuel Tariff Exh Pet VGS-5 Response 4
rr912116 at 65 (White)
23 There are few natural gas utilities currently offering RNG at retail VGS modeled its
RNG program after the program designed by FortisBC a local distribution company in British
Columbia Canada VGS also had discussions with SoCalGas in Southern California Both of
these companies are leaders in developing RNG offerings and fostering RNG supply resources
Murray supp pf at 7
24 VGS will file with the Commission and Department a marketing plan containing the
following elements
l An evaluation element that includes concrete metrics such as sales
volume targets and enrollment targets
2 Identification of target market segment(s)
3 Development of materials and language for customer-marketing efforts
that explain the RNG program in plain language easily understandable to the
average customer
4 An online bill calculator
5 An implementation plan that identifies specific activities and a timetable
and
6 Abudget
Exh Pet-VGS-5 White pf at 10 Tr912116 at22-23 (Munay)
25 VGS and the Department represent that the RNG progriquestun is responsive to the
Commissions condition in its Order in Docket 7970 rcquiring VGS to develop a proposal to
promote bio-methane project development Murray supp pf al 13-14tr912116 at 63 (Vhite)
26 VGS asserts that the RNG program represents appropriate progress toward the Vermont
Comprehensive Energy Plan (CEP) goal to meet90o of Vermonts energy needs through
renewable sources by 2050 Murray supp pf at 12-13
VI DlscussroN iexclxu Coxclustox
Vith this proposal for decision I recommend that the Commission approve the RNG
program in accordance with the findings described above and based upon the evidence in the
Docket No 8667 Page 9
record In Docket 7970 the Commission required VGS in consultation with the Department to
file a petition with the [Commission] proposing a program to promote bio-methane project
development It is reasonable to expectthat aprogram meant to stimulate development of a
specific energy source would look to stimulate demand for that resource by offering an
opportunity for customers to purchase supply from RNG producers
The RNG program proposed by VGS and supported by the Department seeks to offer
ratepayers the option to purchase renewable energy as part of their individual energy-use
portfolio Furthermore the program includes a provision requiring that VGS develop a detailed
marketing plan that will serve to educate customers on the availability costs and benefits of
such resources which could lead to increased demand for the product
VGS intends to take advantage of the existing market for RINs associated with RNG used
as transportation fuel by proposing a Renewable Vehicle Fuel Tariff As described above in the
Public Comments section the Chittenden County Transportation Authority and Casella Vaste
Systems are interested in exploring the use of RNG to fuel their vehicle fleets which
demonstrates that there is existing customer demand for this product
Unlike the markets relating to RNG supply used for transportation fuel or renewable
electric generation and the associated trading and verification of RECs the RNG market is in its
infancy At this time it would not be appropriate to expect VGS to implement an RNG program
utilizing an RNG content standard similar to the electric renewable portfolio standard as
recommended by CLF because the equivalent standards and processes do not exist However
the RNG program represents a meaningful first step in encouraging customer interest in
purchasing RNG at retail thereby stimulating supply of RNG into the market and is consistent
with the Commissions condition requiring VGS to develop a proposal to promote bio-methane
project development
VGSs RNG program includes appropriate mechanisms for periodic reporting and
verification of program activities as well as an opportunity to comprehensively review the
program after three years of implementation Furthermore determinations regarding recovery of
costs associated with the RNG program will be made in the context of future proceedings
regarding VGSs rates The RNG program should evolve with the RNG markets in the near-term
and over the course of the next several years which will allow progress towards achievement of
Vermonts 2050 CEP renewable energy goals
Docket No 8667 Page 10
Because not all parties to this proceeding have waived their rights under 3 VSA $ 811
to file written comments or present oral argument with respect to this proposal for decision I am
circulating the proposal for decision to the parties for their review and comment
Dated at Montpelier Vermont this rrtl day of QrIltt 2017a0AndreaHearing Officer
Docket No 8667 Page 11
VII Corumrssron Drscussrox
On August 22017 the Department filed a letter stating that it supports the issuance of an
Order by the Commission that adopts the proposal for decision in full
Also on August 22017 VGS filed comments on the proposal for decision requesting
that Finding 16 be modified as follows (additional text in italics) If RNG supply exceeds
customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary
flow any remaining RNG attribute inventory amounts through the PGA or through a rate case ifVGS was under traditional cost of service regulation (subject to [Commission] approval)
VGS asserts that [a]bsent such specific language it is possible that VGS would be unable [to]
defer such costs for future recovery and that removal of that component introduces uncertainty
about the potential procedural mechanisms available for cost recovery in the last resort VGS
states that with the Commissions consideraacutetion of this request it does not request oral argument
No other comments were filed on the proposal for decision
The Hearing Officer recommended that the Commission find that determinations
regarding recovery of costs associated with the RNG program will be made in the context of
future proceedings regarding VGSs rates We agree with this recommendation VGS should
have an opportunity to request rate recovery for excess RNG supply However this proceeding
is not the proper time for such a determination Accordingly Finding 16 is hereby modified as
follows If RNG supply exceeds customer demand VGS would first seek to sell the excess
RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any
remaining RNG attribute inventory amounts through the PGA or through arate case as part of
its cost of service if the PGA is no longer in effect atthat timeWe emphasize the importance of the successful implementation of the RNG program in
helping to meet the States renewable energy policy objectives The annual report on the
implementation of the RNG program will serve as a valuable tool to assess that progress In this
proceeding CLF has raised policy considerations that should serve to guide these future reviews
of the RNG program For example CLF has raised concerns regarding the effectiveness of the
voluntary nature of the program In assessing its program we expect VGS to revisit and report
on the feasibility of incorporating RNG as a portion of its supply mix in the future It is
important for VGSs RNG program to be sustainable and continue to evolve ensuring significant
DocketNo8667 Page 12
contributions toward meeting the States renewable energy goals and reducing the consumption
of fossil fuel Accordingly it is critical that the annual report and the three-year comprehensive
review address not only the effectiveness of the program but also its affordability and the
feasibility of other policy options to advance the production and use of RNG in Vermont
Docket No 8667 Page 13
VIII Onunn
Ir rs Hennsy oRDERED ADJUDGED AND DECRnnn by the Public Utility Commission of the
State of Vermont that
1 The findings conclusions and recommendations of the Hearing Officer are
adopted and the Renewable Natural Gas (RNG) program to be implemented by Vermont Gas
SystemsInc (VGS) is approved
2 When VGS has procured RNG supply in amounts reasonably estimated to be
sufficient for estimated customer demand it shall file a formal tariff including proposed rates for
sale of RNG The tariff shall be reviewedpursuantto the procedures of 30 VSA ccedilccedil225226
and227 and sales under the program shall begin after Commission approval of the tariff
3 VGS shall develop and file for Commission approval a separate Renewable
Vehicle Fuel Tariff to serve customers using RNG as a transportation fuel
4 VGS shall file a marketing plan for the RNG program consistent with the
requirements set forth above within one month of the issuance of this Order
5 VGS shall file an annual report consistent with the requirements set forth above
upon implementation of the RNG program
6 VGS shall file a comprehensive review of the performance of the program with
the Commission and the Department after three years of implementation This review will
include an environmental accounting protocol to quantiff the environmental benefits of the
progrfim
7 VGS shall review proposed RNG supply arrangements with the Department
Docket No 8667
Orprcp oF THE Crnm
Dated at Montpelier Vermont this day of+hb
Z Roisman
Cheney
Page 14
20t7
Puslrc Urrlnv
CovtriquestIssIoN
OP VERMONT
(
)))
)))
Fired otildeeglcL ( JotTAttest c
of the Commission
NorIcE To READERS This decision is subject to revision oftechnical errors Reqders are requested tonotify the Clerk of the Commission (by e-mail telephone or inwriting) or any appqrent errors in order that anynecessary corrections may be made (E-mail address pucclerkvermontgov)
Appeal of this decision to the Supreme Court of Vermont must befiledwith the Clerk of the Comnissionwithin thirty days Appeal will not stay the efect of thszlig Order absentfurther order by this Commission orappropriate actiacuteon by the Supreme Court of Vermont Motions for reconsideration or stay if any must be filed withthe Clerk of the Commissionwithin ten days of the date of this deciacutesion and Order
Exhibit 22 VGS RNG Tariff Rate Filing
Exhibit 23 PUC Approval of VGS RNG Rates
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Case No l8-03 13-TF
Petition of Vermont Gas Systems Inc fotapproval of a new tariff implementing theRenewable Natural Gas program
Order entered
OnonRAppnovINc Tiquestrurn
On January 302018 Vermont Gas Systems Inc (VGS) filed a petition for approval of
a new tariff implementing the Renewable Natural Gas (RNG) program approved by the
Vermont Public Utility Commission (Commission) in Docket No 8667 In that Docket the
Commission required VGS to file a tariff implementing the RNG program when it has procured
RNG supply in amounts reasonably estimated to be sufficient to meet customer demandl In
this Order the Commission approves the new tariff marketed under the name EcoGas with an
effective date of bills rendered on and after March 15 2018
VGS states that it has executed an RNG supply contract with deliveries scheduled for
2018 and that two additional contracts are being negotiated for deliveries beginningin2019
VGS is proposing to set its initial RNG adder at$ll749lCcf which represents a five-year
blended rate based on the three RNG supply arrangements VGS intends to account for the
difference between the cost of RNG supply and the RNG adder as a regulatory asset within gas
costs As additional lower-cost supply is added to the portfolio the regulatory asset balance will
be recovered from EcoGas participants with the goal of fully reducing the balance by the end of
five years Accordingly VGS states that the RNG program will be rate-neutral to VGS and its
non-RNG customers
On February 272018 the Vermont Department of Public Service (Department) filed a
letter recommending that the Commission approve the tariff without a hearing or further
investigation The Department states that the tariff filing and proposed accounting treatment
comply with Vermont rate-setting practices policies precedents and statutes
lslaotx
I Docket 8667 Order of 96117 at 13
Page2Case No 18-0313-TF
Based on the foregoing we hereby approve VGSs proposed RNG tariff to be effective
on a bills-rendered basis beginning on March 15 2018 Recovery of any regulatory asset
balance at the end of the fifth year would need to be approved by the Commission in a future
proceeding
So Omnnnn
Case No l8-0313-TF
8r- day of lruacuterLiquestiquest
Page 3
Dated at Montpelier Vermont this 2018
Roisman PueIrc Urlrrv
CoiriexcllriquestlssloN
Cheney
OF VERMONT
Sarah Hofmann
Onncp oF THE CLBRr
Filed huacuteveuroAacute- icirc dollAttest I
Clerk of the Commission
Notice to Readers This decision is subiect to revision oftechnical errors Readers are requested to notify
the Clerk of the Commission (by e-mail telephone or in writing) or qny qpparent errors in order that any
necessary corrections may be made (E-mail address pucclerkvermontgov)Appeal of this decisiacuteon to the Supreme Court of Yermont must be filed with the Clerk of the Commission
within 30 days Appeal will not stay the efect of this Order oslashbsent further order by this Commission or appropriate
action by the Supreme Court of Vermont Motionsthornr reconsideration or stay if any must befiledwith the Clerk ofthe Commissionwithin 28 doslashys of the date of this decision and Order
)))
))))
PUC Case No 18-0313-TF
Eileen SimollardesLauren HammerVermont Gas
85 Swift StreetSouth Burlington VT 05403
June E Tiemey CommissionerVermont Department of Public Service1 12 State StreetMontpelier VT 05620 -2601
Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
Exhibit 31 Accounting Procedures
Exhibit 31 Accounting for VGS Renewable Natural Gas (Ver-9202019)
1 Purchase of RNG Supply
RNG supply purchases are separated into the cost of the commodity and the cost of the renewable attribute The commodity portion is expensed to gas costs in the delivery month while the renewable attribute is booked to an inventory account referenced herein as the ldquoRenewable Inventory Accountrdquo Like VGSrsquo existing storage inventory accounting the Renewable Inventory Account will track both the dollar value of the renewable attribute and the renewable attribute Mcfs Renewable attribute dollar values are record to ldquo16410050 Inventory RNG Storagerdquo while Mcf values are recorded in the gas cost model maintained by accounting In the month VGS purchases the renewable attribute it is accrued in a book model and goes in to 16410150 Inventory RNG Accrued then moves to the 16410050 in a final model the following month for final
RNG may be purchased at different locations and using varying pricing structures While the accounting for RNG does not vary with the purchase location or price the determination of the value of the renewable attribute will vary depending on whether or not the supply pricing expressly values the renewable attribute as an adder or it is embedded in a fixed price Examples of each are shown below The accounting of RNG supply is intended to separate the cost of the renewable attribute from the cost of the commodity The examples below are not all inclusive of what may occur but intended to show the accounting procedures used to separate the renewable attribute from the commodity and specify ownership of each aspect
In all cases the commodity cost portion - which is the total cost of the RNG purchased excluding the renewable attribute - will be expensed in the delivery month as a cost of gas
Example 1 ndash The fixed price of RNG includes both the commodity and the renewable attribute
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The total cost of the RNG supply purchased during the month is calculated by Accounting within the gas cost model as follows
MMBtu Purchased (as validated in step 2) $ MMBtu purchase price (as provided in a supply confirmation provided by gas supply)
4 For purposes of booking the renewable attribute to inventory it is necessary to calculate the RNG cost per Mcf The RNG cost Mcf is calculated using the total cost of RNG supply as calculated in step 3 divided by the Mcf in step 1
5 The renewable attribute price per Mcf is calculated as follows
RNG cost per Mcf as determined in step 4 ndashplus ldquoother componentsrdquo as calculated pursuant to Attachment A ndash minus ldquoAverage Commodity Costrdquo as calculated pursuant to Attachment A The ldquoother componentsrdquo added to the RNG cost per Mcf will vary depending on where the RNG supply was delivered but in each case will be identified in the calculation shown on Attachment A
6 The renewable attribute price per Mcf the total RNG Mcf delivered is recorded in the Inventory RNG Storage account
7 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
Example 2 - RNG purchased at a renewable attribute price plus a daily or monthly index
Where the pricing of RNG specifically separates the commodity from the renewable attribute the renewable attribute price will be what is recorded in the Renewable Inventory Account
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The renewable attribute price per Mcf the total RNG Mcf delivered as determined in step 1 is recorded in the Renewable Inventory Account
4 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
2 Recalculating the RNG Adder
The RNG Adder paid by customers will be recalculated anytime the Natural Gas charge portion of rates changes The Manager of Gas SupplyGas control is responsible for recalculating the RNG Adder The calculation will be verified and approved by the Vice President ndash Regulatory Affairs The determination of the RNG Adder will be pursuant to the methodology shown in Attachment A The Regulatory Department will prepare the amended RNG Adder tariff for filing with the PUC Upon PUC approval of the RNG Adder the Regulatory Department will prepare a memorandum advising Accounting and Gas Supply of the new RNG Adder as approved
3 Customer purchases VGS Renewable Natural Gas
The RNG Adder at the percent selected by the customer will be applied to the entire monthrsquos usage on the customersrsquo next bill For customers utilizing the S-RNG adder the entire volume elected with be on the customersrsquo next bill The S-RNG Adder nor the RNG Adder and percentage selected will not be prorated based on enrollment or termination date
Customers may terminate or modify their RNG selection upon 3 dayrsquos notice to VGS The termination or modification will be effective on the customerrsquos next monthly bill
The customerrsquos usage for the month will be multiplied by the percentage and the approved RNG Adder For customers utilizing the S-RNG adder the volume elected will be multiplied by the approved RNG adder This amount will then be recorded to SAP accounts 4010015-40010021 depending on which rate class the customer is in The RNG Adder is the same regardless of which rate class a customer is in At the end of the month a report is run by billing from the customer information system that shows total usage and which percentage of RNG the customer has signed up for to calculate the number of MCFrsquos of renewable attribute sold during the billing period Billing also provides a report of the volumes sold through the S-RNG Tarriff The Inventory RNG Storage account maintained within the gas cost model by Accounting is reduced by these Mcf The MCFrsquos are then multiplied by the RNG Adder in effect for the billing month and an entry is made to remove that dollar amount from the Inventory RNG Storage account and into the monthly cost of gas The intent of this transaction is to ensure that cost of the renewable attribute is reflected in the cost of gas in the month it is purchased by the customer This results in a matching of the renewable attribute revenue and expense
The RNG Adder revenue and renewable attributes removed from storage will be included in the gas cost deferral calculation However because there is a matching of the renewable attribute revenue and expense the impact on the deferral calculation will be zero
The calculation of unbilled revenues will exclude RNG as a customer can cancel their participation prior to their next bill
In the event Vermont Gas issues a credit to a customer related to the RNG program the value of the renewable attribute credited and the associated Mcf will not be applied to the Renewable Inventory Account
4 Controls
A spreadsheet is maintained by accounting that shows the MCFrsquos and dollar values of the Renewable Inventory Account This is reconciled monthly by the accounting team and will be reviewed by the Manager Gas SupplyGas Control
Accounting will validate that the amount removed from the Renewable Inventory Account matches the RNG Adder revenue Any discrepancies will be reviewed and corrected
A report will be run for each bill cycle that shows any changes to the RNG percentages selected this will include customers opting to withdraw from the RNG program The customer care team will validate any changes against customer confirmation paperwork
5 Renewable Inventory Account Reconciliation and Forecast
The PUC Order approving the RNG program contains provisions describing how RNG supply and demand imbalances will be addressed These provisions and how VGS will track and comply with them are as discussed in this section The PUC Order approving the RNG Program provides that if the available RNG supply during the previous 12 months is less than the amount purchased by customers VGS may use the funds collected to purchase carbon offsets (Finding 13) If carbon offset are not available VGS will contribute the RNG program revenues to the Clean Energy Development Fund or issue prorated credits to affected customers (Finding 15) The Order also provides that in the event RNG supply exceeds customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any remaining RNG attribute inventory amounts through the PGA or through a rate case as part of its cost of service if the s PGA is no longer in effect at that time (Finding 16 as modified) Finding 11 provides that VGS will use a ldquotrue-uprdquo period of up to 12 months in order to balance the difference between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply) Taken together these provisions require VGS to evaluate the imbalance after 12-months and then true-up the imbalance over the next twelve months To provide a forecast of the supplydemand imbalance quarterly the billing area will run a report showing the expected RNG volumes based on current customer commitments by month for the next 12-months Current customers commitments will be calculated based on the previous 12 months of usage multiplied by the RNG percentage currently signed up for The marketing department will provide their forecast of new RNG sales for the next 12-months Both will be provided to the Manager Gas SupplyGas Control The Manager Gas SupplyGas Control will compare the forecasted RNG sales known and expected to RNG supply commitments and provide a 24-month forecast of the supplydemand balance The supplydemand balance will be reviewed at the risk management meeting The strategy for addressing the imbalance consistent with the PUC order will be determined by the risk management committee
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
VGS Renewable Natural Gas Program Manual
Page 2
to the Environmental Protection Agency (EPA) thatrsquos carbon avoidance equivalent to more than 70 wind turbines8
Section 1 Program Overview
11 WHAT IS VGS RENEWABLE NATURAL GAS ldquoVGS Renewable Natural Gasrdquo is an innovative offering that will allow Vermont Gas customers to displace the use of conventional (fossil) natural gas by purchasing the renewable attributes of renewable natural gas (RNG) production These renewable attributes correspond with the production of RNG by anaerobic digestion of organic matter at landfills waste treatment plants industrial sites and farm digesters This digestion process produces biogas which is cleaned to pipeline quality - at which point it is referred to as biomethane - and injected as RNG into the natural gas pipeline system
Our initial supply of RNG is coming from outside of Vermont where it is injected into the natural gas pipeline and commingled with conventional natural gas We are working with developers to create a local ldquoin-staterdquo supply of RNG produced in local digester facilities to then inject directly into the Vermont Gas distribution system
Vermont Gas customers have the opportunity to participate in the VGSrsquo Renewable Natural Gas Program by voluntarily signing up to purchase renewable attributes of RNG for either a percentage of their natural gas usage or for a fixed quantity per monthly billing cycle Participating customers agree to pay an additional charge referred to as an ldquoRNG Adderrdquo commensurate with the additional cost to purchase RNG supply compared to conventional natural gas This charge will be reflected on participating customersrsquo monthly bills along with the percentage of the customerrsquos gas usage or fixed monthly quantity covered by the RNG Program Every customer who participates in the program advances Vermontrsquos leadership in renewable energy innovation and furthers Vermontrsquos Comprehensive Energy Plan9
12 HOW MUCH DOES VGS RENEWABLE NATURAL GAS COST All VGS customers firm and interruptible who voluntarily enroll in the VGS Renewable Natural Gas Program will pay an additional Program ldquoRNG Adderrdquo based on the percentage of RNG the customer has subscribed or the fixed quantity allocated by the customer The RNG Adder is billed in hundred cubic feet or ldquoCCFrdquo (1 CCF equals one hundred cubic feet of gas) based on the percentage of RNG selected by the customer or fixed quantity
8 httpswwwepagovenergygreenhouse-gas-equivalencies-calculator 9 Vermont Comprehensive Energy Plan Chapter 125 (httpsoutsidevermontgovsovwebservicesShared20Documents2016CEP_Finalpdf)
VGS Renewable Natural Gas Program Manual
Page 3
The voluntary VGS Renewable Natural Gas Adder is available to all firm rate classes (R G1 G2 G3 and G4) in the percentages shown below and will apply to monthly CCF usage
Available RNG Adder Percentages (applied to monthly Ccf usage)
10
25
50
100
In addition rather than electing a percentage any customer10 may elect to purchase a fixed amount of the environmental attributes associated with RNG which falls under the approved ldquoS-RNGrdquo Tariff The RNG Adder (and S-RNG Adder) will appear as a separate line item charge on the customerrsquos bill in addition to the existing rate elements of a Daily Access Charge a Natural Gas Charge and a Distribution Charge The current RNG Adder can be found at httpswwwvermontgascomrenewablenaturalgasadder-calculator The RNG Adder will change whenever the Public Utility Commission (ldquoPUCrdquo) authorizes a change in the Natural Gas Charge portion of the tariff Currently the RNG Adder is adjusted quarterly alongside the Natural Gas Charge change The effect of these changes to the RNG Adder is that the cost of the RNG Adder will vary with the wholesale cost of conventional gas and may further vary in the future as new RNG supply contracts come into our portfolio
VGS ldquointerruptible servicerdquo customers may participate in the RNG Program through either the RNG adder or the S-RNG tariff which will permit these customers to designate how much of their annual natural gas purchases they wish to meet via the RNG Program As noted above the RNG Adder will change whenever the PUC authorizes a change in the Natural Gas Charge portion of the tariff
13 WHERE IS VGS RENEWABLE NATURAL GAS PRODUCED VGS Renewable Natural Gas can be sourced from either in-state or out-of-state producers that utilize anaerobic digestion of organic matter such as landfills waste treatment plants industrial sites and farm digesters that are connected to the natural gas pipeline system In-state RNG supply (planned for 2020) would be injected directly into Vermont Gasrsquo pipeline system after ensuring the RNG meets VGSrsquo natural gas quality standards Although out-of-state VGS Renewable Natural Gas resources may not physically flow to
10 A customer is defined as a consumer of natural gas in Vermont regardless of whether or not the customer has an account for metered natural gas service with the Company
VGS Renewable Natural Gas Program Manual
Page 4
the VGS system the environmental attributes will be dedicated to Vermont Gas customers
Much like renewable electricity that is comingled in the electric grid VGS Renewable Natural Gas is comingled with conventional natural gas supply in the pipeline system VGS Renewable Natural Gas customers are purchasing the environmental attributes of RNG There is no claim by VGS that a participating customer is directly burning an RNG or biomethane molecule
14 WHAT ARE THE ENVIRONMENT BENEFITS An average household enrolling in the VGS Renewable Natural Gas program at the 100 level will effectively nullify the corresponding carbon footprint associated with the customerrsquos direct use of natural gas For a typical VGS residential customer using 90 Mcf of conventional natural gas each year this equates to 49 metric tons11 of avoided carbon dioxide emissions each year
VGS is not making representations or claims for any additional environmental benefits of anaerobic digesters beyond the carbon reduction associated with replacing conventional natural gas with a renewable source of energy production Specifically we make no environmental claims related to the avoidance of uncontrolled fugitive methane emissions that would have gone into the atmosphere from the primary biogas feedstock (eg landfill gas manure wastewater) in the absence of anaerobic digestion and capture of the methane as RNG
11 (httpswwwepagovenergygreenhouse-gas-equivalencies-calculator)
VGS Renewable Natural Gas Program Manual
Page 5
Section 2 Regulation
KEY REGULATORY STEPS
Item Description Filing Schedule VGS RNG Adder Tariff Update
Updates required to reflect gas costs changes
Quarterly
Annual RNG Report Full Programmatic Report Annually RNG Supply Contracts Filed for VT Public Utility
Commission (PUC) approval or information
As required
Triennial Assessment Program Review with Dept of Public Service
Every three years
21 REGULATORY SUMMARY
In October 2015 Vermont Gas filed a petition with the PUC for authority to establish a Renewable Natural Gas offering The PUC initiated Docket No 8667 to evaluate VGSrsquo proposal VGS modified the program based on input from parties to the proceeding12 and resubmitted testimony in April of 2016 followed by technical hearings in September of 2016 On September 6 2017 the PUC issued the final order approving the voluntary RNG program (see Exhibit 21) The Order provided authority for VGS to sell RNG under the proposed ldquoadderrdquo structure The Order also provided the accounting guidance to inventory the renewable attributes of RNG and the ability to recoup unsold RNG costs if need be with subsequent PUC approval The order also authorizes VGS to purchase carbon offsets in the event the supply of RNG is insufficient to meet subscriber demand
The table below lists the requirements contained in the Order and VGSrsquo compliance to-date
Order Requirement Status and Compliance Date
1 When VGS has procured RNG supplyhellipit shall filea formal tariff including proposed rates for the saleof RNG
Completed - January 30 2018 See also section 22 below
2 VGS shall develop and file for Commissionapproval a separate Renewable Vehicle Fuel Tariffto serve customers using RNG as a transportationfuel
Pending ndash Due date TBD
12 Parties to Docket No were the Department of Public Service Conservation Law Foundation and Lincoln Renewable Natural Gas LLC
VGS Renewable Natural Gas Program Manual
Page 6
Order Requirement Status and Compliance Date
3 VGS shall file a marketing plan for the RNGprogram consistent with the requirements setforth in the order within one month of the issuanceof this Oder
Completed - October 6 2017
4 VGS shall file an annual report consistent withthe requirements of the Order uponimplementation of the RNG program
Initial filing completed ndash filed June 2018 and 2019
5 VGS shall file a comprehensive review of theperformance of the program with the Commissionand Department after 3 years of implementationThis review will include an environmentalaccounting protocol to quantify the environmentalbenefits of the program
Pending ndash Due by March 15 2021
6 VGS shall review proposed RNG supplyarrangements with the Department
Completed - Initial review 11618 Review of subsequent contract also completed and approved by PUC
On October 4 2018 the Company filed with the PUC for a new RNG tariff offering ldquoS-RNGrdquo Adder which has the same pricing as the RNG Adder The new offering allows customers to purchase a fixed amount of RNG per month that would be unbundled from the customerrsquos metered gas consumption and offers customers who are consumers of natural gas but do not have an account for metered gas service with the Company the ability to purchase RNG attributes The PUC approved the S-RNG Adder to take effect with bills rendered on or after December 1 2018 (see Exhibit 24)
22 VGS RENEWABLE NATURAL GAS ADDER TARIFF The PUC order provides ldquoWhen VGS has procured RNG supplyhellipit shall file a formal tariff including proposed ratesrdquo On January 30 2018 after contracting for the initial RNG supply VGS filed the VGS Renewable Natural Gas Adder Tariff (see Exhibit 22) On March 9 2018 the PUC approved the initial RNG Adder for effect with bills rendered on and after March 15 2018 (see Exhibit 23)
In simple terms the RNG Adder reflects the difference between the cost of RNG and the cost of conventional gas This is calculated by subtracting the average commodity cost for conventional natural gas from the average commodity cost for RNG as indicated in the following example
VGS Renewable Natural Gas Program Manual
Page 7
VGS Renewable Natural Gas Adder Calculation Average RNG Commodity Cost
Minus Average Natural Gas Charge Equals VGS Renewable Natural Gas Adder
Exhibit 22 provides the detailed calculations
This formula identifies the current premium to be paid per CCF of RNG This premium also represents the value of the ldquoVGS Renewable Natural Gas Attributerdquo that VGS will withdraw from the VGS Renewable Natural Gas Attribute Inventory described below
To full reflect the cost of the initial RNG supply with future RNG supply contracts the initial RNG Adder was based on a blended rate of the cost of the first and the expected costs of future RNG purchases over the next 5 years The PUC has authorized this blended approach
The RNG Adder will change whenever the PUC authorizes a change in the Natural Gas Charge portion of the tariff Currently this change occurs quarterly
23 ANNUAL RNG REPORT An Annual RNG Report will be filed with PUC and Vermont Department of Public Service (ldquoDepartmentrdquo) each year in June The first annual report was filed in June 2018 In accordance with the PUC final order approving the Program the annual report will include the following information
1 Number of subscribers by class2 Sales volume by customer class3 Sales Revenues4 Any sales or purchases of carbon offsets5 Supply Consumption matching portfolio including any shortfall or excess supply of
RNG6 True-up schedule for any imbalances7 RNG supply verification8 Quantification of the impact of any excess RNG costs flowing through the PGA if
VGS remains under alternative regulation9 Accounting of any carbon offsets or other incentives10 Status of any contracts for RNG including plans to acquire new supply contracts11 Revenue from Renewable Identification Number (ldquoRINrdquo) sales and impact on the
transport (transportation) tariff as well as any projections about the RIN marketthat are available to VGS and
12 Complete reports and environmental verifications by an independent verifier
The annual report will also address the effectiveness of the program and its affordability
VGS Renewable Natural Gas Program Manual
Page 8
24 THREE-YEAR IMPLEMENTATION REVIEW In accordance with the PUC Order in March 2021 (the third year of the Program) VGS will file a comprehensive review of the performance of the Program The review will include an environmental accounting protocol to quantify the environmental benefits of the program The three-year comprehensive program review will also address the effectiveness of the program its affordability and the feasibility of other policy options to advance the production and use of RNG in Vermont
SECTION 2 EXHIBITS
bull Exhibit 21 VT PUC Approval Orderbull Exhibit 22 VGS RNG Tariff Rate Filingbull Exhibit 23 PUC Approval of VGS RNG Ratesbull Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
VGS Renewable Natural Gas Program Manual
Page 9
Section 3 Supply Procurement and Accounting
KEY VGS RENEWABLE NATURAL GAS SUPPLY AND ACCOUNTING STEPS
Item Description Schedule Owner RNG Supply Contracts
Procuring RNG Supply As needed Gas Supply
RNG Supply True-Up
Balancing RNG supply sales and retiring attributes
Monthly Finance
RNG Supply Verification
Verifying ldquorenewabilityrdquo of RNG Supply
Annually Gas SupplyThird- Party
31 VGS RENEWABLE NATURAL GAS SUPPLY OVERVIEW
VGS intends to contract with a variety of RNG supply sources to meet its customer demand in the RNG Program RNG supply is currently available from a limited number of landfill and digester projects in Canada or US states other than Vermont In Vermont at least one local supply project is currently under development
Today there is no central ldquomarketplacerdquo for RNG suppliers and buyers to trade RNG supply contracts RNG buyers such as VGS transact with individual producersprojects or work through RNG brokers to acquire RNG supply or the environmental attributes associated with RNG in bilateral transactions VGSrsquo initial RNG supply contract in 2018 was with BP Canada Energy Group ULC and sourced from the EBI Inc13 biogas production facility located in Ste Genevieve Quebec In 2019 VGSrsquo purchased RNG supply from a waste water treatment facility in Dubuque Iowa
In 2020 VGS plans to begin receiving RNG supply from a Vermont farm digester and a Canadian digester facility The Vermont farm digester located in Salisbury Vermont is slated for completion in late 2020 producing 180000 MMbtursquos per year The Canadian digester project is located in London Ontario VGS has agreed to purchased 100 of the supply from this facility up to 120000 MMbtursquosyear for 15 years VGS sought and received PUC approval for this Ontario supply in 2018 and received approval for an amendment in 2019 To meet anticipated demand for RNG until these two resources come on line the Company purchased short-term supply of RNG from the Iowa facility in 2019 We anticipate that these supply sources will satisfy the VGS Renewable Natural Gas Program supply needs for the first few years of the Program If we are unsuccessful
13 EBIrsquos Facility was recognized in 2016 (httpswwwdesjardinscomcavideossinglejspdocName=vid-ebi-e)
VGS Renewable Natural Gas Program Manual
Page 10
in procuring supply from these sources or if demand exceeds these planned supplies VGS will seek additional RNG supply in the marketplace
32 VGS RENEWABLE NATURAL GAS SUPPLY CONTRACTS VGS will utilize standard industry or comparable contract vehicles to procure RNG supply with site-specific terms and conditions Given the unique nature of the in-state RNG project the gas supply contract is a 3 way agreement between the producer VGS and an end user Accordingly the form of the contract does not resemble industry standard supply agreements but contains all appropriate business terms The first two contracts signed by VGS utilize a gas utility standard base contract with signed transaction confirmation documents that specify the specific details of each deal These contracts will require the RNG supplier to certify the renewable attributes and that VGS has full and sole ownership of those attributes As required by the PUC Order RNG Suppliers will also be required to allow VGS independent verification of the production and transactions related to VGS supply volumes The specific PUC requirements are found in finding 21 page 7 of Exhibit 21 - VT PUC Approval Order
33 VGS RENEWABLE NATURAL GAS ACCOUNTING Like accounting practices in the renewable electric industry Vermont Gas will have the obligation to match RNG supply volumes with customer RNG purchase volumes over time As discussed in Section 22 the premium for RNG above the cost of conventional natural gas establishes the value of the renewable attribute purchased by the customer These attributes are tracked in a separate inventory account and then matched with actual retail VGS Renewable Natural Gas sales Once these renewable attributes are matched with VGS Renewable Natural Gas sales they are ldquoretiredrdquo and cannot be resold in any manner or used to satisfy another obligation by VGS As provided in the PUC order ldquoVGS will use a ldquotrue-uprdquo period of up to 12 months to balance the difference between RNG attributes sold to customers (demand) and RNG attributes purchased by VGS from suppliers (supply)rdquo This true-up period allows RNG attribute ldquooversupplyrdquo and ldquoundersupplyrdquo to be balanced as described below
In an ldquooversupplyrdquo situation where forecasted RNG attribute purchases exceed the number of RNG attributes that VGS forecasts selling to its customers through the RNG Program VGS will first seek to market the excess RNG and the environmental attributes back through the wholesale supply channels If this oversupply extends beyond the 12-month true-up window VGS may seek PUC permission to flow any remaining RNG attribute inventory amounts through the Purchase Gas Adjustment (ldquoPGArdquo) or through its cost of service if the PGA is no longer in effect at that time
An ldquoundersupplyrdquo situation would occur if customer purchases of RNG attributes exceeded the amount available under VGSrsquo RNG supply contracts in the forward looking 12-month true-up window If the RNG supply purchases are lagging the RNG sales VGS
VGS Renewable Natural Gas Program Manual
Page 11
will true-up or balance this undersupply over the upcoming 12-month period through existing or additional RNG supply purchases
If VGS is unable to eliminate an undersupply imbalance after the 12-month true-up period VGS would need to purchase carbon offsets in the dollar amount equal to VGS Renewable Natural Gas revenues collected associated with the undersupply (See Exhibit 21 Order Finding 13 and 15) Carbon offsets are listed on one of several Carbon Registries such as the American Carbon Registry If carbon offsets are not available VGS has the option to contribute these RNG revenues to the statersquos Clean Energy Development Fund or issue prorated credits to affected customers It should be noted that while purchasing offsets is a tool for VGS it is not the intent of the VGS Renewable Natural Gas Program and if an undersupply situation persisted VGS would likely petition the PUC to modify or suspend the VGS Renewable Natural Gas Program prospectively
VGS will manage the RNG Program to closely match supply and demand and utilizing our RNG wholesale cost mitigation tools to avoid RNG supply challenges
As renewable programs evolve in the energy and natural gas industry Vermont Gas will adjust its accounting procedures to reflect industry standards and revise this manual to reflect any modifications or changes
34 RENEWABLE VERIFICATION VGS is committed to transparency and the integrity of this innovative program is essential to success Toward that end no step is more essential than the verification of the renewability claims of our VGS Renewable Natural Gas supply The PUC reinforced this commitment in the RNG approval order as follows
ldquoVGS will annually verify that the RNG was produced by a renewable gas production facility that VGS is the exclusive owner of any environmental attributes associated with RNG it sells under the program that it acquired the RNG from its transferor and sold it at retail and that the RNG has not been sold twice at any point between RNG production and sale to VGS whether by sales into carbon offset markets or otherwise This verification will be based on certifications of VGSrsquos suppliers and of an independent third party retained by VGS for this purposerdquo
VGS will use an independent third-party to verify the renewable claims for the VGS Renewable Natural Gas supply including the following
bull Confirm the renewable fuel feedstock identificationbull Confirm the product renewable fuel identificationbull Review and confirm the renewable fuel production processbull Review of fuel flow measurement and quality monitoring process and equipment
VGS Renewable Natural Gas Program Manual
Page 12
bull Review of contracts and affidavits governing the transfer of the RNG from theoriginal source to the end user(s)
bull Review of evidence confirming the existence of a physical path (common carrierpipeline) for RNG transfer and distribution to end users
SECTION 3 EXHIBITS
bull Exhibit 31-Accounting Proceduresbull Exhibit 32-Verification from Suppliersbull Exhibit 33-Third Party Verification
VGS Renewable Natural Gas Program Manual
Page 13
Section 4 Marketing
KEY MARKETING STEPS Item Description Owner VGS Renewable Natural Gas Branding
Maintain product and brand integrity Communications
Product Definition Ensuring proper VGS Renewable Natural Gas description in all materials
Communications
External Review Verification of Marketing claims Communications
41 MARKETING PLAN Exhibit 41 is the 2018 version of the Marketing Plan filed with the PUC This document may be updated from time to time as we adjust our marketing strategy
42 MARKETING CLAIMS VGS is committed to making clear and accurate claims about the environmental benefits of VGS Renewable Natural Gas We have enlisted the assistance of a law firm specializing in marketing renewable products to review VGSrsquo marketing materials and claims In addition VGSrsquo annual third-party review of our program will focus on the integrity of our administration of the VGS Renewable Natural Gas program (see Section 54)
43 VGS RENEWABLE NATURAL GAS ldquoPRODUCT CONTENT LABELrdquo The Product Content Label is intended to be prominently displayed on the VGS web site and in correspondence to customers when they enroll in this program
Product Content Label
By participating in the VGS Renewable Natural Gas program you are purchasing the renewable attributes associated with the production of renewable natural gas (ldquoRNGrdquo) which may also be referred to as biogas or bio-methane A unit of VGS Renewable Natural Gas measured in hundred cubic feet (CCF) represents the environmental attribute of 1 CCF of biogas VGS reserves the right to purchase carbon offsets if RNG supply is not available VGS will notify customers if this occurs The Product Content Label is available at httpswwwvermontgascomrenewablenaturalgas
SECTION 4 EXHIBITS
bull Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)bull Exhibit 42 VGS Renewable Natural Gas Trademark
VGS Renewable Natural Gas Program Manual
Page 14
Section 5 Customer Information and Billing
KEY BILLING AND REVENUE STEPS Item Description Owner Billing Enrollment of VGS Renewable Natural Gas
Customers Contact Center
Notice Customer Notice of VGS Renewable Natural Gas Rates
Contact CenterBilling Group
Program Assurance Verification of VGS Renewable Natural Gas program procedures
Billing and Finance
51 CUSTOMER ENROLLMENT AND BILLING PROCESS The VGS Customer Care team will enroll customers and establish the VGS Renewable Natural Gas Adder on customer accounts Customers will be able to order VGS Renewable Natural Gas via VGSrsquo website (preferred method) calling VGS contact center or through the VGS Energy Services team An RNG calculator is available on VGSrsquo website httpswwwvermontgascomrenewablenaturalgasadder-calculator that can assist customers in estimating the costs of VGS Renewable Natural Gas at the various percentage levels based on the customerrsquos gas consumption VGS will inform customers of the current RNG Adder premium when they enroll Customers have two options when enrolling in the RNG program Customers may select their desired percentage of VGS Renewable Natural Gas ( 10 25 50 or 100) or they may allocate a fixed amount of RNG attributes (ldquoS-RNGrdquo) for each month that they are enrolled in Customer Care will then set up the billing on their account VGS will send an order confirmation via email or as a separate mailing (see Exhibit 51) thanking the customer for subscribing to VGS Renewable Natural Gas and informing the customer of the estimated impact on their bill As shown on Exhibit 51 the order confirmation letter will also include the RNG program guidelines These guidelines are discussed in section 53 below
52 VGS RENEWABLE NATURAL GAS WEBSITE AND FREQUENTLY ASKED QUESTIONS The VGS Renewable Natural Gas web page contains general VGS Renewable Natural Gas information an FAQ a VGS Renewable Natural Gas calculator current VGS Renewable Natural Gas Adder and an easy-to-use sign up form
For the most recent Frequently Answered Questions visit httpwwwvermontgascomVGS Renewable Natural Gas
VGS Renewable Natural Gas Program Manual
Page 15
53 VGS RENEWABLE NATURAL GAS PROGRAM GUIDELINES VGS Renewable Natural Gas customers will fall under VGSrsquo General Terms and Conditions outlined in VGSrsquo tariffs and PUC rules (ex Disconnection practices late fees taxes) VGS tariffs can be found at httpwwwvermontgascomaccountrates
VGS will notify VGS Renewable Natural Gas customers of rate changes in advance of implementation on both their individual bills and the Companyrsquos website RNG customers have the ability to cancel or modify their RNG account profile consistent with the tariff
VGSrsquo RNG customers can subscribe to VGS Renewable Natural Gas service with no term commitment and can cancel with three daysrsquo notice The RNG Adder will apply at either the percentage or fixed quantity allocated by the customer to the usage shown on the monthly bill regardless of enrollment or termination date The RNG Adder will not be pro-rated for partial-month usage
VGS customers receiving the low-income rate discount can subscribe to VGS Renewable Natural Gas however the 20 low income discount will not apply to the RNG Adder
Customers currently on a budget program will be encouraged to request a recalculation of their budget plan to adjust for the RNG Adder costs but it is not required
54 VGS RENEWABLE NATURAL GAS PROGRAM ASSURANCE
On an annual basis VGS will conduct a program review to ensure the VGS Renewable Natural Gas program is managed consistent with this manual The VGS Renewable Natural Gas program is a new product for the US natural gas utility industry and as such no industry specific standards exist VGS is working with on a national effort to develop a ldquoGreen-Erdquo certification process for Renewable Natural Gas programs that process is targeted for completion in 2020
SECTION 5 EXHIBITS
bull Exhibit 51 ECIS Customer Confirmation
VGS Renewable Natural Gas Program Manual
Page 16
EXHIBITS
Exhibit 21 VT PUC Approval Order
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Docket No 8667
Petition of Vermont Gas Systems Inc for aRenewable Natural Gas Program andOptional Tariff
)))
Hearing atMontpelier Vermont
September 22016
order entered q leacute I aon
PRBsBNI Andrea C McHugh Hearing Officer
AppeeReNcBs Peter H Zamore Esq
Owen J McClain EsqSheehey Furlong amp Behrn PCfor Vermont Gas Systems Inc
Louise C Porter EsqTimotthorn M Duggan Esq
for the Vermont Department of Public Service
Sandra Levine Esqfor Conservation Law Foundation
Gerald R Tarrant EsqTarcant Gillies amp Richardsonfor Lincoln Renewable Natural Gas LLC
I INrnooucrroN
This case involves a petition filed by Vermont Gas Systems Inc (VGS) with the
Vermont Public Utility Commission (oCommission) I for approval of a Renewable Natural Gas
(RNG) program and optional RNG tariff service for its customers The proposed RNG
progriquestigravem establishes a framework for VGS to offer its customers the option to purchase RNG for
I Pursuant to Section 9 of Act 53 of the 2017 legislafive session the Vermont Public Service Boards name waschanged to the Vermont Public Utility Commission effective July l 2017 For claity activities of the VermontPublic Service Board that occurred before the name change will be referred to in Commission documents as
activities of the Commission unless that would be conntildersing in the specific context
Docket No 8667 Page2
program establishes a framework for VGS to offer its customers the option to purchase RNG for
as a portion of their usage RNG is produced from materials such as agricultural waste manure
municipal waste plant material or compost and is also referred to as bio-methane In this
proposal for decision I recommend that the Commission approve the proposed RNG program
and require VGS to make compliance filings as set forth herein
il PnocnrunnlHrsroRY
On October 232015 VGS figraveled a petition for approval for its RNG program including
prefiled testimony and exhibits of Thomas Murray
On January 192016I held a prehearing conference and on January 252016I issued
an Order establishing a schedule
On February 122016 VGS filed a revised RNG Plan
On March 102016I held a workshop to discuss the proposed program
On March 152016I issued an Order revising the schedule
On March 222016 Conservation Law Foundation (CLF) and Lincoln Renewable
Natural Gas LLC (Lincoln) filed motions to intervene in this proceeding
On April 12016 VGS filed supplemental testimony and exhibits
On April 82016I issued an Order granting CLFs and Lincolns intervention requests
On July 72016 the Vermont Department of Public Service (Department) CLF and
Lincoln filed testimony
On August 82016 Lincoln filed supplemental testimony
A technical hearing was hthornld on September 22016
On September 30 20|6VGS filed a draft proposal for decision supported by the
Department In addition CLF filed a brief on the same date Reply briefs were filed by VGS
and CLF on October 142016
III Posnroxs oF THE PlRrlns
VGS
VGS requests approval of its proposed RNG program for the sale of RNG to customers
on a voluntary basis VGS claims that its proposal contains reasonable provisions to align its
RNG purchases with the amounts sold to its customers appropriate mechanisms to address over-
Docket No 8667 Page 3
or under-supply of RNG and verification requirements to ensure that sales in fact consist of
RNG VGS maintains that the RNG program is an appropriate first step in stimulating RNG
producer supply and customer demand and is oamply supported by Vermonts experience of
measured implementation of electric renewable pricing programs2 VGS argues that the
program is responsive to the Commissions condition in its Order in Docket 79701o develop a
proposal to promote bio-methane project development3
Department of Public Service
Although the Department did not file a brief or reply brief it did present witness
testimony and indicated its support for the draft proposal for decision filed by VGS The
Department recommends that VGS review all proposed RNG supply arrangements with the
Department (in addition to seeking 30 VSA $ 248 approval where required) and suggests that
in the event of an undersupply of RNG VGS obtain carbon offsets in an amount equivalent to
the unused customer contributions The Department recommends that the RNG program be
reviewed at the end of three years at which time the protocol regarding the purchase of offsets
would be revisited
C ons ervation Law Foundation
CLF urges that the Commission reject the RNG program and instead adopt an RNG
content standard similar to the electric renewable portfolio standarda CLF maintains that the
expected annual sales volume is not apace that is consistent with Vermonts legislative and
planning targets for meeting energy needs with renewable energy or for reducing greenhouse gas
emissionss CLF claims that the proposed voluntary tariff falls short of being a program or
strategy that promotes the increased use of RNG resources or supply or fosters bio-methane
projects in Addison county6
2 VGS reply brief aI23 In Docket 7970the Commission considered the petition of VGS for a certificate of public good (CPG) pursuant
to 30 VSA $ 248 authorizing the construction of the Addison Natural Gas Pipeline In an Order issued on
December 232013 the Commission granted the CPG As a condition of approval the Commission required VGSin consultation with the Department to file a petition with the [Commission] proposing a program to promote bio-methane project development Docket 7970 Order of l2l23ll3 at 147
a CLF brief at 12s CLF brief at 36 CLF brief at 4
Docket No 8667 Page 4
Lincoln
Lincoln maintains that itis essential to promote development of agricultural-based bio-
methane supply in VermontT Lincoln states that the Commission is not in a position to
adequately address VGSs proposed RNG program until negotiations for sale of itsoutput
involving VGS and Middlebury College are completes
IV Punrrc CounnnNrs
The Commission received three letters of support for VGSs RNG program On March 10
2016 the Chittenden County Transportation Authority filed comments indicating that it intends to
explore the possibility of utilizing RNG to cover a portion of the energy needs for its fleet of 70
buses On March 182016 Champlain College filed comments noting that it is interested in using
RNG for a portion of its energy needs that are currently met with conventional natural gas On
March 282016 Casella Waste Systems made a filing with the Commission stating its intention
to explore using RNG to meet some of its energy needs for its fleet of vehicles
V trrutrxcs
Based on the evidence of record I hereby report the following findings and
recommendations to the Commission in accordance with 30 VSA $ 8(c)
1 RNG is produced from raw materials such as agricultural waste manure municipal
waste plant material or food waste Decomposition or digestion of these materials produces
raw methane which is then cleaned or upgraded to bio-methane in order to meet the receiving
pipelines gas quality specifications prior to injection into an existing pipeline system Thomas
Murray VGS (Murray) supp pf at3
2 VGS is exploring options to purchase RNG supply from Lincoln and from landfill gas
projects located outside Vermont that would be received through the Trans-CanadaPipeline
(TCPL) system Murray supp pf at 8-9
7 Daniel Smith Lincoln Renewable Natural Gas LLC (Smith) supp pf at L8 On August 152016 Lincoln filed a motion to continue this proceeding for a period of not less than 60 days statingthat the continuance would allow [it] VGS and Middlebury College to complete discussions as to VGSsinvolvement in the RNG supply in Vermont and allow the record in this case to be properly developed VGS and
the Department opposed the request for continuance On August 222016I issued an Order denying Lincolnsrequest and determined that Lincoln did not demonstrate good cause to postpone the technical hearing
Docket No 8667 Page 5
3 Under the program retail customers would voluntarily purchase RNG in amounts equal to
l0oo25yo50o or 100 of their total monthly requirements at specified prices per Ccf as an
adder to other retail charges Customers could terminate RNG purchases upon providing three
days of advance notice to VGS Murray supp pf at l-2 exhs Pet-VGS-l and Pet-VGS-3
4 Intemrptible customers will have the opportunity to participate in the RNG program
through VGSs existing Lock Price Program which currently provides for up to a two-year
commitment Murray supp pf at 5
5 VGS will develop and file for Commission approval a separate tariff for use of RNG as a
transportation fuel This tariff will allow VGS to take advantage of the sale of the associated
Renewable Identification Numbers (ooRINs) When RNG is used as a transportation fuel it is
eligible to receive RINs under the Federal Renewable Fuel Standard RINs can be resold on the
wholesale market and would be used to offset the price of RNG to transportation customers
receiving service under the tariff Joan E White
Department (White) pf at7tr912116 at 62-
63 (White) exh Pet-VGS-5 Response 4
6 VGS will also initiate a review of the RNG program by the Commission Department and
others after three years White pf at9tr912116 (Munay) at24
7 The adder price for each Ccf of RNG will be equal to the average RNG commodity cost to
VGS less the average commodity cost of natural gas VGS will adjust the adder price per Ccf on
a quarterly basis as part of its Purchased Gas Adjustment (PGA) filing Murray supp pf at 4
8 The proposed RNG program will include a tariff that is very similar in concept to the
Green Mountain Power Corporation (GMP) Cow Power tariff However Cow Power is based
on a fixed rate per kWh no matter what the cost of the renewable energy Murray supp pf at llVhite pf at 4
9 VGSs RNG tariff will be calculated quarterly based on actual RNG and natural gas costs
and will provide accurate price signals as to the price differential between natural gas and RNG
White pf at 4
10 Based on a survey conducted by VGS 85 of its customers are willingto pay l0oo
more for a renewable product VGS projects that customers could potentially consume over
500000 Mcf of RNG over the next five years Murray supp pf at 5
DocketNo8667 Page 6
11 VGS will use a true-up period of up to 12 months in order to balance the difference
between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply)
Murray supp pf at 9
12 There is a risk that due to the voluntary nature of the RNG program supply and demand
will be mismatched White pf at41 David G Hill CLF (Hi11) pf at 9
13 If the available RNG supply during the previous 12 months is less than the amount
purchased by VGS customers the RNG program provides that VGS may use funds collected to
purchase carbon offsets from an established carbon registry such as the American Carbon
Registry VGS will purchase an amount of carbon offsets equal to the amount of the revenue
resulting from the undersupply in order to result in a revenue-neutral program At the time of the
three-year implementation review VGS will propose an environmental accounting protocol in
order to quantify the environmental benefits of the program and to evaluate the financial risk of
purchasing carbon offsets in an amount equivalent to the environmental benefits of unsold RNG
due to undersupply Murray supp pf at 6 l0 exh Pet-VGS-s Responses 1
14 The development and standardization of RNG attributes is in its infancy as compared to
the existing markets for the environmental attributes used in the electric industry (renewable
energy credits or (RECs)) Murray supp pf at 12
15 If carbon offsets are not available VGS will contribute the RNG program revenues to the
Clean Energy Development Fund or issue prorated credits to affected customers Exh Pet-
VGS-S Responses 3
16 If RNG supply exceeds customer demand VGS would seek to sell the excess RNG at
wholesale Murray supp pf at 10
17 VGS will provide proposed RNG supply contracts to the Department prior to execution
It will also consult with the Department before making decisions that could dramatically impact
price or the integrity of the RNG program Exh Pet-VGS-S Responses 2 White pf at 5
18 The estimated cost of RNG supply ranges from $l2lMcf to $25lMcf The cost of natural
gas is less than $3Mcf Murray supp pf at 8-9
19 VGS will implement an RNG Quality Assurance Plan establishing a testing and
monitoring process to ensure that RNG injected (via in-state RNG producers) into the VGS
system is pipeline quality and meets the specifications of the TCPL transportation tariff for bio-
methane gas quality Murray supp pf at 14 exh Pet-VGS-4
Docket No 8667 PageT
20 VGS will file an annual report on the RNG program with the Commission and the
Department containing the following information
1 Number of subscribers by customer class
2 Sales volume by customer class
3 Sales revenues
4 Any sales or purchases of carbon offsets
5 Supplyconsumption matching portfolio including any shortfall or excess
supply of RNG
6 True-up schedule for any imbalances
7 RNG supply verification
8 Quantification of the impact of any excess RNG costs flowing through the
PGA if VGS remains under altemative regulation
9 Accounting of any carbon ofszligets or other incentives
10 Status of any contracts for RNG including plans to acquire new supply
contracts
I 1 Revenue from Renewable Identification Number (RlN) sales and impact
on the transport tariff as well as any projections about the RIN market that are
available to VGS and
12 Complete reports and environmental verifications by an independent
verifier
Murray supp pf at 11 exh Pet-VGS-3 White pf at 8-9 tr912116 at23-24 (Munay)
21 Except as described below concerning RlN-eligible RNG VGS will annually verify that
the RNG was produced by a renewable gas production facility that VGS is the exclusive oryner
of any environmental attributes associated with RNG it sells under the program that it acquired
the RNG from its transferor and sold itatretail and that neither the RNG nor any renewable
attribute associated with the RNG has been sold twice at any point between RNG production and
sale to VGS whether by sales into carbon offset markets or otherwise This verification will be
based on certifications by VGSs suppliers and by an independent third party retained by VGS
for this purpose Exh Pet-VGS-3 exh Pet-VGS-s Response 5 White pf at 8
Docket No 8667 Page I
22 For RlN-eligible RNG used as vehicle fuel verification will be addressed in detail in the
future as part of VGSs proposed Renewable Vehicle Fuel Tariff Exh Pet VGS-5 Response 4
rr912116 at 65 (White)
23 There are few natural gas utilities currently offering RNG at retail VGS modeled its
RNG program after the program designed by FortisBC a local distribution company in British
Columbia Canada VGS also had discussions with SoCalGas in Southern California Both of
these companies are leaders in developing RNG offerings and fostering RNG supply resources
Murray supp pf at 7
24 VGS will file with the Commission and Department a marketing plan containing the
following elements
l An evaluation element that includes concrete metrics such as sales
volume targets and enrollment targets
2 Identification of target market segment(s)
3 Development of materials and language for customer-marketing efforts
that explain the RNG program in plain language easily understandable to the
average customer
4 An online bill calculator
5 An implementation plan that identifies specific activities and a timetable
and
6 Abudget
Exh Pet-VGS-5 White pf at 10 Tr912116 at22-23 (Munay)
25 VGS and the Department represent that the RNG progriquestun is responsive to the
Commissions condition in its Order in Docket 7970 rcquiring VGS to develop a proposal to
promote bio-methane project development Murray supp pf al 13-14tr912116 at 63 (Vhite)
26 VGS asserts that the RNG program represents appropriate progress toward the Vermont
Comprehensive Energy Plan (CEP) goal to meet90o of Vermonts energy needs through
renewable sources by 2050 Murray supp pf at 12-13
VI DlscussroN iexclxu Coxclustox
Vith this proposal for decision I recommend that the Commission approve the RNG
program in accordance with the findings described above and based upon the evidence in the
Docket No 8667 Page 9
record In Docket 7970 the Commission required VGS in consultation with the Department to
file a petition with the [Commission] proposing a program to promote bio-methane project
development It is reasonable to expectthat aprogram meant to stimulate development of a
specific energy source would look to stimulate demand for that resource by offering an
opportunity for customers to purchase supply from RNG producers
The RNG program proposed by VGS and supported by the Department seeks to offer
ratepayers the option to purchase renewable energy as part of their individual energy-use
portfolio Furthermore the program includes a provision requiring that VGS develop a detailed
marketing plan that will serve to educate customers on the availability costs and benefits of
such resources which could lead to increased demand for the product
VGS intends to take advantage of the existing market for RINs associated with RNG used
as transportation fuel by proposing a Renewable Vehicle Fuel Tariff As described above in the
Public Comments section the Chittenden County Transportation Authority and Casella Vaste
Systems are interested in exploring the use of RNG to fuel their vehicle fleets which
demonstrates that there is existing customer demand for this product
Unlike the markets relating to RNG supply used for transportation fuel or renewable
electric generation and the associated trading and verification of RECs the RNG market is in its
infancy At this time it would not be appropriate to expect VGS to implement an RNG program
utilizing an RNG content standard similar to the electric renewable portfolio standard as
recommended by CLF because the equivalent standards and processes do not exist However
the RNG program represents a meaningful first step in encouraging customer interest in
purchasing RNG at retail thereby stimulating supply of RNG into the market and is consistent
with the Commissions condition requiring VGS to develop a proposal to promote bio-methane
project development
VGSs RNG program includes appropriate mechanisms for periodic reporting and
verification of program activities as well as an opportunity to comprehensively review the
program after three years of implementation Furthermore determinations regarding recovery of
costs associated with the RNG program will be made in the context of future proceedings
regarding VGSs rates The RNG program should evolve with the RNG markets in the near-term
and over the course of the next several years which will allow progress towards achievement of
Vermonts 2050 CEP renewable energy goals
Docket No 8667 Page 10
Because not all parties to this proceeding have waived their rights under 3 VSA $ 811
to file written comments or present oral argument with respect to this proposal for decision I am
circulating the proposal for decision to the parties for their review and comment
Dated at Montpelier Vermont this rrtl day of QrIltt 2017a0AndreaHearing Officer
Docket No 8667 Page 11
VII Corumrssron Drscussrox
On August 22017 the Department filed a letter stating that it supports the issuance of an
Order by the Commission that adopts the proposal for decision in full
Also on August 22017 VGS filed comments on the proposal for decision requesting
that Finding 16 be modified as follows (additional text in italics) If RNG supply exceeds
customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary
flow any remaining RNG attribute inventory amounts through the PGA or through a rate case ifVGS was under traditional cost of service regulation (subject to [Commission] approval)
VGS asserts that [a]bsent such specific language it is possible that VGS would be unable [to]
defer such costs for future recovery and that removal of that component introduces uncertainty
about the potential procedural mechanisms available for cost recovery in the last resort VGS
states that with the Commissions consideraacutetion of this request it does not request oral argument
No other comments were filed on the proposal for decision
The Hearing Officer recommended that the Commission find that determinations
regarding recovery of costs associated with the RNG program will be made in the context of
future proceedings regarding VGSs rates We agree with this recommendation VGS should
have an opportunity to request rate recovery for excess RNG supply However this proceeding
is not the proper time for such a determination Accordingly Finding 16 is hereby modified as
follows If RNG supply exceeds customer demand VGS would first seek to sell the excess
RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any
remaining RNG attribute inventory amounts through the PGA or through arate case as part of
its cost of service if the PGA is no longer in effect atthat timeWe emphasize the importance of the successful implementation of the RNG program in
helping to meet the States renewable energy policy objectives The annual report on the
implementation of the RNG program will serve as a valuable tool to assess that progress In this
proceeding CLF has raised policy considerations that should serve to guide these future reviews
of the RNG program For example CLF has raised concerns regarding the effectiveness of the
voluntary nature of the program In assessing its program we expect VGS to revisit and report
on the feasibility of incorporating RNG as a portion of its supply mix in the future It is
important for VGSs RNG program to be sustainable and continue to evolve ensuring significant
DocketNo8667 Page 12
contributions toward meeting the States renewable energy goals and reducing the consumption
of fossil fuel Accordingly it is critical that the annual report and the three-year comprehensive
review address not only the effectiveness of the program but also its affordability and the
feasibility of other policy options to advance the production and use of RNG in Vermont
Docket No 8667 Page 13
VIII Onunn
Ir rs Hennsy oRDERED ADJUDGED AND DECRnnn by the Public Utility Commission of the
State of Vermont that
1 The findings conclusions and recommendations of the Hearing Officer are
adopted and the Renewable Natural Gas (RNG) program to be implemented by Vermont Gas
SystemsInc (VGS) is approved
2 When VGS has procured RNG supply in amounts reasonably estimated to be
sufficient for estimated customer demand it shall file a formal tariff including proposed rates for
sale of RNG The tariff shall be reviewedpursuantto the procedures of 30 VSA ccedilccedil225226
and227 and sales under the program shall begin after Commission approval of the tariff
3 VGS shall develop and file for Commission approval a separate Renewable
Vehicle Fuel Tariff to serve customers using RNG as a transportation fuel
4 VGS shall file a marketing plan for the RNG program consistent with the
requirements set forth above within one month of the issuance of this Order
5 VGS shall file an annual report consistent with the requirements set forth above
upon implementation of the RNG program
6 VGS shall file a comprehensive review of the performance of the program with
the Commission and the Department after three years of implementation This review will
include an environmental accounting protocol to quantiff the environmental benefits of the
progrfim
7 VGS shall review proposed RNG supply arrangements with the Department
Docket No 8667
Orprcp oF THE Crnm
Dated at Montpelier Vermont this day of+hb
Z Roisman
Cheney
Page 14
20t7
Puslrc Urrlnv
CovtriquestIssIoN
OP VERMONT
(
)))
)))
Fired otildeeglcL ( JotTAttest c
of the Commission
NorIcE To READERS This decision is subject to revision oftechnical errors Reqders are requested tonotify the Clerk of the Commission (by e-mail telephone or inwriting) or any appqrent errors in order that anynecessary corrections may be made (E-mail address pucclerkvermontgov)
Appeal of this decision to the Supreme Court of Vermont must befiledwith the Clerk of the Comnissionwithin thirty days Appeal will not stay the efect of thszlig Order absentfurther order by this Commission orappropriate actiacuteon by the Supreme Court of Vermont Motions for reconsideration or stay if any must be filed withthe Clerk of the Commissionwithin ten days of the date of this deciacutesion and Order
Exhibit 22 VGS RNG Tariff Rate Filing
Exhibit 23 PUC Approval of VGS RNG Rates
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Case No l8-03 13-TF
Petition of Vermont Gas Systems Inc fotapproval of a new tariff implementing theRenewable Natural Gas program
Order entered
OnonRAppnovINc Tiquestrurn
On January 302018 Vermont Gas Systems Inc (VGS) filed a petition for approval of
a new tariff implementing the Renewable Natural Gas (RNG) program approved by the
Vermont Public Utility Commission (Commission) in Docket No 8667 In that Docket the
Commission required VGS to file a tariff implementing the RNG program when it has procured
RNG supply in amounts reasonably estimated to be sufficient to meet customer demandl In
this Order the Commission approves the new tariff marketed under the name EcoGas with an
effective date of bills rendered on and after March 15 2018
VGS states that it has executed an RNG supply contract with deliveries scheduled for
2018 and that two additional contracts are being negotiated for deliveries beginningin2019
VGS is proposing to set its initial RNG adder at$ll749lCcf which represents a five-year
blended rate based on the three RNG supply arrangements VGS intends to account for the
difference between the cost of RNG supply and the RNG adder as a regulatory asset within gas
costs As additional lower-cost supply is added to the portfolio the regulatory asset balance will
be recovered from EcoGas participants with the goal of fully reducing the balance by the end of
five years Accordingly VGS states that the RNG program will be rate-neutral to VGS and its
non-RNG customers
On February 272018 the Vermont Department of Public Service (Department) filed a
letter recommending that the Commission approve the tariff without a hearing or further
investigation The Department states that the tariff filing and proposed accounting treatment
comply with Vermont rate-setting practices policies precedents and statutes
lslaotx
I Docket 8667 Order of 96117 at 13
Page2Case No 18-0313-TF
Based on the foregoing we hereby approve VGSs proposed RNG tariff to be effective
on a bills-rendered basis beginning on March 15 2018 Recovery of any regulatory asset
balance at the end of the fifth year would need to be approved by the Commission in a future
proceeding
So Omnnnn
Case No l8-0313-TF
8r- day of lruacuterLiquestiquest
Page 3
Dated at Montpelier Vermont this 2018
Roisman PueIrc Urlrrv
CoiriexcllriquestlssloN
Cheney
OF VERMONT
Sarah Hofmann
Onncp oF THE CLBRr
Filed huacuteveuroAacute- icirc dollAttest I
Clerk of the Commission
Notice to Readers This decision is subiect to revision oftechnical errors Readers are requested to notify
the Clerk of the Commission (by e-mail telephone or in writing) or qny qpparent errors in order that any
necessary corrections may be made (E-mail address pucclerkvermontgov)Appeal of this decisiacuteon to the Supreme Court of Yermont must be filed with the Clerk of the Commission
within 30 days Appeal will not stay the efect of this Order oslashbsent further order by this Commission or appropriate
action by the Supreme Court of Vermont Motionsthornr reconsideration or stay if any must befiledwith the Clerk ofthe Commissionwithin 28 doslashys of the date of this decision and Order
)))
))))
PUC Case No 18-0313-TF
Eileen SimollardesLauren HammerVermont Gas
85 Swift StreetSouth Burlington VT 05403
June E Tiemey CommissionerVermont Department of Public Service1 12 State StreetMontpelier VT 05620 -2601
Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
Exhibit 31 Accounting Procedures
Exhibit 31 Accounting for VGS Renewable Natural Gas (Ver-9202019)
1 Purchase of RNG Supply
RNG supply purchases are separated into the cost of the commodity and the cost of the renewable attribute The commodity portion is expensed to gas costs in the delivery month while the renewable attribute is booked to an inventory account referenced herein as the ldquoRenewable Inventory Accountrdquo Like VGSrsquo existing storage inventory accounting the Renewable Inventory Account will track both the dollar value of the renewable attribute and the renewable attribute Mcfs Renewable attribute dollar values are record to ldquo16410050 Inventory RNG Storagerdquo while Mcf values are recorded in the gas cost model maintained by accounting In the month VGS purchases the renewable attribute it is accrued in a book model and goes in to 16410150 Inventory RNG Accrued then moves to the 16410050 in a final model the following month for final
RNG may be purchased at different locations and using varying pricing structures While the accounting for RNG does not vary with the purchase location or price the determination of the value of the renewable attribute will vary depending on whether or not the supply pricing expressly values the renewable attribute as an adder or it is embedded in a fixed price Examples of each are shown below The accounting of RNG supply is intended to separate the cost of the renewable attribute from the cost of the commodity The examples below are not all inclusive of what may occur but intended to show the accounting procedures used to separate the renewable attribute from the commodity and specify ownership of each aspect
In all cases the commodity cost portion - which is the total cost of the RNG purchased excluding the renewable attribute - will be expensed in the delivery month as a cost of gas
Example 1 ndash The fixed price of RNG includes both the commodity and the renewable attribute
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The total cost of the RNG supply purchased during the month is calculated by Accounting within the gas cost model as follows
MMBtu Purchased (as validated in step 2) $ MMBtu purchase price (as provided in a supply confirmation provided by gas supply)
4 For purposes of booking the renewable attribute to inventory it is necessary to calculate the RNG cost per Mcf The RNG cost Mcf is calculated using the total cost of RNG supply as calculated in step 3 divided by the Mcf in step 1
5 The renewable attribute price per Mcf is calculated as follows
RNG cost per Mcf as determined in step 4 ndashplus ldquoother componentsrdquo as calculated pursuant to Attachment A ndash minus ldquoAverage Commodity Costrdquo as calculated pursuant to Attachment A The ldquoother componentsrdquo added to the RNG cost per Mcf will vary depending on where the RNG supply was delivered but in each case will be identified in the calculation shown on Attachment A
6 The renewable attribute price per Mcf the total RNG Mcf delivered is recorded in the Inventory RNG Storage account
7 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
Example 2 - RNG purchased at a renewable attribute price plus a daily or monthly index
Where the pricing of RNG specifically separates the commodity from the renewable attribute the renewable attribute price will be what is recorded in the Renewable Inventory Account
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The renewable attribute price per Mcf the total RNG Mcf delivered as determined in step 1 is recorded in the Renewable Inventory Account
4 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
2 Recalculating the RNG Adder
The RNG Adder paid by customers will be recalculated anytime the Natural Gas charge portion of rates changes The Manager of Gas SupplyGas control is responsible for recalculating the RNG Adder The calculation will be verified and approved by the Vice President ndash Regulatory Affairs The determination of the RNG Adder will be pursuant to the methodology shown in Attachment A The Regulatory Department will prepare the amended RNG Adder tariff for filing with the PUC Upon PUC approval of the RNG Adder the Regulatory Department will prepare a memorandum advising Accounting and Gas Supply of the new RNG Adder as approved
3 Customer purchases VGS Renewable Natural Gas
The RNG Adder at the percent selected by the customer will be applied to the entire monthrsquos usage on the customersrsquo next bill For customers utilizing the S-RNG adder the entire volume elected with be on the customersrsquo next bill The S-RNG Adder nor the RNG Adder and percentage selected will not be prorated based on enrollment or termination date
Customers may terminate or modify their RNG selection upon 3 dayrsquos notice to VGS The termination or modification will be effective on the customerrsquos next monthly bill
The customerrsquos usage for the month will be multiplied by the percentage and the approved RNG Adder For customers utilizing the S-RNG adder the volume elected will be multiplied by the approved RNG adder This amount will then be recorded to SAP accounts 4010015-40010021 depending on which rate class the customer is in The RNG Adder is the same regardless of which rate class a customer is in At the end of the month a report is run by billing from the customer information system that shows total usage and which percentage of RNG the customer has signed up for to calculate the number of MCFrsquos of renewable attribute sold during the billing period Billing also provides a report of the volumes sold through the S-RNG Tarriff The Inventory RNG Storage account maintained within the gas cost model by Accounting is reduced by these Mcf The MCFrsquos are then multiplied by the RNG Adder in effect for the billing month and an entry is made to remove that dollar amount from the Inventory RNG Storage account and into the monthly cost of gas The intent of this transaction is to ensure that cost of the renewable attribute is reflected in the cost of gas in the month it is purchased by the customer This results in a matching of the renewable attribute revenue and expense
The RNG Adder revenue and renewable attributes removed from storage will be included in the gas cost deferral calculation However because there is a matching of the renewable attribute revenue and expense the impact on the deferral calculation will be zero
The calculation of unbilled revenues will exclude RNG as a customer can cancel their participation prior to their next bill
In the event Vermont Gas issues a credit to a customer related to the RNG program the value of the renewable attribute credited and the associated Mcf will not be applied to the Renewable Inventory Account
4 Controls
A spreadsheet is maintained by accounting that shows the MCFrsquos and dollar values of the Renewable Inventory Account This is reconciled monthly by the accounting team and will be reviewed by the Manager Gas SupplyGas Control
Accounting will validate that the amount removed from the Renewable Inventory Account matches the RNG Adder revenue Any discrepancies will be reviewed and corrected
A report will be run for each bill cycle that shows any changes to the RNG percentages selected this will include customers opting to withdraw from the RNG program The customer care team will validate any changes against customer confirmation paperwork
5 Renewable Inventory Account Reconciliation and Forecast
The PUC Order approving the RNG program contains provisions describing how RNG supply and demand imbalances will be addressed These provisions and how VGS will track and comply with them are as discussed in this section The PUC Order approving the RNG Program provides that if the available RNG supply during the previous 12 months is less than the amount purchased by customers VGS may use the funds collected to purchase carbon offsets (Finding 13) If carbon offset are not available VGS will contribute the RNG program revenues to the Clean Energy Development Fund or issue prorated credits to affected customers (Finding 15) The Order also provides that in the event RNG supply exceeds customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any remaining RNG attribute inventory amounts through the PGA or through a rate case as part of its cost of service if the s PGA is no longer in effect at that time (Finding 16 as modified) Finding 11 provides that VGS will use a ldquotrue-uprdquo period of up to 12 months in order to balance the difference between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply) Taken together these provisions require VGS to evaluate the imbalance after 12-months and then true-up the imbalance over the next twelve months To provide a forecast of the supplydemand imbalance quarterly the billing area will run a report showing the expected RNG volumes based on current customer commitments by month for the next 12-months Current customers commitments will be calculated based on the previous 12 months of usage multiplied by the RNG percentage currently signed up for The marketing department will provide their forecast of new RNG sales for the next 12-months Both will be provided to the Manager Gas SupplyGas Control The Manager Gas SupplyGas Control will compare the forecasted RNG sales known and expected to RNG supply commitments and provide a 24-month forecast of the supplydemand balance The supplydemand balance will be reviewed at the risk management meeting The strategy for addressing the imbalance consistent with the PUC order will be determined by the risk management committee
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
VGS Renewable Natural Gas Program Manual
Page 3
The voluntary VGS Renewable Natural Gas Adder is available to all firm rate classes (R G1 G2 G3 and G4) in the percentages shown below and will apply to monthly CCF usage
Available RNG Adder Percentages (applied to monthly Ccf usage)
10
25
50
100
In addition rather than electing a percentage any customer10 may elect to purchase a fixed amount of the environmental attributes associated with RNG which falls under the approved ldquoS-RNGrdquo Tariff The RNG Adder (and S-RNG Adder) will appear as a separate line item charge on the customerrsquos bill in addition to the existing rate elements of a Daily Access Charge a Natural Gas Charge and a Distribution Charge The current RNG Adder can be found at httpswwwvermontgascomrenewablenaturalgasadder-calculator The RNG Adder will change whenever the Public Utility Commission (ldquoPUCrdquo) authorizes a change in the Natural Gas Charge portion of the tariff Currently the RNG Adder is adjusted quarterly alongside the Natural Gas Charge change The effect of these changes to the RNG Adder is that the cost of the RNG Adder will vary with the wholesale cost of conventional gas and may further vary in the future as new RNG supply contracts come into our portfolio
VGS ldquointerruptible servicerdquo customers may participate in the RNG Program through either the RNG adder or the S-RNG tariff which will permit these customers to designate how much of their annual natural gas purchases they wish to meet via the RNG Program As noted above the RNG Adder will change whenever the PUC authorizes a change in the Natural Gas Charge portion of the tariff
13 WHERE IS VGS RENEWABLE NATURAL GAS PRODUCED VGS Renewable Natural Gas can be sourced from either in-state or out-of-state producers that utilize anaerobic digestion of organic matter such as landfills waste treatment plants industrial sites and farm digesters that are connected to the natural gas pipeline system In-state RNG supply (planned for 2020) would be injected directly into Vermont Gasrsquo pipeline system after ensuring the RNG meets VGSrsquo natural gas quality standards Although out-of-state VGS Renewable Natural Gas resources may not physically flow to
10 A customer is defined as a consumer of natural gas in Vermont regardless of whether or not the customer has an account for metered natural gas service with the Company
VGS Renewable Natural Gas Program Manual
Page 4
the VGS system the environmental attributes will be dedicated to Vermont Gas customers
Much like renewable electricity that is comingled in the electric grid VGS Renewable Natural Gas is comingled with conventional natural gas supply in the pipeline system VGS Renewable Natural Gas customers are purchasing the environmental attributes of RNG There is no claim by VGS that a participating customer is directly burning an RNG or biomethane molecule
14 WHAT ARE THE ENVIRONMENT BENEFITS An average household enrolling in the VGS Renewable Natural Gas program at the 100 level will effectively nullify the corresponding carbon footprint associated with the customerrsquos direct use of natural gas For a typical VGS residential customer using 90 Mcf of conventional natural gas each year this equates to 49 metric tons11 of avoided carbon dioxide emissions each year
VGS is not making representations or claims for any additional environmental benefits of anaerobic digesters beyond the carbon reduction associated with replacing conventional natural gas with a renewable source of energy production Specifically we make no environmental claims related to the avoidance of uncontrolled fugitive methane emissions that would have gone into the atmosphere from the primary biogas feedstock (eg landfill gas manure wastewater) in the absence of anaerobic digestion and capture of the methane as RNG
11 (httpswwwepagovenergygreenhouse-gas-equivalencies-calculator)
VGS Renewable Natural Gas Program Manual
Page 5
Section 2 Regulation
KEY REGULATORY STEPS
Item Description Filing Schedule VGS RNG Adder Tariff Update
Updates required to reflect gas costs changes
Quarterly
Annual RNG Report Full Programmatic Report Annually RNG Supply Contracts Filed for VT Public Utility
Commission (PUC) approval or information
As required
Triennial Assessment Program Review with Dept of Public Service
Every three years
21 REGULATORY SUMMARY
In October 2015 Vermont Gas filed a petition with the PUC for authority to establish a Renewable Natural Gas offering The PUC initiated Docket No 8667 to evaluate VGSrsquo proposal VGS modified the program based on input from parties to the proceeding12 and resubmitted testimony in April of 2016 followed by technical hearings in September of 2016 On September 6 2017 the PUC issued the final order approving the voluntary RNG program (see Exhibit 21) The Order provided authority for VGS to sell RNG under the proposed ldquoadderrdquo structure The Order also provided the accounting guidance to inventory the renewable attributes of RNG and the ability to recoup unsold RNG costs if need be with subsequent PUC approval The order also authorizes VGS to purchase carbon offsets in the event the supply of RNG is insufficient to meet subscriber demand
The table below lists the requirements contained in the Order and VGSrsquo compliance to-date
Order Requirement Status and Compliance Date
1 When VGS has procured RNG supplyhellipit shall filea formal tariff including proposed rates for the saleof RNG
Completed - January 30 2018 See also section 22 below
2 VGS shall develop and file for Commissionapproval a separate Renewable Vehicle Fuel Tariffto serve customers using RNG as a transportationfuel
Pending ndash Due date TBD
12 Parties to Docket No were the Department of Public Service Conservation Law Foundation and Lincoln Renewable Natural Gas LLC
VGS Renewable Natural Gas Program Manual
Page 6
Order Requirement Status and Compliance Date
3 VGS shall file a marketing plan for the RNGprogram consistent with the requirements setforth in the order within one month of the issuanceof this Oder
Completed - October 6 2017
4 VGS shall file an annual report consistent withthe requirements of the Order uponimplementation of the RNG program
Initial filing completed ndash filed June 2018 and 2019
5 VGS shall file a comprehensive review of theperformance of the program with the Commissionand Department after 3 years of implementationThis review will include an environmentalaccounting protocol to quantify the environmentalbenefits of the program
Pending ndash Due by March 15 2021
6 VGS shall review proposed RNG supplyarrangements with the Department
Completed - Initial review 11618 Review of subsequent contract also completed and approved by PUC
On October 4 2018 the Company filed with the PUC for a new RNG tariff offering ldquoS-RNGrdquo Adder which has the same pricing as the RNG Adder The new offering allows customers to purchase a fixed amount of RNG per month that would be unbundled from the customerrsquos metered gas consumption and offers customers who are consumers of natural gas but do not have an account for metered gas service with the Company the ability to purchase RNG attributes The PUC approved the S-RNG Adder to take effect with bills rendered on or after December 1 2018 (see Exhibit 24)
22 VGS RENEWABLE NATURAL GAS ADDER TARIFF The PUC order provides ldquoWhen VGS has procured RNG supplyhellipit shall file a formal tariff including proposed ratesrdquo On January 30 2018 after contracting for the initial RNG supply VGS filed the VGS Renewable Natural Gas Adder Tariff (see Exhibit 22) On March 9 2018 the PUC approved the initial RNG Adder for effect with bills rendered on and after March 15 2018 (see Exhibit 23)
In simple terms the RNG Adder reflects the difference between the cost of RNG and the cost of conventional gas This is calculated by subtracting the average commodity cost for conventional natural gas from the average commodity cost for RNG as indicated in the following example
VGS Renewable Natural Gas Program Manual
Page 7
VGS Renewable Natural Gas Adder Calculation Average RNG Commodity Cost
Minus Average Natural Gas Charge Equals VGS Renewable Natural Gas Adder
Exhibit 22 provides the detailed calculations
This formula identifies the current premium to be paid per CCF of RNG This premium also represents the value of the ldquoVGS Renewable Natural Gas Attributerdquo that VGS will withdraw from the VGS Renewable Natural Gas Attribute Inventory described below
To full reflect the cost of the initial RNG supply with future RNG supply contracts the initial RNG Adder was based on a blended rate of the cost of the first and the expected costs of future RNG purchases over the next 5 years The PUC has authorized this blended approach
The RNG Adder will change whenever the PUC authorizes a change in the Natural Gas Charge portion of the tariff Currently this change occurs quarterly
23 ANNUAL RNG REPORT An Annual RNG Report will be filed with PUC and Vermont Department of Public Service (ldquoDepartmentrdquo) each year in June The first annual report was filed in June 2018 In accordance with the PUC final order approving the Program the annual report will include the following information
1 Number of subscribers by class2 Sales volume by customer class3 Sales Revenues4 Any sales or purchases of carbon offsets5 Supply Consumption matching portfolio including any shortfall or excess supply of
RNG6 True-up schedule for any imbalances7 RNG supply verification8 Quantification of the impact of any excess RNG costs flowing through the PGA if
VGS remains under alternative regulation9 Accounting of any carbon offsets or other incentives10 Status of any contracts for RNG including plans to acquire new supply contracts11 Revenue from Renewable Identification Number (ldquoRINrdquo) sales and impact on the
transport (transportation) tariff as well as any projections about the RIN marketthat are available to VGS and
12 Complete reports and environmental verifications by an independent verifier
The annual report will also address the effectiveness of the program and its affordability
VGS Renewable Natural Gas Program Manual
Page 8
24 THREE-YEAR IMPLEMENTATION REVIEW In accordance with the PUC Order in March 2021 (the third year of the Program) VGS will file a comprehensive review of the performance of the Program The review will include an environmental accounting protocol to quantify the environmental benefits of the program The three-year comprehensive program review will also address the effectiveness of the program its affordability and the feasibility of other policy options to advance the production and use of RNG in Vermont
SECTION 2 EXHIBITS
bull Exhibit 21 VT PUC Approval Orderbull Exhibit 22 VGS RNG Tariff Rate Filingbull Exhibit 23 PUC Approval of VGS RNG Ratesbull Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
VGS Renewable Natural Gas Program Manual
Page 9
Section 3 Supply Procurement and Accounting
KEY VGS RENEWABLE NATURAL GAS SUPPLY AND ACCOUNTING STEPS
Item Description Schedule Owner RNG Supply Contracts
Procuring RNG Supply As needed Gas Supply
RNG Supply True-Up
Balancing RNG supply sales and retiring attributes
Monthly Finance
RNG Supply Verification
Verifying ldquorenewabilityrdquo of RNG Supply
Annually Gas SupplyThird- Party
31 VGS RENEWABLE NATURAL GAS SUPPLY OVERVIEW
VGS intends to contract with a variety of RNG supply sources to meet its customer demand in the RNG Program RNG supply is currently available from a limited number of landfill and digester projects in Canada or US states other than Vermont In Vermont at least one local supply project is currently under development
Today there is no central ldquomarketplacerdquo for RNG suppliers and buyers to trade RNG supply contracts RNG buyers such as VGS transact with individual producersprojects or work through RNG brokers to acquire RNG supply or the environmental attributes associated with RNG in bilateral transactions VGSrsquo initial RNG supply contract in 2018 was with BP Canada Energy Group ULC and sourced from the EBI Inc13 biogas production facility located in Ste Genevieve Quebec In 2019 VGSrsquo purchased RNG supply from a waste water treatment facility in Dubuque Iowa
In 2020 VGS plans to begin receiving RNG supply from a Vermont farm digester and a Canadian digester facility The Vermont farm digester located in Salisbury Vermont is slated for completion in late 2020 producing 180000 MMbtursquos per year The Canadian digester project is located in London Ontario VGS has agreed to purchased 100 of the supply from this facility up to 120000 MMbtursquosyear for 15 years VGS sought and received PUC approval for this Ontario supply in 2018 and received approval for an amendment in 2019 To meet anticipated demand for RNG until these two resources come on line the Company purchased short-term supply of RNG from the Iowa facility in 2019 We anticipate that these supply sources will satisfy the VGS Renewable Natural Gas Program supply needs for the first few years of the Program If we are unsuccessful
13 EBIrsquos Facility was recognized in 2016 (httpswwwdesjardinscomcavideossinglejspdocName=vid-ebi-e)
VGS Renewable Natural Gas Program Manual
Page 10
in procuring supply from these sources or if demand exceeds these planned supplies VGS will seek additional RNG supply in the marketplace
32 VGS RENEWABLE NATURAL GAS SUPPLY CONTRACTS VGS will utilize standard industry or comparable contract vehicles to procure RNG supply with site-specific terms and conditions Given the unique nature of the in-state RNG project the gas supply contract is a 3 way agreement between the producer VGS and an end user Accordingly the form of the contract does not resemble industry standard supply agreements but contains all appropriate business terms The first two contracts signed by VGS utilize a gas utility standard base contract with signed transaction confirmation documents that specify the specific details of each deal These contracts will require the RNG supplier to certify the renewable attributes and that VGS has full and sole ownership of those attributes As required by the PUC Order RNG Suppliers will also be required to allow VGS independent verification of the production and transactions related to VGS supply volumes The specific PUC requirements are found in finding 21 page 7 of Exhibit 21 - VT PUC Approval Order
33 VGS RENEWABLE NATURAL GAS ACCOUNTING Like accounting practices in the renewable electric industry Vermont Gas will have the obligation to match RNG supply volumes with customer RNG purchase volumes over time As discussed in Section 22 the premium for RNG above the cost of conventional natural gas establishes the value of the renewable attribute purchased by the customer These attributes are tracked in a separate inventory account and then matched with actual retail VGS Renewable Natural Gas sales Once these renewable attributes are matched with VGS Renewable Natural Gas sales they are ldquoretiredrdquo and cannot be resold in any manner or used to satisfy another obligation by VGS As provided in the PUC order ldquoVGS will use a ldquotrue-uprdquo period of up to 12 months to balance the difference between RNG attributes sold to customers (demand) and RNG attributes purchased by VGS from suppliers (supply)rdquo This true-up period allows RNG attribute ldquooversupplyrdquo and ldquoundersupplyrdquo to be balanced as described below
In an ldquooversupplyrdquo situation where forecasted RNG attribute purchases exceed the number of RNG attributes that VGS forecasts selling to its customers through the RNG Program VGS will first seek to market the excess RNG and the environmental attributes back through the wholesale supply channels If this oversupply extends beyond the 12-month true-up window VGS may seek PUC permission to flow any remaining RNG attribute inventory amounts through the Purchase Gas Adjustment (ldquoPGArdquo) or through its cost of service if the PGA is no longer in effect at that time
An ldquoundersupplyrdquo situation would occur if customer purchases of RNG attributes exceeded the amount available under VGSrsquo RNG supply contracts in the forward looking 12-month true-up window If the RNG supply purchases are lagging the RNG sales VGS
VGS Renewable Natural Gas Program Manual
Page 11
will true-up or balance this undersupply over the upcoming 12-month period through existing or additional RNG supply purchases
If VGS is unable to eliminate an undersupply imbalance after the 12-month true-up period VGS would need to purchase carbon offsets in the dollar amount equal to VGS Renewable Natural Gas revenues collected associated with the undersupply (See Exhibit 21 Order Finding 13 and 15) Carbon offsets are listed on one of several Carbon Registries such as the American Carbon Registry If carbon offsets are not available VGS has the option to contribute these RNG revenues to the statersquos Clean Energy Development Fund or issue prorated credits to affected customers It should be noted that while purchasing offsets is a tool for VGS it is not the intent of the VGS Renewable Natural Gas Program and if an undersupply situation persisted VGS would likely petition the PUC to modify or suspend the VGS Renewable Natural Gas Program prospectively
VGS will manage the RNG Program to closely match supply and demand and utilizing our RNG wholesale cost mitigation tools to avoid RNG supply challenges
As renewable programs evolve in the energy and natural gas industry Vermont Gas will adjust its accounting procedures to reflect industry standards and revise this manual to reflect any modifications or changes
34 RENEWABLE VERIFICATION VGS is committed to transparency and the integrity of this innovative program is essential to success Toward that end no step is more essential than the verification of the renewability claims of our VGS Renewable Natural Gas supply The PUC reinforced this commitment in the RNG approval order as follows
ldquoVGS will annually verify that the RNG was produced by a renewable gas production facility that VGS is the exclusive owner of any environmental attributes associated with RNG it sells under the program that it acquired the RNG from its transferor and sold it at retail and that the RNG has not been sold twice at any point between RNG production and sale to VGS whether by sales into carbon offset markets or otherwise This verification will be based on certifications of VGSrsquos suppliers and of an independent third party retained by VGS for this purposerdquo
VGS will use an independent third-party to verify the renewable claims for the VGS Renewable Natural Gas supply including the following
bull Confirm the renewable fuel feedstock identificationbull Confirm the product renewable fuel identificationbull Review and confirm the renewable fuel production processbull Review of fuel flow measurement and quality monitoring process and equipment
VGS Renewable Natural Gas Program Manual
Page 12
bull Review of contracts and affidavits governing the transfer of the RNG from theoriginal source to the end user(s)
bull Review of evidence confirming the existence of a physical path (common carrierpipeline) for RNG transfer and distribution to end users
SECTION 3 EXHIBITS
bull Exhibit 31-Accounting Proceduresbull Exhibit 32-Verification from Suppliersbull Exhibit 33-Third Party Verification
VGS Renewable Natural Gas Program Manual
Page 13
Section 4 Marketing
KEY MARKETING STEPS Item Description Owner VGS Renewable Natural Gas Branding
Maintain product and brand integrity Communications
Product Definition Ensuring proper VGS Renewable Natural Gas description in all materials
Communications
External Review Verification of Marketing claims Communications
41 MARKETING PLAN Exhibit 41 is the 2018 version of the Marketing Plan filed with the PUC This document may be updated from time to time as we adjust our marketing strategy
42 MARKETING CLAIMS VGS is committed to making clear and accurate claims about the environmental benefits of VGS Renewable Natural Gas We have enlisted the assistance of a law firm specializing in marketing renewable products to review VGSrsquo marketing materials and claims In addition VGSrsquo annual third-party review of our program will focus on the integrity of our administration of the VGS Renewable Natural Gas program (see Section 54)
43 VGS RENEWABLE NATURAL GAS ldquoPRODUCT CONTENT LABELrdquo The Product Content Label is intended to be prominently displayed on the VGS web site and in correspondence to customers when they enroll in this program
Product Content Label
By participating in the VGS Renewable Natural Gas program you are purchasing the renewable attributes associated with the production of renewable natural gas (ldquoRNGrdquo) which may also be referred to as biogas or bio-methane A unit of VGS Renewable Natural Gas measured in hundred cubic feet (CCF) represents the environmental attribute of 1 CCF of biogas VGS reserves the right to purchase carbon offsets if RNG supply is not available VGS will notify customers if this occurs The Product Content Label is available at httpswwwvermontgascomrenewablenaturalgas
SECTION 4 EXHIBITS
bull Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)bull Exhibit 42 VGS Renewable Natural Gas Trademark
VGS Renewable Natural Gas Program Manual
Page 14
Section 5 Customer Information and Billing
KEY BILLING AND REVENUE STEPS Item Description Owner Billing Enrollment of VGS Renewable Natural Gas
Customers Contact Center
Notice Customer Notice of VGS Renewable Natural Gas Rates
Contact CenterBilling Group
Program Assurance Verification of VGS Renewable Natural Gas program procedures
Billing and Finance
51 CUSTOMER ENROLLMENT AND BILLING PROCESS The VGS Customer Care team will enroll customers and establish the VGS Renewable Natural Gas Adder on customer accounts Customers will be able to order VGS Renewable Natural Gas via VGSrsquo website (preferred method) calling VGS contact center or through the VGS Energy Services team An RNG calculator is available on VGSrsquo website httpswwwvermontgascomrenewablenaturalgasadder-calculator that can assist customers in estimating the costs of VGS Renewable Natural Gas at the various percentage levels based on the customerrsquos gas consumption VGS will inform customers of the current RNG Adder premium when they enroll Customers have two options when enrolling in the RNG program Customers may select their desired percentage of VGS Renewable Natural Gas ( 10 25 50 or 100) or they may allocate a fixed amount of RNG attributes (ldquoS-RNGrdquo) for each month that they are enrolled in Customer Care will then set up the billing on their account VGS will send an order confirmation via email or as a separate mailing (see Exhibit 51) thanking the customer for subscribing to VGS Renewable Natural Gas and informing the customer of the estimated impact on their bill As shown on Exhibit 51 the order confirmation letter will also include the RNG program guidelines These guidelines are discussed in section 53 below
52 VGS RENEWABLE NATURAL GAS WEBSITE AND FREQUENTLY ASKED QUESTIONS The VGS Renewable Natural Gas web page contains general VGS Renewable Natural Gas information an FAQ a VGS Renewable Natural Gas calculator current VGS Renewable Natural Gas Adder and an easy-to-use sign up form
For the most recent Frequently Answered Questions visit httpwwwvermontgascomVGS Renewable Natural Gas
VGS Renewable Natural Gas Program Manual
Page 15
53 VGS RENEWABLE NATURAL GAS PROGRAM GUIDELINES VGS Renewable Natural Gas customers will fall under VGSrsquo General Terms and Conditions outlined in VGSrsquo tariffs and PUC rules (ex Disconnection practices late fees taxes) VGS tariffs can be found at httpwwwvermontgascomaccountrates
VGS will notify VGS Renewable Natural Gas customers of rate changes in advance of implementation on both their individual bills and the Companyrsquos website RNG customers have the ability to cancel or modify their RNG account profile consistent with the tariff
VGSrsquo RNG customers can subscribe to VGS Renewable Natural Gas service with no term commitment and can cancel with three daysrsquo notice The RNG Adder will apply at either the percentage or fixed quantity allocated by the customer to the usage shown on the monthly bill regardless of enrollment or termination date The RNG Adder will not be pro-rated for partial-month usage
VGS customers receiving the low-income rate discount can subscribe to VGS Renewable Natural Gas however the 20 low income discount will not apply to the RNG Adder
Customers currently on a budget program will be encouraged to request a recalculation of their budget plan to adjust for the RNG Adder costs but it is not required
54 VGS RENEWABLE NATURAL GAS PROGRAM ASSURANCE
On an annual basis VGS will conduct a program review to ensure the VGS Renewable Natural Gas program is managed consistent with this manual The VGS Renewable Natural Gas program is a new product for the US natural gas utility industry and as such no industry specific standards exist VGS is working with on a national effort to develop a ldquoGreen-Erdquo certification process for Renewable Natural Gas programs that process is targeted for completion in 2020
SECTION 5 EXHIBITS
bull Exhibit 51 ECIS Customer Confirmation
VGS Renewable Natural Gas Program Manual
Page 16
EXHIBITS
Exhibit 21 VT PUC Approval Order
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Docket No 8667
Petition of Vermont Gas Systems Inc for aRenewable Natural Gas Program andOptional Tariff
)))
Hearing atMontpelier Vermont
September 22016
order entered q leacute I aon
PRBsBNI Andrea C McHugh Hearing Officer
AppeeReNcBs Peter H Zamore Esq
Owen J McClain EsqSheehey Furlong amp Behrn PCfor Vermont Gas Systems Inc
Louise C Porter EsqTimotthorn M Duggan Esq
for the Vermont Department of Public Service
Sandra Levine Esqfor Conservation Law Foundation
Gerald R Tarrant EsqTarcant Gillies amp Richardsonfor Lincoln Renewable Natural Gas LLC
I INrnooucrroN
This case involves a petition filed by Vermont Gas Systems Inc (VGS) with the
Vermont Public Utility Commission (oCommission) I for approval of a Renewable Natural Gas
(RNG) program and optional RNG tariff service for its customers The proposed RNG
progriquestigravem establishes a framework for VGS to offer its customers the option to purchase RNG for
I Pursuant to Section 9 of Act 53 of the 2017 legislafive session the Vermont Public Service Boards name waschanged to the Vermont Public Utility Commission effective July l 2017 For claity activities of the VermontPublic Service Board that occurred before the name change will be referred to in Commission documents as
activities of the Commission unless that would be conntildersing in the specific context
Docket No 8667 Page2
program establishes a framework for VGS to offer its customers the option to purchase RNG for
as a portion of their usage RNG is produced from materials such as agricultural waste manure
municipal waste plant material or compost and is also referred to as bio-methane In this
proposal for decision I recommend that the Commission approve the proposed RNG program
and require VGS to make compliance filings as set forth herein
il PnocnrunnlHrsroRY
On October 232015 VGS figraveled a petition for approval for its RNG program including
prefiled testimony and exhibits of Thomas Murray
On January 192016I held a prehearing conference and on January 252016I issued
an Order establishing a schedule
On February 122016 VGS filed a revised RNG Plan
On March 102016I held a workshop to discuss the proposed program
On March 152016I issued an Order revising the schedule
On March 222016 Conservation Law Foundation (CLF) and Lincoln Renewable
Natural Gas LLC (Lincoln) filed motions to intervene in this proceeding
On April 12016 VGS filed supplemental testimony and exhibits
On April 82016I issued an Order granting CLFs and Lincolns intervention requests
On July 72016 the Vermont Department of Public Service (Department) CLF and
Lincoln filed testimony
On August 82016 Lincoln filed supplemental testimony
A technical hearing was hthornld on September 22016
On September 30 20|6VGS filed a draft proposal for decision supported by the
Department In addition CLF filed a brief on the same date Reply briefs were filed by VGS
and CLF on October 142016
III Posnroxs oF THE PlRrlns
VGS
VGS requests approval of its proposed RNG program for the sale of RNG to customers
on a voluntary basis VGS claims that its proposal contains reasonable provisions to align its
RNG purchases with the amounts sold to its customers appropriate mechanisms to address over-
Docket No 8667 Page 3
or under-supply of RNG and verification requirements to ensure that sales in fact consist of
RNG VGS maintains that the RNG program is an appropriate first step in stimulating RNG
producer supply and customer demand and is oamply supported by Vermonts experience of
measured implementation of electric renewable pricing programs2 VGS argues that the
program is responsive to the Commissions condition in its Order in Docket 79701o develop a
proposal to promote bio-methane project development3
Department of Public Service
Although the Department did not file a brief or reply brief it did present witness
testimony and indicated its support for the draft proposal for decision filed by VGS The
Department recommends that VGS review all proposed RNG supply arrangements with the
Department (in addition to seeking 30 VSA $ 248 approval where required) and suggests that
in the event of an undersupply of RNG VGS obtain carbon offsets in an amount equivalent to
the unused customer contributions The Department recommends that the RNG program be
reviewed at the end of three years at which time the protocol regarding the purchase of offsets
would be revisited
C ons ervation Law Foundation
CLF urges that the Commission reject the RNG program and instead adopt an RNG
content standard similar to the electric renewable portfolio standarda CLF maintains that the
expected annual sales volume is not apace that is consistent with Vermonts legislative and
planning targets for meeting energy needs with renewable energy or for reducing greenhouse gas
emissionss CLF claims that the proposed voluntary tariff falls short of being a program or
strategy that promotes the increased use of RNG resources or supply or fosters bio-methane
projects in Addison county6
2 VGS reply brief aI23 In Docket 7970the Commission considered the petition of VGS for a certificate of public good (CPG) pursuant
to 30 VSA $ 248 authorizing the construction of the Addison Natural Gas Pipeline In an Order issued on
December 232013 the Commission granted the CPG As a condition of approval the Commission required VGSin consultation with the Department to file a petition with the [Commission] proposing a program to promote bio-methane project development Docket 7970 Order of l2l23ll3 at 147
a CLF brief at 12s CLF brief at 36 CLF brief at 4
Docket No 8667 Page 4
Lincoln
Lincoln maintains that itis essential to promote development of agricultural-based bio-
methane supply in VermontT Lincoln states that the Commission is not in a position to
adequately address VGSs proposed RNG program until negotiations for sale of itsoutput
involving VGS and Middlebury College are completes
IV Punrrc CounnnNrs
The Commission received three letters of support for VGSs RNG program On March 10
2016 the Chittenden County Transportation Authority filed comments indicating that it intends to
explore the possibility of utilizing RNG to cover a portion of the energy needs for its fleet of 70
buses On March 182016 Champlain College filed comments noting that it is interested in using
RNG for a portion of its energy needs that are currently met with conventional natural gas On
March 282016 Casella Waste Systems made a filing with the Commission stating its intention
to explore using RNG to meet some of its energy needs for its fleet of vehicles
V trrutrxcs
Based on the evidence of record I hereby report the following findings and
recommendations to the Commission in accordance with 30 VSA $ 8(c)
1 RNG is produced from raw materials such as agricultural waste manure municipal
waste plant material or food waste Decomposition or digestion of these materials produces
raw methane which is then cleaned or upgraded to bio-methane in order to meet the receiving
pipelines gas quality specifications prior to injection into an existing pipeline system Thomas
Murray VGS (Murray) supp pf at3
2 VGS is exploring options to purchase RNG supply from Lincoln and from landfill gas
projects located outside Vermont that would be received through the Trans-CanadaPipeline
(TCPL) system Murray supp pf at 8-9
7 Daniel Smith Lincoln Renewable Natural Gas LLC (Smith) supp pf at L8 On August 152016 Lincoln filed a motion to continue this proceeding for a period of not less than 60 days statingthat the continuance would allow [it] VGS and Middlebury College to complete discussions as to VGSsinvolvement in the RNG supply in Vermont and allow the record in this case to be properly developed VGS and
the Department opposed the request for continuance On August 222016I issued an Order denying Lincolnsrequest and determined that Lincoln did not demonstrate good cause to postpone the technical hearing
Docket No 8667 Page 5
3 Under the program retail customers would voluntarily purchase RNG in amounts equal to
l0oo25yo50o or 100 of their total monthly requirements at specified prices per Ccf as an
adder to other retail charges Customers could terminate RNG purchases upon providing three
days of advance notice to VGS Murray supp pf at l-2 exhs Pet-VGS-l and Pet-VGS-3
4 Intemrptible customers will have the opportunity to participate in the RNG program
through VGSs existing Lock Price Program which currently provides for up to a two-year
commitment Murray supp pf at 5
5 VGS will develop and file for Commission approval a separate tariff for use of RNG as a
transportation fuel This tariff will allow VGS to take advantage of the sale of the associated
Renewable Identification Numbers (ooRINs) When RNG is used as a transportation fuel it is
eligible to receive RINs under the Federal Renewable Fuel Standard RINs can be resold on the
wholesale market and would be used to offset the price of RNG to transportation customers
receiving service under the tariff Joan E White
Department (White) pf at7tr912116 at 62-
63 (White) exh Pet-VGS-5 Response 4
6 VGS will also initiate a review of the RNG program by the Commission Department and
others after three years White pf at9tr912116 (Munay) at24
7 The adder price for each Ccf of RNG will be equal to the average RNG commodity cost to
VGS less the average commodity cost of natural gas VGS will adjust the adder price per Ccf on
a quarterly basis as part of its Purchased Gas Adjustment (PGA) filing Murray supp pf at 4
8 The proposed RNG program will include a tariff that is very similar in concept to the
Green Mountain Power Corporation (GMP) Cow Power tariff However Cow Power is based
on a fixed rate per kWh no matter what the cost of the renewable energy Murray supp pf at llVhite pf at 4
9 VGSs RNG tariff will be calculated quarterly based on actual RNG and natural gas costs
and will provide accurate price signals as to the price differential between natural gas and RNG
White pf at 4
10 Based on a survey conducted by VGS 85 of its customers are willingto pay l0oo
more for a renewable product VGS projects that customers could potentially consume over
500000 Mcf of RNG over the next five years Murray supp pf at 5
DocketNo8667 Page 6
11 VGS will use a true-up period of up to 12 months in order to balance the difference
between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply)
Murray supp pf at 9
12 There is a risk that due to the voluntary nature of the RNG program supply and demand
will be mismatched White pf at41 David G Hill CLF (Hi11) pf at 9
13 If the available RNG supply during the previous 12 months is less than the amount
purchased by VGS customers the RNG program provides that VGS may use funds collected to
purchase carbon offsets from an established carbon registry such as the American Carbon
Registry VGS will purchase an amount of carbon offsets equal to the amount of the revenue
resulting from the undersupply in order to result in a revenue-neutral program At the time of the
three-year implementation review VGS will propose an environmental accounting protocol in
order to quantify the environmental benefits of the program and to evaluate the financial risk of
purchasing carbon offsets in an amount equivalent to the environmental benefits of unsold RNG
due to undersupply Murray supp pf at 6 l0 exh Pet-VGS-s Responses 1
14 The development and standardization of RNG attributes is in its infancy as compared to
the existing markets for the environmental attributes used in the electric industry (renewable
energy credits or (RECs)) Murray supp pf at 12
15 If carbon offsets are not available VGS will contribute the RNG program revenues to the
Clean Energy Development Fund or issue prorated credits to affected customers Exh Pet-
VGS-S Responses 3
16 If RNG supply exceeds customer demand VGS would seek to sell the excess RNG at
wholesale Murray supp pf at 10
17 VGS will provide proposed RNG supply contracts to the Department prior to execution
It will also consult with the Department before making decisions that could dramatically impact
price or the integrity of the RNG program Exh Pet-VGS-S Responses 2 White pf at 5
18 The estimated cost of RNG supply ranges from $l2lMcf to $25lMcf The cost of natural
gas is less than $3Mcf Murray supp pf at 8-9
19 VGS will implement an RNG Quality Assurance Plan establishing a testing and
monitoring process to ensure that RNG injected (via in-state RNG producers) into the VGS
system is pipeline quality and meets the specifications of the TCPL transportation tariff for bio-
methane gas quality Murray supp pf at 14 exh Pet-VGS-4
Docket No 8667 PageT
20 VGS will file an annual report on the RNG program with the Commission and the
Department containing the following information
1 Number of subscribers by customer class
2 Sales volume by customer class
3 Sales revenues
4 Any sales or purchases of carbon offsets
5 Supplyconsumption matching portfolio including any shortfall or excess
supply of RNG
6 True-up schedule for any imbalances
7 RNG supply verification
8 Quantification of the impact of any excess RNG costs flowing through the
PGA if VGS remains under altemative regulation
9 Accounting of any carbon ofszligets or other incentives
10 Status of any contracts for RNG including plans to acquire new supply
contracts
I 1 Revenue from Renewable Identification Number (RlN) sales and impact
on the transport tariff as well as any projections about the RIN market that are
available to VGS and
12 Complete reports and environmental verifications by an independent
verifier
Murray supp pf at 11 exh Pet-VGS-3 White pf at 8-9 tr912116 at23-24 (Munay)
21 Except as described below concerning RlN-eligible RNG VGS will annually verify that
the RNG was produced by a renewable gas production facility that VGS is the exclusive oryner
of any environmental attributes associated with RNG it sells under the program that it acquired
the RNG from its transferor and sold itatretail and that neither the RNG nor any renewable
attribute associated with the RNG has been sold twice at any point between RNG production and
sale to VGS whether by sales into carbon offset markets or otherwise This verification will be
based on certifications by VGSs suppliers and by an independent third party retained by VGS
for this purpose Exh Pet-VGS-3 exh Pet-VGS-s Response 5 White pf at 8
Docket No 8667 Page I
22 For RlN-eligible RNG used as vehicle fuel verification will be addressed in detail in the
future as part of VGSs proposed Renewable Vehicle Fuel Tariff Exh Pet VGS-5 Response 4
rr912116 at 65 (White)
23 There are few natural gas utilities currently offering RNG at retail VGS modeled its
RNG program after the program designed by FortisBC a local distribution company in British
Columbia Canada VGS also had discussions with SoCalGas in Southern California Both of
these companies are leaders in developing RNG offerings and fostering RNG supply resources
Murray supp pf at 7
24 VGS will file with the Commission and Department a marketing plan containing the
following elements
l An evaluation element that includes concrete metrics such as sales
volume targets and enrollment targets
2 Identification of target market segment(s)
3 Development of materials and language for customer-marketing efforts
that explain the RNG program in plain language easily understandable to the
average customer
4 An online bill calculator
5 An implementation plan that identifies specific activities and a timetable
and
6 Abudget
Exh Pet-VGS-5 White pf at 10 Tr912116 at22-23 (Munay)
25 VGS and the Department represent that the RNG progriquestun is responsive to the
Commissions condition in its Order in Docket 7970 rcquiring VGS to develop a proposal to
promote bio-methane project development Murray supp pf al 13-14tr912116 at 63 (Vhite)
26 VGS asserts that the RNG program represents appropriate progress toward the Vermont
Comprehensive Energy Plan (CEP) goal to meet90o of Vermonts energy needs through
renewable sources by 2050 Murray supp pf at 12-13
VI DlscussroN iexclxu Coxclustox
Vith this proposal for decision I recommend that the Commission approve the RNG
program in accordance with the findings described above and based upon the evidence in the
Docket No 8667 Page 9
record In Docket 7970 the Commission required VGS in consultation with the Department to
file a petition with the [Commission] proposing a program to promote bio-methane project
development It is reasonable to expectthat aprogram meant to stimulate development of a
specific energy source would look to stimulate demand for that resource by offering an
opportunity for customers to purchase supply from RNG producers
The RNG program proposed by VGS and supported by the Department seeks to offer
ratepayers the option to purchase renewable energy as part of their individual energy-use
portfolio Furthermore the program includes a provision requiring that VGS develop a detailed
marketing plan that will serve to educate customers on the availability costs and benefits of
such resources which could lead to increased demand for the product
VGS intends to take advantage of the existing market for RINs associated with RNG used
as transportation fuel by proposing a Renewable Vehicle Fuel Tariff As described above in the
Public Comments section the Chittenden County Transportation Authority and Casella Vaste
Systems are interested in exploring the use of RNG to fuel their vehicle fleets which
demonstrates that there is existing customer demand for this product
Unlike the markets relating to RNG supply used for transportation fuel or renewable
electric generation and the associated trading and verification of RECs the RNG market is in its
infancy At this time it would not be appropriate to expect VGS to implement an RNG program
utilizing an RNG content standard similar to the electric renewable portfolio standard as
recommended by CLF because the equivalent standards and processes do not exist However
the RNG program represents a meaningful first step in encouraging customer interest in
purchasing RNG at retail thereby stimulating supply of RNG into the market and is consistent
with the Commissions condition requiring VGS to develop a proposal to promote bio-methane
project development
VGSs RNG program includes appropriate mechanisms for periodic reporting and
verification of program activities as well as an opportunity to comprehensively review the
program after three years of implementation Furthermore determinations regarding recovery of
costs associated with the RNG program will be made in the context of future proceedings
regarding VGSs rates The RNG program should evolve with the RNG markets in the near-term
and over the course of the next several years which will allow progress towards achievement of
Vermonts 2050 CEP renewable energy goals
Docket No 8667 Page 10
Because not all parties to this proceeding have waived their rights under 3 VSA $ 811
to file written comments or present oral argument with respect to this proposal for decision I am
circulating the proposal for decision to the parties for their review and comment
Dated at Montpelier Vermont this rrtl day of QrIltt 2017a0AndreaHearing Officer
Docket No 8667 Page 11
VII Corumrssron Drscussrox
On August 22017 the Department filed a letter stating that it supports the issuance of an
Order by the Commission that adopts the proposal for decision in full
Also on August 22017 VGS filed comments on the proposal for decision requesting
that Finding 16 be modified as follows (additional text in italics) If RNG supply exceeds
customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary
flow any remaining RNG attribute inventory amounts through the PGA or through a rate case ifVGS was under traditional cost of service regulation (subject to [Commission] approval)
VGS asserts that [a]bsent such specific language it is possible that VGS would be unable [to]
defer such costs for future recovery and that removal of that component introduces uncertainty
about the potential procedural mechanisms available for cost recovery in the last resort VGS
states that with the Commissions consideraacutetion of this request it does not request oral argument
No other comments were filed on the proposal for decision
The Hearing Officer recommended that the Commission find that determinations
regarding recovery of costs associated with the RNG program will be made in the context of
future proceedings regarding VGSs rates We agree with this recommendation VGS should
have an opportunity to request rate recovery for excess RNG supply However this proceeding
is not the proper time for such a determination Accordingly Finding 16 is hereby modified as
follows If RNG supply exceeds customer demand VGS would first seek to sell the excess
RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any
remaining RNG attribute inventory amounts through the PGA or through arate case as part of
its cost of service if the PGA is no longer in effect atthat timeWe emphasize the importance of the successful implementation of the RNG program in
helping to meet the States renewable energy policy objectives The annual report on the
implementation of the RNG program will serve as a valuable tool to assess that progress In this
proceeding CLF has raised policy considerations that should serve to guide these future reviews
of the RNG program For example CLF has raised concerns regarding the effectiveness of the
voluntary nature of the program In assessing its program we expect VGS to revisit and report
on the feasibility of incorporating RNG as a portion of its supply mix in the future It is
important for VGSs RNG program to be sustainable and continue to evolve ensuring significant
DocketNo8667 Page 12
contributions toward meeting the States renewable energy goals and reducing the consumption
of fossil fuel Accordingly it is critical that the annual report and the three-year comprehensive
review address not only the effectiveness of the program but also its affordability and the
feasibility of other policy options to advance the production and use of RNG in Vermont
Docket No 8667 Page 13
VIII Onunn
Ir rs Hennsy oRDERED ADJUDGED AND DECRnnn by the Public Utility Commission of the
State of Vermont that
1 The findings conclusions and recommendations of the Hearing Officer are
adopted and the Renewable Natural Gas (RNG) program to be implemented by Vermont Gas
SystemsInc (VGS) is approved
2 When VGS has procured RNG supply in amounts reasonably estimated to be
sufficient for estimated customer demand it shall file a formal tariff including proposed rates for
sale of RNG The tariff shall be reviewedpursuantto the procedures of 30 VSA ccedilccedil225226
and227 and sales under the program shall begin after Commission approval of the tariff
3 VGS shall develop and file for Commission approval a separate Renewable
Vehicle Fuel Tariff to serve customers using RNG as a transportation fuel
4 VGS shall file a marketing plan for the RNG program consistent with the
requirements set forth above within one month of the issuance of this Order
5 VGS shall file an annual report consistent with the requirements set forth above
upon implementation of the RNG program
6 VGS shall file a comprehensive review of the performance of the program with
the Commission and the Department after three years of implementation This review will
include an environmental accounting protocol to quantiff the environmental benefits of the
progrfim
7 VGS shall review proposed RNG supply arrangements with the Department
Docket No 8667
Orprcp oF THE Crnm
Dated at Montpelier Vermont this day of+hb
Z Roisman
Cheney
Page 14
20t7
Puslrc Urrlnv
CovtriquestIssIoN
OP VERMONT
(
)))
)))
Fired otildeeglcL ( JotTAttest c
of the Commission
NorIcE To READERS This decision is subject to revision oftechnical errors Reqders are requested tonotify the Clerk of the Commission (by e-mail telephone or inwriting) or any appqrent errors in order that anynecessary corrections may be made (E-mail address pucclerkvermontgov)
Appeal of this decision to the Supreme Court of Vermont must befiledwith the Clerk of the Comnissionwithin thirty days Appeal will not stay the efect of thszlig Order absentfurther order by this Commission orappropriate actiacuteon by the Supreme Court of Vermont Motions for reconsideration or stay if any must be filed withthe Clerk of the Commissionwithin ten days of the date of this deciacutesion and Order
Exhibit 22 VGS RNG Tariff Rate Filing
Exhibit 23 PUC Approval of VGS RNG Rates
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Case No l8-03 13-TF
Petition of Vermont Gas Systems Inc fotapproval of a new tariff implementing theRenewable Natural Gas program
Order entered
OnonRAppnovINc Tiquestrurn
On January 302018 Vermont Gas Systems Inc (VGS) filed a petition for approval of
a new tariff implementing the Renewable Natural Gas (RNG) program approved by the
Vermont Public Utility Commission (Commission) in Docket No 8667 In that Docket the
Commission required VGS to file a tariff implementing the RNG program when it has procured
RNG supply in amounts reasonably estimated to be sufficient to meet customer demandl In
this Order the Commission approves the new tariff marketed under the name EcoGas with an
effective date of bills rendered on and after March 15 2018
VGS states that it has executed an RNG supply contract with deliveries scheduled for
2018 and that two additional contracts are being negotiated for deliveries beginningin2019
VGS is proposing to set its initial RNG adder at$ll749lCcf which represents a five-year
blended rate based on the three RNG supply arrangements VGS intends to account for the
difference between the cost of RNG supply and the RNG adder as a regulatory asset within gas
costs As additional lower-cost supply is added to the portfolio the regulatory asset balance will
be recovered from EcoGas participants with the goal of fully reducing the balance by the end of
five years Accordingly VGS states that the RNG program will be rate-neutral to VGS and its
non-RNG customers
On February 272018 the Vermont Department of Public Service (Department) filed a
letter recommending that the Commission approve the tariff without a hearing or further
investigation The Department states that the tariff filing and proposed accounting treatment
comply with Vermont rate-setting practices policies precedents and statutes
lslaotx
I Docket 8667 Order of 96117 at 13
Page2Case No 18-0313-TF
Based on the foregoing we hereby approve VGSs proposed RNG tariff to be effective
on a bills-rendered basis beginning on March 15 2018 Recovery of any regulatory asset
balance at the end of the fifth year would need to be approved by the Commission in a future
proceeding
So Omnnnn
Case No l8-0313-TF
8r- day of lruacuterLiquestiquest
Page 3
Dated at Montpelier Vermont this 2018
Roisman PueIrc Urlrrv
CoiriexcllriquestlssloN
Cheney
OF VERMONT
Sarah Hofmann
Onncp oF THE CLBRr
Filed huacuteveuroAacute- icirc dollAttest I
Clerk of the Commission
Notice to Readers This decision is subiect to revision oftechnical errors Readers are requested to notify
the Clerk of the Commission (by e-mail telephone or in writing) or qny qpparent errors in order that any
necessary corrections may be made (E-mail address pucclerkvermontgov)Appeal of this decisiacuteon to the Supreme Court of Yermont must be filed with the Clerk of the Commission
within 30 days Appeal will not stay the efect of this Order oslashbsent further order by this Commission or appropriate
action by the Supreme Court of Vermont Motionsthornr reconsideration or stay if any must befiledwith the Clerk ofthe Commissionwithin 28 doslashys of the date of this decision and Order
)))
))))
PUC Case No 18-0313-TF
Eileen SimollardesLauren HammerVermont Gas
85 Swift StreetSouth Burlington VT 05403
June E Tiemey CommissionerVermont Department of Public Service1 12 State StreetMontpelier VT 05620 -2601
Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
Exhibit 31 Accounting Procedures
Exhibit 31 Accounting for VGS Renewable Natural Gas (Ver-9202019)
1 Purchase of RNG Supply
RNG supply purchases are separated into the cost of the commodity and the cost of the renewable attribute The commodity portion is expensed to gas costs in the delivery month while the renewable attribute is booked to an inventory account referenced herein as the ldquoRenewable Inventory Accountrdquo Like VGSrsquo existing storage inventory accounting the Renewable Inventory Account will track both the dollar value of the renewable attribute and the renewable attribute Mcfs Renewable attribute dollar values are record to ldquo16410050 Inventory RNG Storagerdquo while Mcf values are recorded in the gas cost model maintained by accounting In the month VGS purchases the renewable attribute it is accrued in a book model and goes in to 16410150 Inventory RNG Accrued then moves to the 16410050 in a final model the following month for final
RNG may be purchased at different locations and using varying pricing structures While the accounting for RNG does not vary with the purchase location or price the determination of the value of the renewable attribute will vary depending on whether or not the supply pricing expressly values the renewable attribute as an adder or it is embedded in a fixed price Examples of each are shown below The accounting of RNG supply is intended to separate the cost of the renewable attribute from the cost of the commodity The examples below are not all inclusive of what may occur but intended to show the accounting procedures used to separate the renewable attribute from the commodity and specify ownership of each aspect
In all cases the commodity cost portion - which is the total cost of the RNG purchased excluding the renewable attribute - will be expensed in the delivery month as a cost of gas
Example 1 ndash The fixed price of RNG includes both the commodity and the renewable attribute
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The total cost of the RNG supply purchased during the month is calculated by Accounting within the gas cost model as follows
MMBtu Purchased (as validated in step 2) $ MMBtu purchase price (as provided in a supply confirmation provided by gas supply)
4 For purposes of booking the renewable attribute to inventory it is necessary to calculate the RNG cost per Mcf The RNG cost Mcf is calculated using the total cost of RNG supply as calculated in step 3 divided by the Mcf in step 1
5 The renewable attribute price per Mcf is calculated as follows
RNG cost per Mcf as determined in step 4 ndashplus ldquoother componentsrdquo as calculated pursuant to Attachment A ndash minus ldquoAverage Commodity Costrdquo as calculated pursuant to Attachment A The ldquoother componentsrdquo added to the RNG cost per Mcf will vary depending on where the RNG supply was delivered but in each case will be identified in the calculation shown on Attachment A
6 The renewable attribute price per Mcf the total RNG Mcf delivered is recorded in the Inventory RNG Storage account
7 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
Example 2 - RNG purchased at a renewable attribute price plus a daily or monthly index
Where the pricing of RNG specifically separates the commodity from the renewable attribute the renewable attribute price will be what is recorded in the Renewable Inventory Account
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The renewable attribute price per Mcf the total RNG Mcf delivered as determined in step 1 is recorded in the Renewable Inventory Account
4 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
2 Recalculating the RNG Adder
The RNG Adder paid by customers will be recalculated anytime the Natural Gas charge portion of rates changes The Manager of Gas SupplyGas control is responsible for recalculating the RNG Adder The calculation will be verified and approved by the Vice President ndash Regulatory Affairs The determination of the RNG Adder will be pursuant to the methodology shown in Attachment A The Regulatory Department will prepare the amended RNG Adder tariff for filing with the PUC Upon PUC approval of the RNG Adder the Regulatory Department will prepare a memorandum advising Accounting and Gas Supply of the new RNG Adder as approved
3 Customer purchases VGS Renewable Natural Gas
The RNG Adder at the percent selected by the customer will be applied to the entire monthrsquos usage on the customersrsquo next bill For customers utilizing the S-RNG adder the entire volume elected with be on the customersrsquo next bill The S-RNG Adder nor the RNG Adder and percentage selected will not be prorated based on enrollment or termination date
Customers may terminate or modify their RNG selection upon 3 dayrsquos notice to VGS The termination or modification will be effective on the customerrsquos next monthly bill
The customerrsquos usage for the month will be multiplied by the percentage and the approved RNG Adder For customers utilizing the S-RNG adder the volume elected will be multiplied by the approved RNG adder This amount will then be recorded to SAP accounts 4010015-40010021 depending on which rate class the customer is in The RNG Adder is the same regardless of which rate class a customer is in At the end of the month a report is run by billing from the customer information system that shows total usage and which percentage of RNG the customer has signed up for to calculate the number of MCFrsquos of renewable attribute sold during the billing period Billing also provides a report of the volumes sold through the S-RNG Tarriff The Inventory RNG Storage account maintained within the gas cost model by Accounting is reduced by these Mcf The MCFrsquos are then multiplied by the RNG Adder in effect for the billing month and an entry is made to remove that dollar amount from the Inventory RNG Storage account and into the monthly cost of gas The intent of this transaction is to ensure that cost of the renewable attribute is reflected in the cost of gas in the month it is purchased by the customer This results in a matching of the renewable attribute revenue and expense
The RNG Adder revenue and renewable attributes removed from storage will be included in the gas cost deferral calculation However because there is a matching of the renewable attribute revenue and expense the impact on the deferral calculation will be zero
The calculation of unbilled revenues will exclude RNG as a customer can cancel their participation prior to their next bill
In the event Vermont Gas issues a credit to a customer related to the RNG program the value of the renewable attribute credited and the associated Mcf will not be applied to the Renewable Inventory Account
4 Controls
A spreadsheet is maintained by accounting that shows the MCFrsquos and dollar values of the Renewable Inventory Account This is reconciled monthly by the accounting team and will be reviewed by the Manager Gas SupplyGas Control
Accounting will validate that the amount removed from the Renewable Inventory Account matches the RNG Adder revenue Any discrepancies will be reviewed and corrected
A report will be run for each bill cycle that shows any changes to the RNG percentages selected this will include customers opting to withdraw from the RNG program The customer care team will validate any changes against customer confirmation paperwork
5 Renewable Inventory Account Reconciliation and Forecast
The PUC Order approving the RNG program contains provisions describing how RNG supply and demand imbalances will be addressed These provisions and how VGS will track and comply with them are as discussed in this section The PUC Order approving the RNG Program provides that if the available RNG supply during the previous 12 months is less than the amount purchased by customers VGS may use the funds collected to purchase carbon offsets (Finding 13) If carbon offset are not available VGS will contribute the RNG program revenues to the Clean Energy Development Fund or issue prorated credits to affected customers (Finding 15) The Order also provides that in the event RNG supply exceeds customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any remaining RNG attribute inventory amounts through the PGA or through a rate case as part of its cost of service if the s PGA is no longer in effect at that time (Finding 16 as modified) Finding 11 provides that VGS will use a ldquotrue-uprdquo period of up to 12 months in order to balance the difference between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply) Taken together these provisions require VGS to evaluate the imbalance after 12-months and then true-up the imbalance over the next twelve months To provide a forecast of the supplydemand imbalance quarterly the billing area will run a report showing the expected RNG volumes based on current customer commitments by month for the next 12-months Current customers commitments will be calculated based on the previous 12 months of usage multiplied by the RNG percentage currently signed up for The marketing department will provide their forecast of new RNG sales for the next 12-months Both will be provided to the Manager Gas SupplyGas Control The Manager Gas SupplyGas Control will compare the forecasted RNG sales known and expected to RNG supply commitments and provide a 24-month forecast of the supplydemand balance The supplydemand balance will be reviewed at the risk management meeting The strategy for addressing the imbalance consistent with the PUC order will be determined by the risk management committee
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
VGS Renewable Natural Gas Program Manual
Page 4
the VGS system the environmental attributes will be dedicated to Vermont Gas customers
Much like renewable electricity that is comingled in the electric grid VGS Renewable Natural Gas is comingled with conventional natural gas supply in the pipeline system VGS Renewable Natural Gas customers are purchasing the environmental attributes of RNG There is no claim by VGS that a participating customer is directly burning an RNG or biomethane molecule
14 WHAT ARE THE ENVIRONMENT BENEFITS An average household enrolling in the VGS Renewable Natural Gas program at the 100 level will effectively nullify the corresponding carbon footprint associated with the customerrsquos direct use of natural gas For a typical VGS residential customer using 90 Mcf of conventional natural gas each year this equates to 49 metric tons11 of avoided carbon dioxide emissions each year
VGS is not making representations or claims for any additional environmental benefits of anaerobic digesters beyond the carbon reduction associated with replacing conventional natural gas with a renewable source of energy production Specifically we make no environmental claims related to the avoidance of uncontrolled fugitive methane emissions that would have gone into the atmosphere from the primary biogas feedstock (eg landfill gas manure wastewater) in the absence of anaerobic digestion and capture of the methane as RNG
11 (httpswwwepagovenergygreenhouse-gas-equivalencies-calculator)
VGS Renewable Natural Gas Program Manual
Page 5
Section 2 Regulation
KEY REGULATORY STEPS
Item Description Filing Schedule VGS RNG Adder Tariff Update
Updates required to reflect gas costs changes
Quarterly
Annual RNG Report Full Programmatic Report Annually RNG Supply Contracts Filed for VT Public Utility
Commission (PUC) approval or information
As required
Triennial Assessment Program Review with Dept of Public Service
Every three years
21 REGULATORY SUMMARY
In October 2015 Vermont Gas filed a petition with the PUC for authority to establish a Renewable Natural Gas offering The PUC initiated Docket No 8667 to evaluate VGSrsquo proposal VGS modified the program based on input from parties to the proceeding12 and resubmitted testimony in April of 2016 followed by technical hearings in September of 2016 On September 6 2017 the PUC issued the final order approving the voluntary RNG program (see Exhibit 21) The Order provided authority for VGS to sell RNG under the proposed ldquoadderrdquo structure The Order also provided the accounting guidance to inventory the renewable attributes of RNG and the ability to recoup unsold RNG costs if need be with subsequent PUC approval The order also authorizes VGS to purchase carbon offsets in the event the supply of RNG is insufficient to meet subscriber demand
The table below lists the requirements contained in the Order and VGSrsquo compliance to-date
Order Requirement Status and Compliance Date
1 When VGS has procured RNG supplyhellipit shall filea formal tariff including proposed rates for the saleof RNG
Completed - January 30 2018 See also section 22 below
2 VGS shall develop and file for Commissionapproval a separate Renewable Vehicle Fuel Tariffto serve customers using RNG as a transportationfuel
Pending ndash Due date TBD
12 Parties to Docket No were the Department of Public Service Conservation Law Foundation and Lincoln Renewable Natural Gas LLC
VGS Renewable Natural Gas Program Manual
Page 6
Order Requirement Status and Compliance Date
3 VGS shall file a marketing plan for the RNGprogram consistent with the requirements setforth in the order within one month of the issuanceof this Oder
Completed - October 6 2017
4 VGS shall file an annual report consistent withthe requirements of the Order uponimplementation of the RNG program
Initial filing completed ndash filed June 2018 and 2019
5 VGS shall file a comprehensive review of theperformance of the program with the Commissionand Department after 3 years of implementationThis review will include an environmentalaccounting protocol to quantify the environmentalbenefits of the program
Pending ndash Due by March 15 2021
6 VGS shall review proposed RNG supplyarrangements with the Department
Completed - Initial review 11618 Review of subsequent contract also completed and approved by PUC
On October 4 2018 the Company filed with the PUC for a new RNG tariff offering ldquoS-RNGrdquo Adder which has the same pricing as the RNG Adder The new offering allows customers to purchase a fixed amount of RNG per month that would be unbundled from the customerrsquos metered gas consumption and offers customers who are consumers of natural gas but do not have an account for metered gas service with the Company the ability to purchase RNG attributes The PUC approved the S-RNG Adder to take effect with bills rendered on or after December 1 2018 (see Exhibit 24)
22 VGS RENEWABLE NATURAL GAS ADDER TARIFF The PUC order provides ldquoWhen VGS has procured RNG supplyhellipit shall file a formal tariff including proposed ratesrdquo On January 30 2018 after contracting for the initial RNG supply VGS filed the VGS Renewable Natural Gas Adder Tariff (see Exhibit 22) On March 9 2018 the PUC approved the initial RNG Adder for effect with bills rendered on and after March 15 2018 (see Exhibit 23)
In simple terms the RNG Adder reflects the difference between the cost of RNG and the cost of conventional gas This is calculated by subtracting the average commodity cost for conventional natural gas from the average commodity cost for RNG as indicated in the following example
VGS Renewable Natural Gas Program Manual
Page 7
VGS Renewable Natural Gas Adder Calculation Average RNG Commodity Cost
Minus Average Natural Gas Charge Equals VGS Renewable Natural Gas Adder
Exhibit 22 provides the detailed calculations
This formula identifies the current premium to be paid per CCF of RNG This premium also represents the value of the ldquoVGS Renewable Natural Gas Attributerdquo that VGS will withdraw from the VGS Renewable Natural Gas Attribute Inventory described below
To full reflect the cost of the initial RNG supply with future RNG supply contracts the initial RNG Adder was based on a blended rate of the cost of the first and the expected costs of future RNG purchases over the next 5 years The PUC has authorized this blended approach
The RNG Adder will change whenever the PUC authorizes a change in the Natural Gas Charge portion of the tariff Currently this change occurs quarterly
23 ANNUAL RNG REPORT An Annual RNG Report will be filed with PUC and Vermont Department of Public Service (ldquoDepartmentrdquo) each year in June The first annual report was filed in June 2018 In accordance with the PUC final order approving the Program the annual report will include the following information
1 Number of subscribers by class2 Sales volume by customer class3 Sales Revenues4 Any sales or purchases of carbon offsets5 Supply Consumption matching portfolio including any shortfall or excess supply of
RNG6 True-up schedule for any imbalances7 RNG supply verification8 Quantification of the impact of any excess RNG costs flowing through the PGA if
VGS remains under alternative regulation9 Accounting of any carbon offsets or other incentives10 Status of any contracts for RNG including plans to acquire new supply contracts11 Revenue from Renewable Identification Number (ldquoRINrdquo) sales and impact on the
transport (transportation) tariff as well as any projections about the RIN marketthat are available to VGS and
12 Complete reports and environmental verifications by an independent verifier
The annual report will also address the effectiveness of the program and its affordability
VGS Renewable Natural Gas Program Manual
Page 8
24 THREE-YEAR IMPLEMENTATION REVIEW In accordance with the PUC Order in March 2021 (the third year of the Program) VGS will file a comprehensive review of the performance of the Program The review will include an environmental accounting protocol to quantify the environmental benefits of the program The three-year comprehensive program review will also address the effectiveness of the program its affordability and the feasibility of other policy options to advance the production and use of RNG in Vermont
SECTION 2 EXHIBITS
bull Exhibit 21 VT PUC Approval Orderbull Exhibit 22 VGS RNG Tariff Rate Filingbull Exhibit 23 PUC Approval of VGS RNG Ratesbull Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
VGS Renewable Natural Gas Program Manual
Page 9
Section 3 Supply Procurement and Accounting
KEY VGS RENEWABLE NATURAL GAS SUPPLY AND ACCOUNTING STEPS
Item Description Schedule Owner RNG Supply Contracts
Procuring RNG Supply As needed Gas Supply
RNG Supply True-Up
Balancing RNG supply sales and retiring attributes
Monthly Finance
RNG Supply Verification
Verifying ldquorenewabilityrdquo of RNG Supply
Annually Gas SupplyThird- Party
31 VGS RENEWABLE NATURAL GAS SUPPLY OVERVIEW
VGS intends to contract with a variety of RNG supply sources to meet its customer demand in the RNG Program RNG supply is currently available from a limited number of landfill and digester projects in Canada or US states other than Vermont In Vermont at least one local supply project is currently under development
Today there is no central ldquomarketplacerdquo for RNG suppliers and buyers to trade RNG supply contracts RNG buyers such as VGS transact with individual producersprojects or work through RNG brokers to acquire RNG supply or the environmental attributes associated with RNG in bilateral transactions VGSrsquo initial RNG supply contract in 2018 was with BP Canada Energy Group ULC and sourced from the EBI Inc13 biogas production facility located in Ste Genevieve Quebec In 2019 VGSrsquo purchased RNG supply from a waste water treatment facility in Dubuque Iowa
In 2020 VGS plans to begin receiving RNG supply from a Vermont farm digester and a Canadian digester facility The Vermont farm digester located in Salisbury Vermont is slated for completion in late 2020 producing 180000 MMbtursquos per year The Canadian digester project is located in London Ontario VGS has agreed to purchased 100 of the supply from this facility up to 120000 MMbtursquosyear for 15 years VGS sought and received PUC approval for this Ontario supply in 2018 and received approval for an amendment in 2019 To meet anticipated demand for RNG until these two resources come on line the Company purchased short-term supply of RNG from the Iowa facility in 2019 We anticipate that these supply sources will satisfy the VGS Renewable Natural Gas Program supply needs for the first few years of the Program If we are unsuccessful
13 EBIrsquos Facility was recognized in 2016 (httpswwwdesjardinscomcavideossinglejspdocName=vid-ebi-e)
VGS Renewable Natural Gas Program Manual
Page 10
in procuring supply from these sources or if demand exceeds these planned supplies VGS will seek additional RNG supply in the marketplace
32 VGS RENEWABLE NATURAL GAS SUPPLY CONTRACTS VGS will utilize standard industry or comparable contract vehicles to procure RNG supply with site-specific terms and conditions Given the unique nature of the in-state RNG project the gas supply contract is a 3 way agreement between the producer VGS and an end user Accordingly the form of the contract does not resemble industry standard supply agreements but contains all appropriate business terms The first two contracts signed by VGS utilize a gas utility standard base contract with signed transaction confirmation documents that specify the specific details of each deal These contracts will require the RNG supplier to certify the renewable attributes and that VGS has full and sole ownership of those attributes As required by the PUC Order RNG Suppliers will also be required to allow VGS independent verification of the production and transactions related to VGS supply volumes The specific PUC requirements are found in finding 21 page 7 of Exhibit 21 - VT PUC Approval Order
33 VGS RENEWABLE NATURAL GAS ACCOUNTING Like accounting practices in the renewable electric industry Vermont Gas will have the obligation to match RNG supply volumes with customer RNG purchase volumes over time As discussed in Section 22 the premium for RNG above the cost of conventional natural gas establishes the value of the renewable attribute purchased by the customer These attributes are tracked in a separate inventory account and then matched with actual retail VGS Renewable Natural Gas sales Once these renewable attributes are matched with VGS Renewable Natural Gas sales they are ldquoretiredrdquo and cannot be resold in any manner or used to satisfy another obligation by VGS As provided in the PUC order ldquoVGS will use a ldquotrue-uprdquo period of up to 12 months to balance the difference between RNG attributes sold to customers (demand) and RNG attributes purchased by VGS from suppliers (supply)rdquo This true-up period allows RNG attribute ldquooversupplyrdquo and ldquoundersupplyrdquo to be balanced as described below
In an ldquooversupplyrdquo situation where forecasted RNG attribute purchases exceed the number of RNG attributes that VGS forecasts selling to its customers through the RNG Program VGS will first seek to market the excess RNG and the environmental attributes back through the wholesale supply channels If this oversupply extends beyond the 12-month true-up window VGS may seek PUC permission to flow any remaining RNG attribute inventory amounts through the Purchase Gas Adjustment (ldquoPGArdquo) or through its cost of service if the PGA is no longer in effect at that time
An ldquoundersupplyrdquo situation would occur if customer purchases of RNG attributes exceeded the amount available under VGSrsquo RNG supply contracts in the forward looking 12-month true-up window If the RNG supply purchases are lagging the RNG sales VGS
VGS Renewable Natural Gas Program Manual
Page 11
will true-up or balance this undersupply over the upcoming 12-month period through existing or additional RNG supply purchases
If VGS is unable to eliminate an undersupply imbalance after the 12-month true-up period VGS would need to purchase carbon offsets in the dollar amount equal to VGS Renewable Natural Gas revenues collected associated with the undersupply (See Exhibit 21 Order Finding 13 and 15) Carbon offsets are listed on one of several Carbon Registries such as the American Carbon Registry If carbon offsets are not available VGS has the option to contribute these RNG revenues to the statersquos Clean Energy Development Fund or issue prorated credits to affected customers It should be noted that while purchasing offsets is a tool for VGS it is not the intent of the VGS Renewable Natural Gas Program and if an undersupply situation persisted VGS would likely petition the PUC to modify or suspend the VGS Renewable Natural Gas Program prospectively
VGS will manage the RNG Program to closely match supply and demand and utilizing our RNG wholesale cost mitigation tools to avoid RNG supply challenges
As renewable programs evolve in the energy and natural gas industry Vermont Gas will adjust its accounting procedures to reflect industry standards and revise this manual to reflect any modifications or changes
34 RENEWABLE VERIFICATION VGS is committed to transparency and the integrity of this innovative program is essential to success Toward that end no step is more essential than the verification of the renewability claims of our VGS Renewable Natural Gas supply The PUC reinforced this commitment in the RNG approval order as follows
ldquoVGS will annually verify that the RNG was produced by a renewable gas production facility that VGS is the exclusive owner of any environmental attributes associated with RNG it sells under the program that it acquired the RNG from its transferor and sold it at retail and that the RNG has not been sold twice at any point between RNG production and sale to VGS whether by sales into carbon offset markets or otherwise This verification will be based on certifications of VGSrsquos suppliers and of an independent third party retained by VGS for this purposerdquo
VGS will use an independent third-party to verify the renewable claims for the VGS Renewable Natural Gas supply including the following
bull Confirm the renewable fuel feedstock identificationbull Confirm the product renewable fuel identificationbull Review and confirm the renewable fuel production processbull Review of fuel flow measurement and quality monitoring process and equipment
VGS Renewable Natural Gas Program Manual
Page 12
bull Review of contracts and affidavits governing the transfer of the RNG from theoriginal source to the end user(s)
bull Review of evidence confirming the existence of a physical path (common carrierpipeline) for RNG transfer and distribution to end users
SECTION 3 EXHIBITS
bull Exhibit 31-Accounting Proceduresbull Exhibit 32-Verification from Suppliersbull Exhibit 33-Third Party Verification
VGS Renewable Natural Gas Program Manual
Page 13
Section 4 Marketing
KEY MARKETING STEPS Item Description Owner VGS Renewable Natural Gas Branding
Maintain product and brand integrity Communications
Product Definition Ensuring proper VGS Renewable Natural Gas description in all materials
Communications
External Review Verification of Marketing claims Communications
41 MARKETING PLAN Exhibit 41 is the 2018 version of the Marketing Plan filed with the PUC This document may be updated from time to time as we adjust our marketing strategy
42 MARKETING CLAIMS VGS is committed to making clear and accurate claims about the environmental benefits of VGS Renewable Natural Gas We have enlisted the assistance of a law firm specializing in marketing renewable products to review VGSrsquo marketing materials and claims In addition VGSrsquo annual third-party review of our program will focus on the integrity of our administration of the VGS Renewable Natural Gas program (see Section 54)
43 VGS RENEWABLE NATURAL GAS ldquoPRODUCT CONTENT LABELrdquo The Product Content Label is intended to be prominently displayed on the VGS web site and in correspondence to customers when they enroll in this program
Product Content Label
By participating in the VGS Renewable Natural Gas program you are purchasing the renewable attributes associated with the production of renewable natural gas (ldquoRNGrdquo) which may also be referred to as biogas or bio-methane A unit of VGS Renewable Natural Gas measured in hundred cubic feet (CCF) represents the environmental attribute of 1 CCF of biogas VGS reserves the right to purchase carbon offsets if RNG supply is not available VGS will notify customers if this occurs The Product Content Label is available at httpswwwvermontgascomrenewablenaturalgas
SECTION 4 EXHIBITS
bull Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)bull Exhibit 42 VGS Renewable Natural Gas Trademark
VGS Renewable Natural Gas Program Manual
Page 14
Section 5 Customer Information and Billing
KEY BILLING AND REVENUE STEPS Item Description Owner Billing Enrollment of VGS Renewable Natural Gas
Customers Contact Center
Notice Customer Notice of VGS Renewable Natural Gas Rates
Contact CenterBilling Group
Program Assurance Verification of VGS Renewable Natural Gas program procedures
Billing and Finance
51 CUSTOMER ENROLLMENT AND BILLING PROCESS The VGS Customer Care team will enroll customers and establish the VGS Renewable Natural Gas Adder on customer accounts Customers will be able to order VGS Renewable Natural Gas via VGSrsquo website (preferred method) calling VGS contact center or through the VGS Energy Services team An RNG calculator is available on VGSrsquo website httpswwwvermontgascomrenewablenaturalgasadder-calculator that can assist customers in estimating the costs of VGS Renewable Natural Gas at the various percentage levels based on the customerrsquos gas consumption VGS will inform customers of the current RNG Adder premium when they enroll Customers have two options when enrolling in the RNG program Customers may select their desired percentage of VGS Renewable Natural Gas ( 10 25 50 or 100) or they may allocate a fixed amount of RNG attributes (ldquoS-RNGrdquo) for each month that they are enrolled in Customer Care will then set up the billing on their account VGS will send an order confirmation via email or as a separate mailing (see Exhibit 51) thanking the customer for subscribing to VGS Renewable Natural Gas and informing the customer of the estimated impact on their bill As shown on Exhibit 51 the order confirmation letter will also include the RNG program guidelines These guidelines are discussed in section 53 below
52 VGS RENEWABLE NATURAL GAS WEBSITE AND FREQUENTLY ASKED QUESTIONS The VGS Renewable Natural Gas web page contains general VGS Renewable Natural Gas information an FAQ a VGS Renewable Natural Gas calculator current VGS Renewable Natural Gas Adder and an easy-to-use sign up form
For the most recent Frequently Answered Questions visit httpwwwvermontgascomVGS Renewable Natural Gas
VGS Renewable Natural Gas Program Manual
Page 15
53 VGS RENEWABLE NATURAL GAS PROGRAM GUIDELINES VGS Renewable Natural Gas customers will fall under VGSrsquo General Terms and Conditions outlined in VGSrsquo tariffs and PUC rules (ex Disconnection practices late fees taxes) VGS tariffs can be found at httpwwwvermontgascomaccountrates
VGS will notify VGS Renewable Natural Gas customers of rate changes in advance of implementation on both their individual bills and the Companyrsquos website RNG customers have the ability to cancel or modify their RNG account profile consistent with the tariff
VGSrsquo RNG customers can subscribe to VGS Renewable Natural Gas service with no term commitment and can cancel with three daysrsquo notice The RNG Adder will apply at either the percentage or fixed quantity allocated by the customer to the usage shown on the monthly bill regardless of enrollment or termination date The RNG Adder will not be pro-rated for partial-month usage
VGS customers receiving the low-income rate discount can subscribe to VGS Renewable Natural Gas however the 20 low income discount will not apply to the RNG Adder
Customers currently on a budget program will be encouraged to request a recalculation of their budget plan to adjust for the RNG Adder costs but it is not required
54 VGS RENEWABLE NATURAL GAS PROGRAM ASSURANCE
On an annual basis VGS will conduct a program review to ensure the VGS Renewable Natural Gas program is managed consistent with this manual The VGS Renewable Natural Gas program is a new product for the US natural gas utility industry and as such no industry specific standards exist VGS is working with on a national effort to develop a ldquoGreen-Erdquo certification process for Renewable Natural Gas programs that process is targeted for completion in 2020
SECTION 5 EXHIBITS
bull Exhibit 51 ECIS Customer Confirmation
VGS Renewable Natural Gas Program Manual
Page 16
EXHIBITS
Exhibit 21 VT PUC Approval Order
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Docket No 8667
Petition of Vermont Gas Systems Inc for aRenewable Natural Gas Program andOptional Tariff
)))
Hearing atMontpelier Vermont
September 22016
order entered q leacute I aon
PRBsBNI Andrea C McHugh Hearing Officer
AppeeReNcBs Peter H Zamore Esq
Owen J McClain EsqSheehey Furlong amp Behrn PCfor Vermont Gas Systems Inc
Louise C Porter EsqTimotthorn M Duggan Esq
for the Vermont Department of Public Service
Sandra Levine Esqfor Conservation Law Foundation
Gerald R Tarrant EsqTarcant Gillies amp Richardsonfor Lincoln Renewable Natural Gas LLC
I INrnooucrroN
This case involves a petition filed by Vermont Gas Systems Inc (VGS) with the
Vermont Public Utility Commission (oCommission) I for approval of a Renewable Natural Gas
(RNG) program and optional RNG tariff service for its customers The proposed RNG
progriquestigravem establishes a framework for VGS to offer its customers the option to purchase RNG for
I Pursuant to Section 9 of Act 53 of the 2017 legislafive session the Vermont Public Service Boards name waschanged to the Vermont Public Utility Commission effective July l 2017 For claity activities of the VermontPublic Service Board that occurred before the name change will be referred to in Commission documents as
activities of the Commission unless that would be conntildersing in the specific context
Docket No 8667 Page2
program establishes a framework for VGS to offer its customers the option to purchase RNG for
as a portion of their usage RNG is produced from materials such as agricultural waste manure
municipal waste plant material or compost and is also referred to as bio-methane In this
proposal for decision I recommend that the Commission approve the proposed RNG program
and require VGS to make compliance filings as set forth herein
il PnocnrunnlHrsroRY
On October 232015 VGS figraveled a petition for approval for its RNG program including
prefiled testimony and exhibits of Thomas Murray
On January 192016I held a prehearing conference and on January 252016I issued
an Order establishing a schedule
On February 122016 VGS filed a revised RNG Plan
On March 102016I held a workshop to discuss the proposed program
On March 152016I issued an Order revising the schedule
On March 222016 Conservation Law Foundation (CLF) and Lincoln Renewable
Natural Gas LLC (Lincoln) filed motions to intervene in this proceeding
On April 12016 VGS filed supplemental testimony and exhibits
On April 82016I issued an Order granting CLFs and Lincolns intervention requests
On July 72016 the Vermont Department of Public Service (Department) CLF and
Lincoln filed testimony
On August 82016 Lincoln filed supplemental testimony
A technical hearing was hthornld on September 22016
On September 30 20|6VGS filed a draft proposal for decision supported by the
Department In addition CLF filed a brief on the same date Reply briefs were filed by VGS
and CLF on October 142016
III Posnroxs oF THE PlRrlns
VGS
VGS requests approval of its proposed RNG program for the sale of RNG to customers
on a voluntary basis VGS claims that its proposal contains reasonable provisions to align its
RNG purchases with the amounts sold to its customers appropriate mechanisms to address over-
Docket No 8667 Page 3
or under-supply of RNG and verification requirements to ensure that sales in fact consist of
RNG VGS maintains that the RNG program is an appropriate first step in stimulating RNG
producer supply and customer demand and is oamply supported by Vermonts experience of
measured implementation of electric renewable pricing programs2 VGS argues that the
program is responsive to the Commissions condition in its Order in Docket 79701o develop a
proposal to promote bio-methane project development3
Department of Public Service
Although the Department did not file a brief or reply brief it did present witness
testimony and indicated its support for the draft proposal for decision filed by VGS The
Department recommends that VGS review all proposed RNG supply arrangements with the
Department (in addition to seeking 30 VSA $ 248 approval where required) and suggests that
in the event of an undersupply of RNG VGS obtain carbon offsets in an amount equivalent to
the unused customer contributions The Department recommends that the RNG program be
reviewed at the end of three years at which time the protocol regarding the purchase of offsets
would be revisited
C ons ervation Law Foundation
CLF urges that the Commission reject the RNG program and instead adopt an RNG
content standard similar to the electric renewable portfolio standarda CLF maintains that the
expected annual sales volume is not apace that is consistent with Vermonts legislative and
planning targets for meeting energy needs with renewable energy or for reducing greenhouse gas
emissionss CLF claims that the proposed voluntary tariff falls short of being a program or
strategy that promotes the increased use of RNG resources or supply or fosters bio-methane
projects in Addison county6
2 VGS reply brief aI23 In Docket 7970the Commission considered the petition of VGS for a certificate of public good (CPG) pursuant
to 30 VSA $ 248 authorizing the construction of the Addison Natural Gas Pipeline In an Order issued on
December 232013 the Commission granted the CPG As a condition of approval the Commission required VGSin consultation with the Department to file a petition with the [Commission] proposing a program to promote bio-methane project development Docket 7970 Order of l2l23ll3 at 147
a CLF brief at 12s CLF brief at 36 CLF brief at 4
Docket No 8667 Page 4
Lincoln
Lincoln maintains that itis essential to promote development of agricultural-based bio-
methane supply in VermontT Lincoln states that the Commission is not in a position to
adequately address VGSs proposed RNG program until negotiations for sale of itsoutput
involving VGS and Middlebury College are completes
IV Punrrc CounnnNrs
The Commission received three letters of support for VGSs RNG program On March 10
2016 the Chittenden County Transportation Authority filed comments indicating that it intends to
explore the possibility of utilizing RNG to cover a portion of the energy needs for its fleet of 70
buses On March 182016 Champlain College filed comments noting that it is interested in using
RNG for a portion of its energy needs that are currently met with conventional natural gas On
March 282016 Casella Waste Systems made a filing with the Commission stating its intention
to explore using RNG to meet some of its energy needs for its fleet of vehicles
V trrutrxcs
Based on the evidence of record I hereby report the following findings and
recommendations to the Commission in accordance with 30 VSA $ 8(c)
1 RNG is produced from raw materials such as agricultural waste manure municipal
waste plant material or food waste Decomposition or digestion of these materials produces
raw methane which is then cleaned or upgraded to bio-methane in order to meet the receiving
pipelines gas quality specifications prior to injection into an existing pipeline system Thomas
Murray VGS (Murray) supp pf at3
2 VGS is exploring options to purchase RNG supply from Lincoln and from landfill gas
projects located outside Vermont that would be received through the Trans-CanadaPipeline
(TCPL) system Murray supp pf at 8-9
7 Daniel Smith Lincoln Renewable Natural Gas LLC (Smith) supp pf at L8 On August 152016 Lincoln filed a motion to continue this proceeding for a period of not less than 60 days statingthat the continuance would allow [it] VGS and Middlebury College to complete discussions as to VGSsinvolvement in the RNG supply in Vermont and allow the record in this case to be properly developed VGS and
the Department opposed the request for continuance On August 222016I issued an Order denying Lincolnsrequest and determined that Lincoln did not demonstrate good cause to postpone the technical hearing
Docket No 8667 Page 5
3 Under the program retail customers would voluntarily purchase RNG in amounts equal to
l0oo25yo50o or 100 of their total monthly requirements at specified prices per Ccf as an
adder to other retail charges Customers could terminate RNG purchases upon providing three
days of advance notice to VGS Murray supp pf at l-2 exhs Pet-VGS-l and Pet-VGS-3
4 Intemrptible customers will have the opportunity to participate in the RNG program
through VGSs existing Lock Price Program which currently provides for up to a two-year
commitment Murray supp pf at 5
5 VGS will develop and file for Commission approval a separate tariff for use of RNG as a
transportation fuel This tariff will allow VGS to take advantage of the sale of the associated
Renewable Identification Numbers (ooRINs) When RNG is used as a transportation fuel it is
eligible to receive RINs under the Federal Renewable Fuel Standard RINs can be resold on the
wholesale market and would be used to offset the price of RNG to transportation customers
receiving service under the tariff Joan E White
Department (White) pf at7tr912116 at 62-
63 (White) exh Pet-VGS-5 Response 4
6 VGS will also initiate a review of the RNG program by the Commission Department and
others after three years White pf at9tr912116 (Munay) at24
7 The adder price for each Ccf of RNG will be equal to the average RNG commodity cost to
VGS less the average commodity cost of natural gas VGS will adjust the adder price per Ccf on
a quarterly basis as part of its Purchased Gas Adjustment (PGA) filing Murray supp pf at 4
8 The proposed RNG program will include a tariff that is very similar in concept to the
Green Mountain Power Corporation (GMP) Cow Power tariff However Cow Power is based
on a fixed rate per kWh no matter what the cost of the renewable energy Murray supp pf at llVhite pf at 4
9 VGSs RNG tariff will be calculated quarterly based on actual RNG and natural gas costs
and will provide accurate price signals as to the price differential between natural gas and RNG
White pf at 4
10 Based on a survey conducted by VGS 85 of its customers are willingto pay l0oo
more for a renewable product VGS projects that customers could potentially consume over
500000 Mcf of RNG over the next five years Murray supp pf at 5
DocketNo8667 Page 6
11 VGS will use a true-up period of up to 12 months in order to balance the difference
between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply)
Murray supp pf at 9
12 There is a risk that due to the voluntary nature of the RNG program supply and demand
will be mismatched White pf at41 David G Hill CLF (Hi11) pf at 9
13 If the available RNG supply during the previous 12 months is less than the amount
purchased by VGS customers the RNG program provides that VGS may use funds collected to
purchase carbon offsets from an established carbon registry such as the American Carbon
Registry VGS will purchase an amount of carbon offsets equal to the amount of the revenue
resulting from the undersupply in order to result in a revenue-neutral program At the time of the
three-year implementation review VGS will propose an environmental accounting protocol in
order to quantify the environmental benefits of the program and to evaluate the financial risk of
purchasing carbon offsets in an amount equivalent to the environmental benefits of unsold RNG
due to undersupply Murray supp pf at 6 l0 exh Pet-VGS-s Responses 1
14 The development and standardization of RNG attributes is in its infancy as compared to
the existing markets for the environmental attributes used in the electric industry (renewable
energy credits or (RECs)) Murray supp pf at 12
15 If carbon offsets are not available VGS will contribute the RNG program revenues to the
Clean Energy Development Fund or issue prorated credits to affected customers Exh Pet-
VGS-S Responses 3
16 If RNG supply exceeds customer demand VGS would seek to sell the excess RNG at
wholesale Murray supp pf at 10
17 VGS will provide proposed RNG supply contracts to the Department prior to execution
It will also consult with the Department before making decisions that could dramatically impact
price or the integrity of the RNG program Exh Pet-VGS-S Responses 2 White pf at 5
18 The estimated cost of RNG supply ranges from $l2lMcf to $25lMcf The cost of natural
gas is less than $3Mcf Murray supp pf at 8-9
19 VGS will implement an RNG Quality Assurance Plan establishing a testing and
monitoring process to ensure that RNG injected (via in-state RNG producers) into the VGS
system is pipeline quality and meets the specifications of the TCPL transportation tariff for bio-
methane gas quality Murray supp pf at 14 exh Pet-VGS-4
Docket No 8667 PageT
20 VGS will file an annual report on the RNG program with the Commission and the
Department containing the following information
1 Number of subscribers by customer class
2 Sales volume by customer class
3 Sales revenues
4 Any sales or purchases of carbon offsets
5 Supplyconsumption matching portfolio including any shortfall or excess
supply of RNG
6 True-up schedule for any imbalances
7 RNG supply verification
8 Quantification of the impact of any excess RNG costs flowing through the
PGA if VGS remains under altemative regulation
9 Accounting of any carbon ofszligets or other incentives
10 Status of any contracts for RNG including plans to acquire new supply
contracts
I 1 Revenue from Renewable Identification Number (RlN) sales and impact
on the transport tariff as well as any projections about the RIN market that are
available to VGS and
12 Complete reports and environmental verifications by an independent
verifier
Murray supp pf at 11 exh Pet-VGS-3 White pf at 8-9 tr912116 at23-24 (Munay)
21 Except as described below concerning RlN-eligible RNG VGS will annually verify that
the RNG was produced by a renewable gas production facility that VGS is the exclusive oryner
of any environmental attributes associated with RNG it sells under the program that it acquired
the RNG from its transferor and sold itatretail and that neither the RNG nor any renewable
attribute associated with the RNG has been sold twice at any point between RNG production and
sale to VGS whether by sales into carbon offset markets or otherwise This verification will be
based on certifications by VGSs suppliers and by an independent third party retained by VGS
for this purpose Exh Pet-VGS-3 exh Pet-VGS-s Response 5 White pf at 8
Docket No 8667 Page I
22 For RlN-eligible RNG used as vehicle fuel verification will be addressed in detail in the
future as part of VGSs proposed Renewable Vehicle Fuel Tariff Exh Pet VGS-5 Response 4
rr912116 at 65 (White)
23 There are few natural gas utilities currently offering RNG at retail VGS modeled its
RNG program after the program designed by FortisBC a local distribution company in British
Columbia Canada VGS also had discussions with SoCalGas in Southern California Both of
these companies are leaders in developing RNG offerings and fostering RNG supply resources
Murray supp pf at 7
24 VGS will file with the Commission and Department a marketing plan containing the
following elements
l An evaluation element that includes concrete metrics such as sales
volume targets and enrollment targets
2 Identification of target market segment(s)
3 Development of materials and language for customer-marketing efforts
that explain the RNG program in plain language easily understandable to the
average customer
4 An online bill calculator
5 An implementation plan that identifies specific activities and a timetable
and
6 Abudget
Exh Pet-VGS-5 White pf at 10 Tr912116 at22-23 (Munay)
25 VGS and the Department represent that the RNG progriquestun is responsive to the
Commissions condition in its Order in Docket 7970 rcquiring VGS to develop a proposal to
promote bio-methane project development Murray supp pf al 13-14tr912116 at 63 (Vhite)
26 VGS asserts that the RNG program represents appropriate progress toward the Vermont
Comprehensive Energy Plan (CEP) goal to meet90o of Vermonts energy needs through
renewable sources by 2050 Murray supp pf at 12-13
VI DlscussroN iexclxu Coxclustox
Vith this proposal for decision I recommend that the Commission approve the RNG
program in accordance with the findings described above and based upon the evidence in the
Docket No 8667 Page 9
record In Docket 7970 the Commission required VGS in consultation with the Department to
file a petition with the [Commission] proposing a program to promote bio-methane project
development It is reasonable to expectthat aprogram meant to stimulate development of a
specific energy source would look to stimulate demand for that resource by offering an
opportunity for customers to purchase supply from RNG producers
The RNG program proposed by VGS and supported by the Department seeks to offer
ratepayers the option to purchase renewable energy as part of their individual energy-use
portfolio Furthermore the program includes a provision requiring that VGS develop a detailed
marketing plan that will serve to educate customers on the availability costs and benefits of
such resources which could lead to increased demand for the product
VGS intends to take advantage of the existing market for RINs associated with RNG used
as transportation fuel by proposing a Renewable Vehicle Fuel Tariff As described above in the
Public Comments section the Chittenden County Transportation Authority and Casella Vaste
Systems are interested in exploring the use of RNG to fuel their vehicle fleets which
demonstrates that there is existing customer demand for this product
Unlike the markets relating to RNG supply used for transportation fuel or renewable
electric generation and the associated trading and verification of RECs the RNG market is in its
infancy At this time it would not be appropriate to expect VGS to implement an RNG program
utilizing an RNG content standard similar to the electric renewable portfolio standard as
recommended by CLF because the equivalent standards and processes do not exist However
the RNG program represents a meaningful first step in encouraging customer interest in
purchasing RNG at retail thereby stimulating supply of RNG into the market and is consistent
with the Commissions condition requiring VGS to develop a proposal to promote bio-methane
project development
VGSs RNG program includes appropriate mechanisms for periodic reporting and
verification of program activities as well as an opportunity to comprehensively review the
program after three years of implementation Furthermore determinations regarding recovery of
costs associated with the RNG program will be made in the context of future proceedings
regarding VGSs rates The RNG program should evolve with the RNG markets in the near-term
and over the course of the next several years which will allow progress towards achievement of
Vermonts 2050 CEP renewable energy goals
Docket No 8667 Page 10
Because not all parties to this proceeding have waived their rights under 3 VSA $ 811
to file written comments or present oral argument with respect to this proposal for decision I am
circulating the proposal for decision to the parties for their review and comment
Dated at Montpelier Vermont this rrtl day of QrIltt 2017a0AndreaHearing Officer
Docket No 8667 Page 11
VII Corumrssron Drscussrox
On August 22017 the Department filed a letter stating that it supports the issuance of an
Order by the Commission that adopts the proposal for decision in full
Also on August 22017 VGS filed comments on the proposal for decision requesting
that Finding 16 be modified as follows (additional text in italics) If RNG supply exceeds
customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary
flow any remaining RNG attribute inventory amounts through the PGA or through a rate case ifVGS was under traditional cost of service regulation (subject to [Commission] approval)
VGS asserts that [a]bsent such specific language it is possible that VGS would be unable [to]
defer such costs for future recovery and that removal of that component introduces uncertainty
about the potential procedural mechanisms available for cost recovery in the last resort VGS
states that with the Commissions consideraacutetion of this request it does not request oral argument
No other comments were filed on the proposal for decision
The Hearing Officer recommended that the Commission find that determinations
regarding recovery of costs associated with the RNG program will be made in the context of
future proceedings regarding VGSs rates We agree with this recommendation VGS should
have an opportunity to request rate recovery for excess RNG supply However this proceeding
is not the proper time for such a determination Accordingly Finding 16 is hereby modified as
follows If RNG supply exceeds customer demand VGS would first seek to sell the excess
RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any
remaining RNG attribute inventory amounts through the PGA or through arate case as part of
its cost of service if the PGA is no longer in effect atthat timeWe emphasize the importance of the successful implementation of the RNG program in
helping to meet the States renewable energy policy objectives The annual report on the
implementation of the RNG program will serve as a valuable tool to assess that progress In this
proceeding CLF has raised policy considerations that should serve to guide these future reviews
of the RNG program For example CLF has raised concerns regarding the effectiveness of the
voluntary nature of the program In assessing its program we expect VGS to revisit and report
on the feasibility of incorporating RNG as a portion of its supply mix in the future It is
important for VGSs RNG program to be sustainable and continue to evolve ensuring significant
DocketNo8667 Page 12
contributions toward meeting the States renewable energy goals and reducing the consumption
of fossil fuel Accordingly it is critical that the annual report and the three-year comprehensive
review address not only the effectiveness of the program but also its affordability and the
feasibility of other policy options to advance the production and use of RNG in Vermont
Docket No 8667 Page 13
VIII Onunn
Ir rs Hennsy oRDERED ADJUDGED AND DECRnnn by the Public Utility Commission of the
State of Vermont that
1 The findings conclusions and recommendations of the Hearing Officer are
adopted and the Renewable Natural Gas (RNG) program to be implemented by Vermont Gas
SystemsInc (VGS) is approved
2 When VGS has procured RNG supply in amounts reasonably estimated to be
sufficient for estimated customer demand it shall file a formal tariff including proposed rates for
sale of RNG The tariff shall be reviewedpursuantto the procedures of 30 VSA ccedilccedil225226
and227 and sales under the program shall begin after Commission approval of the tariff
3 VGS shall develop and file for Commission approval a separate Renewable
Vehicle Fuel Tariff to serve customers using RNG as a transportation fuel
4 VGS shall file a marketing plan for the RNG program consistent with the
requirements set forth above within one month of the issuance of this Order
5 VGS shall file an annual report consistent with the requirements set forth above
upon implementation of the RNG program
6 VGS shall file a comprehensive review of the performance of the program with
the Commission and the Department after three years of implementation This review will
include an environmental accounting protocol to quantiff the environmental benefits of the
progrfim
7 VGS shall review proposed RNG supply arrangements with the Department
Docket No 8667
Orprcp oF THE Crnm
Dated at Montpelier Vermont this day of+hb
Z Roisman
Cheney
Page 14
20t7
Puslrc Urrlnv
CovtriquestIssIoN
OP VERMONT
(
)))
)))
Fired otildeeglcL ( JotTAttest c
of the Commission
NorIcE To READERS This decision is subject to revision oftechnical errors Reqders are requested tonotify the Clerk of the Commission (by e-mail telephone or inwriting) or any appqrent errors in order that anynecessary corrections may be made (E-mail address pucclerkvermontgov)
Appeal of this decision to the Supreme Court of Vermont must befiledwith the Clerk of the Comnissionwithin thirty days Appeal will not stay the efect of thszlig Order absentfurther order by this Commission orappropriate actiacuteon by the Supreme Court of Vermont Motions for reconsideration or stay if any must be filed withthe Clerk of the Commissionwithin ten days of the date of this deciacutesion and Order
Exhibit 22 VGS RNG Tariff Rate Filing
Exhibit 23 PUC Approval of VGS RNG Rates
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Case No l8-03 13-TF
Petition of Vermont Gas Systems Inc fotapproval of a new tariff implementing theRenewable Natural Gas program
Order entered
OnonRAppnovINc Tiquestrurn
On January 302018 Vermont Gas Systems Inc (VGS) filed a petition for approval of
a new tariff implementing the Renewable Natural Gas (RNG) program approved by the
Vermont Public Utility Commission (Commission) in Docket No 8667 In that Docket the
Commission required VGS to file a tariff implementing the RNG program when it has procured
RNG supply in amounts reasonably estimated to be sufficient to meet customer demandl In
this Order the Commission approves the new tariff marketed under the name EcoGas with an
effective date of bills rendered on and after March 15 2018
VGS states that it has executed an RNG supply contract with deliveries scheduled for
2018 and that two additional contracts are being negotiated for deliveries beginningin2019
VGS is proposing to set its initial RNG adder at$ll749lCcf which represents a five-year
blended rate based on the three RNG supply arrangements VGS intends to account for the
difference between the cost of RNG supply and the RNG adder as a regulatory asset within gas
costs As additional lower-cost supply is added to the portfolio the regulatory asset balance will
be recovered from EcoGas participants with the goal of fully reducing the balance by the end of
five years Accordingly VGS states that the RNG program will be rate-neutral to VGS and its
non-RNG customers
On February 272018 the Vermont Department of Public Service (Department) filed a
letter recommending that the Commission approve the tariff without a hearing or further
investigation The Department states that the tariff filing and proposed accounting treatment
comply with Vermont rate-setting practices policies precedents and statutes
lslaotx
I Docket 8667 Order of 96117 at 13
Page2Case No 18-0313-TF
Based on the foregoing we hereby approve VGSs proposed RNG tariff to be effective
on a bills-rendered basis beginning on March 15 2018 Recovery of any regulatory asset
balance at the end of the fifth year would need to be approved by the Commission in a future
proceeding
So Omnnnn
Case No l8-0313-TF
8r- day of lruacuterLiquestiquest
Page 3
Dated at Montpelier Vermont this 2018
Roisman PueIrc Urlrrv
CoiriexcllriquestlssloN
Cheney
OF VERMONT
Sarah Hofmann
Onncp oF THE CLBRr
Filed huacuteveuroAacute- icirc dollAttest I
Clerk of the Commission
Notice to Readers This decision is subiect to revision oftechnical errors Readers are requested to notify
the Clerk of the Commission (by e-mail telephone or in writing) or qny qpparent errors in order that any
necessary corrections may be made (E-mail address pucclerkvermontgov)Appeal of this decisiacuteon to the Supreme Court of Yermont must be filed with the Clerk of the Commission
within 30 days Appeal will not stay the efect of this Order oslashbsent further order by this Commission or appropriate
action by the Supreme Court of Vermont Motionsthornr reconsideration or stay if any must befiledwith the Clerk ofthe Commissionwithin 28 doslashys of the date of this decision and Order
)))
))))
PUC Case No 18-0313-TF
Eileen SimollardesLauren HammerVermont Gas
85 Swift StreetSouth Burlington VT 05403
June E Tiemey CommissionerVermont Department of Public Service1 12 State StreetMontpelier VT 05620 -2601
Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
Exhibit 31 Accounting Procedures
Exhibit 31 Accounting for VGS Renewable Natural Gas (Ver-9202019)
1 Purchase of RNG Supply
RNG supply purchases are separated into the cost of the commodity and the cost of the renewable attribute The commodity portion is expensed to gas costs in the delivery month while the renewable attribute is booked to an inventory account referenced herein as the ldquoRenewable Inventory Accountrdquo Like VGSrsquo existing storage inventory accounting the Renewable Inventory Account will track both the dollar value of the renewable attribute and the renewable attribute Mcfs Renewable attribute dollar values are record to ldquo16410050 Inventory RNG Storagerdquo while Mcf values are recorded in the gas cost model maintained by accounting In the month VGS purchases the renewable attribute it is accrued in a book model and goes in to 16410150 Inventory RNG Accrued then moves to the 16410050 in a final model the following month for final
RNG may be purchased at different locations and using varying pricing structures While the accounting for RNG does not vary with the purchase location or price the determination of the value of the renewable attribute will vary depending on whether or not the supply pricing expressly values the renewable attribute as an adder or it is embedded in a fixed price Examples of each are shown below The accounting of RNG supply is intended to separate the cost of the renewable attribute from the cost of the commodity The examples below are not all inclusive of what may occur but intended to show the accounting procedures used to separate the renewable attribute from the commodity and specify ownership of each aspect
In all cases the commodity cost portion - which is the total cost of the RNG purchased excluding the renewable attribute - will be expensed in the delivery month as a cost of gas
Example 1 ndash The fixed price of RNG includes both the commodity and the renewable attribute
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The total cost of the RNG supply purchased during the month is calculated by Accounting within the gas cost model as follows
MMBtu Purchased (as validated in step 2) $ MMBtu purchase price (as provided in a supply confirmation provided by gas supply)
4 For purposes of booking the renewable attribute to inventory it is necessary to calculate the RNG cost per Mcf The RNG cost Mcf is calculated using the total cost of RNG supply as calculated in step 3 divided by the Mcf in step 1
5 The renewable attribute price per Mcf is calculated as follows
RNG cost per Mcf as determined in step 4 ndashplus ldquoother componentsrdquo as calculated pursuant to Attachment A ndash minus ldquoAverage Commodity Costrdquo as calculated pursuant to Attachment A The ldquoother componentsrdquo added to the RNG cost per Mcf will vary depending on where the RNG supply was delivered but in each case will be identified in the calculation shown on Attachment A
6 The renewable attribute price per Mcf the total RNG Mcf delivered is recorded in the Inventory RNG Storage account
7 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
Example 2 - RNG purchased at a renewable attribute price plus a daily or monthly index
Where the pricing of RNG specifically separates the commodity from the renewable attribute the renewable attribute price will be what is recorded in the Renewable Inventory Account
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The renewable attribute price per Mcf the total RNG Mcf delivered as determined in step 1 is recorded in the Renewable Inventory Account
4 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
2 Recalculating the RNG Adder
The RNG Adder paid by customers will be recalculated anytime the Natural Gas charge portion of rates changes The Manager of Gas SupplyGas control is responsible for recalculating the RNG Adder The calculation will be verified and approved by the Vice President ndash Regulatory Affairs The determination of the RNG Adder will be pursuant to the methodology shown in Attachment A The Regulatory Department will prepare the amended RNG Adder tariff for filing with the PUC Upon PUC approval of the RNG Adder the Regulatory Department will prepare a memorandum advising Accounting and Gas Supply of the new RNG Adder as approved
3 Customer purchases VGS Renewable Natural Gas
The RNG Adder at the percent selected by the customer will be applied to the entire monthrsquos usage on the customersrsquo next bill For customers utilizing the S-RNG adder the entire volume elected with be on the customersrsquo next bill The S-RNG Adder nor the RNG Adder and percentage selected will not be prorated based on enrollment or termination date
Customers may terminate or modify their RNG selection upon 3 dayrsquos notice to VGS The termination or modification will be effective on the customerrsquos next monthly bill
The customerrsquos usage for the month will be multiplied by the percentage and the approved RNG Adder For customers utilizing the S-RNG adder the volume elected will be multiplied by the approved RNG adder This amount will then be recorded to SAP accounts 4010015-40010021 depending on which rate class the customer is in The RNG Adder is the same regardless of which rate class a customer is in At the end of the month a report is run by billing from the customer information system that shows total usage and which percentage of RNG the customer has signed up for to calculate the number of MCFrsquos of renewable attribute sold during the billing period Billing also provides a report of the volumes sold through the S-RNG Tarriff The Inventory RNG Storage account maintained within the gas cost model by Accounting is reduced by these Mcf The MCFrsquos are then multiplied by the RNG Adder in effect for the billing month and an entry is made to remove that dollar amount from the Inventory RNG Storage account and into the monthly cost of gas The intent of this transaction is to ensure that cost of the renewable attribute is reflected in the cost of gas in the month it is purchased by the customer This results in a matching of the renewable attribute revenue and expense
The RNG Adder revenue and renewable attributes removed from storage will be included in the gas cost deferral calculation However because there is a matching of the renewable attribute revenue and expense the impact on the deferral calculation will be zero
The calculation of unbilled revenues will exclude RNG as a customer can cancel their participation prior to their next bill
In the event Vermont Gas issues a credit to a customer related to the RNG program the value of the renewable attribute credited and the associated Mcf will not be applied to the Renewable Inventory Account
4 Controls
A spreadsheet is maintained by accounting that shows the MCFrsquos and dollar values of the Renewable Inventory Account This is reconciled monthly by the accounting team and will be reviewed by the Manager Gas SupplyGas Control
Accounting will validate that the amount removed from the Renewable Inventory Account matches the RNG Adder revenue Any discrepancies will be reviewed and corrected
A report will be run for each bill cycle that shows any changes to the RNG percentages selected this will include customers opting to withdraw from the RNG program The customer care team will validate any changes against customer confirmation paperwork
5 Renewable Inventory Account Reconciliation and Forecast
The PUC Order approving the RNG program contains provisions describing how RNG supply and demand imbalances will be addressed These provisions and how VGS will track and comply with them are as discussed in this section The PUC Order approving the RNG Program provides that if the available RNG supply during the previous 12 months is less than the amount purchased by customers VGS may use the funds collected to purchase carbon offsets (Finding 13) If carbon offset are not available VGS will contribute the RNG program revenues to the Clean Energy Development Fund or issue prorated credits to affected customers (Finding 15) The Order also provides that in the event RNG supply exceeds customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any remaining RNG attribute inventory amounts through the PGA or through a rate case as part of its cost of service if the s PGA is no longer in effect at that time (Finding 16 as modified) Finding 11 provides that VGS will use a ldquotrue-uprdquo period of up to 12 months in order to balance the difference between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply) Taken together these provisions require VGS to evaluate the imbalance after 12-months and then true-up the imbalance over the next twelve months To provide a forecast of the supplydemand imbalance quarterly the billing area will run a report showing the expected RNG volumes based on current customer commitments by month for the next 12-months Current customers commitments will be calculated based on the previous 12 months of usage multiplied by the RNG percentage currently signed up for The marketing department will provide their forecast of new RNG sales for the next 12-months Both will be provided to the Manager Gas SupplyGas Control The Manager Gas SupplyGas Control will compare the forecasted RNG sales known and expected to RNG supply commitments and provide a 24-month forecast of the supplydemand balance The supplydemand balance will be reviewed at the risk management meeting The strategy for addressing the imbalance consistent with the PUC order will be determined by the risk management committee
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
VGS Renewable Natural Gas Program Manual
Page 5
Section 2 Regulation
KEY REGULATORY STEPS
Item Description Filing Schedule VGS RNG Adder Tariff Update
Updates required to reflect gas costs changes
Quarterly
Annual RNG Report Full Programmatic Report Annually RNG Supply Contracts Filed for VT Public Utility
Commission (PUC) approval or information
As required
Triennial Assessment Program Review with Dept of Public Service
Every three years
21 REGULATORY SUMMARY
In October 2015 Vermont Gas filed a petition with the PUC for authority to establish a Renewable Natural Gas offering The PUC initiated Docket No 8667 to evaluate VGSrsquo proposal VGS modified the program based on input from parties to the proceeding12 and resubmitted testimony in April of 2016 followed by technical hearings in September of 2016 On September 6 2017 the PUC issued the final order approving the voluntary RNG program (see Exhibit 21) The Order provided authority for VGS to sell RNG under the proposed ldquoadderrdquo structure The Order also provided the accounting guidance to inventory the renewable attributes of RNG and the ability to recoup unsold RNG costs if need be with subsequent PUC approval The order also authorizes VGS to purchase carbon offsets in the event the supply of RNG is insufficient to meet subscriber demand
The table below lists the requirements contained in the Order and VGSrsquo compliance to-date
Order Requirement Status and Compliance Date
1 When VGS has procured RNG supplyhellipit shall filea formal tariff including proposed rates for the saleof RNG
Completed - January 30 2018 See also section 22 below
2 VGS shall develop and file for Commissionapproval a separate Renewable Vehicle Fuel Tariffto serve customers using RNG as a transportationfuel
Pending ndash Due date TBD
12 Parties to Docket No were the Department of Public Service Conservation Law Foundation and Lincoln Renewable Natural Gas LLC
VGS Renewable Natural Gas Program Manual
Page 6
Order Requirement Status and Compliance Date
3 VGS shall file a marketing plan for the RNGprogram consistent with the requirements setforth in the order within one month of the issuanceof this Oder
Completed - October 6 2017
4 VGS shall file an annual report consistent withthe requirements of the Order uponimplementation of the RNG program
Initial filing completed ndash filed June 2018 and 2019
5 VGS shall file a comprehensive review of theperformance of the program with the Commissionand Department after 3 years of implementationThis review will include an environmentalaccounting protocol to quantify the environmentalbenefits of the program
Pending ndash Due by March 15 2021
6 VGS shall review proposed RNG supplyarrangements with the Department
Completed - Initial review 11618 Review of subsequent contract also completed and approved by PUC
On October 4 2018 the Company filed with the PUC for a new RNG tariff offering ldquoS-RNGrdquo Adder which has the same pricing as the RNG Adder The new offering allows customers to purchase a fixed amount of RNG per month that would be unbundled from the customerrsquos metered gas consumption and offers customers who are consumers of natural gas but do not have an account for metered gas service with the Company the ability to purchase RNG attributes The PUC approved the S-RNG Adder to take effect with bills rendered on or after December 1 2018 (see Exhibit 24)
22 VGS RENEWABLE NATURAL GAS ADDER TARIFF The PUC order provides ldquoWhen VGS has procured RNG supplyhellipit shall file a formal tariff including proposed ratesrdquo On January 30 2018 after contracting for the initial RNG supply VGS filed the VGS Renewable Natural Gas Adder Tariff (see Exhibit 22) On March 9 2018 the PUC approved the initial RNG Adder for effect with bills rendered on and after March 15 2018 (see Exhibit 23)
In simple terms the RNG Adder reflects the difference between the cost of RNG and the cost of conventional gas This is calculated by subtracting the average commodity cost for conventional natural gas from the average commodity cost for RNG as indicated in the following example
VGS Renewable Natural Gas Program Manual
Page 7
VGS Renewable Natural Gas Adder Calculation Average RNG Commodity Cost
Minus Average Natural Gas Charge Equals VGS Renewable Natural Gas Adder
Exhibit 22 provides the detailed calculations
This formula identifies the current premium to be paid per CCF of RNG This premium also represents the value of the ldquoVGS Renewable Natural Gas Attributerdquo that VGS will withdraw from the VGS Renewable Natural Gas Attribute Inventory described below
To full reflect the cost of the initial RNG supply with future RNG supply contracts the initial RNG Adder was based on a blended rate of the cost of the first and the expected costs of future RNG purchases over the next 5 years The PUC has authorized this blended approach
The RNG Adder will change whenever the PUC authorizes a change in the Natural Gas Charge portion of the tariff Currently this change occurs quarterly
23 ANNUAL RNG REPORT An Annual RNG Report will be filed with PUC and Vermont Department of Public Service (ldquoDepartmentrdquo) each year in June The first annual report was filed in June 2018 In accordance with the PUC final order approving the Program the annual report will include the following information
1 Number of subscribers by class2 Sales volume by customer class3 Sales Revenues4 Any sales or purchases of carbon offsets5 Supply Consumption matching portfolio including any shortfall or excess supply of
RNG6 True-up schedule for any imbalances7 RNG supply verification8 Quantification of the impact of any excess RNG costs flowing through the PGA if
VGS remains under alternative regulation9 Accounting of any carbon offsets or other incentives10 Status of any contracts for RNG including plans to acquire new supply contracts11 Revenue from Renewable Identification Number (ldquoRINrdquo) sales and impact on the
transport (transportation) tariff as well as any projections about the RIN marketthat are available to VGS and
12 Complete reports and environmental verifications by an independent verifier
The annual report will also address the effectiveness of the program and its affordability
VGS Renewable Natural Gas Program Manual
Page 8
24 THREE-YEAR IMPLEMENTATION REVIEW In accordance with the PUC Order in March 2021 (the third year of the Program) VGS will file a comprehensive review of the performance of the Program The review will include an environmental accounting protocol to quantify the environmental benefits of the program The three-year comprehensive program review will also address the effectiveness of the program its affordability and the feasibility of other policy options to advance the production and use of RNG in Vermont
SECTION 2 EXHIBITS
bull Exhibit 21 VT PUC Approval Orderbull Exhibit 22 VGS RNG Tariff Rate Filingbull Exhibit 23 PUC Approval of VGS RNG Ratesbull Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
VGS Renewable Natural Gas Program Manual
Page 9
Section 3 Supply Procurement and Accounting
KEY VGS RENEWABLE NATURAL GAS SUPPLY AND ACCOUNTING STEPS
Item Description Schedule Owner RNG Supply Contracts
Procuring RNG Supply As needed Gas Supply
RNG Supply True-Up
Balancing RNG supply sales and retiring attributes
Monthly Finance
RNG Supply Verification
Verifying ldquorenewabilityrdquo of RNG Supply
Annually Gas SupplyThird- Party
31 VGS RENEWABLE NATURAL GAS SUPPLY OVERVIEW
VGS intends to contract with a variety of RNG supply sources to meet its customer demand in the RNG Program RNG supply is currently available from a limited number of landfill and digester projects in Canada or US states other than Vermont In Vermont at least one local supply project is currently under development
Today there is no central ldquomarketplacerdquo for RNG suppliers and buyers to trade RNG supply contracts RNG buyers such as VGS transact with individual producersprojects or work through RNG brokers to acquire RNG supply or the environmental attributes associated with RNG in bilateral transactions VGSrsquo initial RNG supply contract in 2018 was with BP Canada Energy Group ULC and sourced from the EBI Inc13 biogas production facility located in Ste Genevieve Quebec In 2019 VGSrsquo purchased RNG supply from a waste water treatment facility in Dubuque Iowa
In 2020 VGS plans to begin receiving RNG supply from a Vermont farm digester and a Canadian digester facility The Vermont farm digester located in Salisbury Vermont is slated for completion in late 2020 producing 180000 MMbtursquos per year The Canadian digester project is located in London Ontario VGS has agreed to purchased 100 of the supply from this facility up to 120000 MMbtursquosyear for 15 years VGS sought and received PUC approval for this Ontario supply in 2018 and received approval for an amendment in 2019 To meet anticipated demand for RNG until these two resources come on line the Company purchased short-term supply of RNG from the Iowa facility in 2019 We anticipate that these supply sources will satisfy the VGS Renewable Natural Gas Program supply needs for the first few years of the Program If we are unsuccessful
13 EBIrsquos Facility was recognized in 2016 (httpswwwdesjardinscomcavideossinglejspdocName=vid-ebi-e)
VGS Renewable Natural Gas Program Manual
Page 10
in procuring supply from these sources or if demand exceeds these planned supplies VGS will seek additional RNG supply in the marketplace
32 VGS RENEWABLE NATURAL GAS SUPPLY CONTRACTS VGS will utilize standard industry or comparable contract vehicles to procure RNG supply with site-specific terms and conditions Given the unique nature of the in-state RNG project the gas supply contract is a 3 way agreement between the producer VGS and an end user Accordingly the form of the contract does not resemble industry standard supply agreements but contains all appropriate business terms The first two contracts signed by VGS utilize a gas utility standard base contract with signed transaction confirmation documents that specify the specific details of each deal These contracts will require the RNG supplier to certify the renewable attributes and that VGS has full and sole ownership of those attributes As required by the PUC Order RNG Suppliers will also be required to allow VGS independent verification of the production and transactions related to VGS supply volumes The specific PUC requirements are found in finding 21 page 7 of Exhibit 21 - VT PUC Approval Order
33 VGS RENEWABLE NATURAL GAS ACCOUNTING Like accounting practices in the renewable electric industry Vermont Gas will have the obligation to match RNG supply volumes with customer RNG purchase volumes over time As discussed in Section 22 the premium for RNG above the cost of conventional natural gas establishes the value of the renewable attribute purchased by the customer These attributes are tracked in a separate inventory account and then matched with actual retail VGS Renewable Natural Gas sales Once these renewable attributes are matched with VGS Renewable Natural Gas sales they are ldquoretiredrdquo and cannot be resold in any manner or used to satisfy another obligation by VGS As provided in the PUC order ldquoVGS will use a ldquotrue-uprdquo period of up to 12 months to balance the difference between RNG attributes sold to customers (demand) and RNG attributes purchased by VGS from suppliers (supply)rdquo This true-up period allows RNG attribute ldquooversupplyrdquo and ldquoundersupplyrdquo to be balanced as described below
In an ldquooversupplyrdquo situation where forecasted RNG attribute purchases exceed the number of RNG attributes that VGS forecasts selling to its customers through the RNG Program VGS will first seek to market the excess RNG and the environmental attributes back through the wholesale supply channels If this oversupply extends beyond the 12-month true-up window VGS may seek PUC permission to flow any remaining RNG attribute inventory amounts through the Purchase Gas Adjustment (ldquoPGArdquo) or through its cost of service if the PGA is no longer in effect at that time
An ldquoundersupplyrdquo situation would occur if customer purchases of RNG attributes exceeded the amount available under VGSrsquo RNG supply contracts in the forward looking 12-month true-up window If the RNG supply purchases are lagging the RNG sales VGS
VGS Renewable Natural Gas Program Manual
Page 11
will true-up or balance this undersupply over the upcoming 12-month period through existing or additional RNG supply purchases
If VGS is unable to eliminate an undersupply imbalance after the 12-month true-up period VGS would need to purchase carbon offsets in the dollar amount equal to VGS Renewable Natural Gas revenues collected associated with the undersupply (See Exhibit 21 Order Finding 13 and 15) Carbon offsets are listed on one of several Carbon Registries such as the American Carbon Registry If carbon offsets are not available VGS has the option to contribute these RNG revenues to the statersquos Clean Energy Development Fund or issue prorated credits to affected customers It should be noted that while purchasing offsets is a tool for VGS it is not the intent of the VGS Renewable Natural Gas Program and if an undersupply situation persisted VGS would likely petition the PUC to modify or suspend the VGS Renewable Natural Gas Program prospectively
VGS will manage the RNG Program to closely match supply and demand and utilizing our RNG wholesale cost mitigation tools to avoid RNG supply challenges
As renewable programs evolve in the energy and natural gas industry Vermont Gas will adjust its accounting procedures to reflect industry standards and revise this manual to reflect any modifications or changes
34 RENEWABLE VERIFICATION VGS is committed to transparency and the integrity of this innovative program is essential to success Toward that end no step is more essential than the verification of the renewability claims of our VGS Renewable Natural Gas supply The PUC reinforced this commitment in the RNG approval order as follows
ldquoVGS will annually verify that the RNG was produced by a renewable gas production facility that VGS is the exclusive owner of any environmental attributes associated with RNG it sells under the program that it acquired the RNG from its transferor and sold it at retail and that the RNG has not been sold twice at any point between RNG production and sale to VGS whether by sales into carbon offset markets or otherwise This verification will be based on certifications of VGSrsquos suppliers and of an independent third party retained by VGS for this purposerdquo
VGS will use an independent third-party to verify the renewable claims for the VGS Renewable Natural Gas supply including the following
bull Confirm the renewable fuel feedstock identificationbull Confirm the product renewable fuel identificationbull Review and confirm the renewable fuel production processbull Review of fuel flow measurement and quality monitoring process and equipment
VGS Renewable Natural Gas Program Manual
Page 12
bull Review of contracts and affidavits governing the transfer of the RNG from theoriginal source to the end user(s)
bull Review of evidence confirming the existence of a physical path (common carrierpipeline) for RNG transfer and distribution to end users
SECTION 3 EXHIBITS
bull Exhibit 31-Accounting Proceduresbull Exhibit 32-Verification from Suppliersbull Exhibit 33-Third Party Verification
VGS Renewable Natural Gas Program Manual
Page 13
Section 4 Marketing
KEY MARKETING STEPS Item Description Owner VGS Renewable Natural Gas Branding
Maintain product and brand integrity Communications
Product Definition Ensuring proper VGS Renewable Natural Gas description in all materials
Communications
External Review Verification of Marketing claims Communications
41 MARKETING PLAN Exhibit 41 is the 2018 version of the Marketing Plan filed with the PUC This document may be updated from time to time as we adjust our marketing strategy
42 MARKETING CLAIMS VGS is committed to making clear and accurate claims about the environmental benefits of VGS Renewable Natural Gas We have enlisted the assistance of a law firm specializing in marketing renewable products to review VGSrsquo marketing materials and claims In addition VGSrsquo annual third-party review of our program will focus on the integrity of our administration of the VGS Renewable Natural Gas program (see Section 54)
43 VGS RENEWABLE NATURAL GAS ldquoPRODUCT CONTENT LABELrdquo The Product Content Label is intended to be prominently displayed on the VGS web site and in correspondence to customers when they enroll in this program
Product Content Label
By participating in the VGS Renewable Natural Gas program you are purchasing the renewable attributes associated with the production of renewable natural gas (ldquoRNGrdquo) which may also be referred to as biogas or bio-methane A unit of VGS Renewable Natural Gas measured in hundred cubic feet (CCF) represents the environmental attribute of 1 CCF of biogas VGS reserves the right to purchase carbon offsets if RNG supply is not available VGS will notify customers if this occurs The Product Content Label is available at httpswwwvermontgascomrenewablenaturalgas
SECTION 4 EXHIBITS
bull Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)bull Exhibit 42 VGS Renewable Natural Gas Trademark
VGS Renewable Natural Gas Program Manual
Page 14
Section 5 Customer Information and Billing
KEY BILLING AND REVENUE STEPS Item Description Owner Billing Enrollment of VGS Renewable Natural Gas
Customers Contact Center
Notice Customer Notice of VGS Renewable Natural Gas Rates
Contact CenterBilling Group
Program Assurance Verification of VGS Renewable Natural Gas program procedures
Billing and Finance
51 CUSTOMER ENROLLMENT AND BILLING PROCESS The VGS Customer Care team will enroll customers and establish the VGS Renewable Natural Gas Adder on customer accounts Customers will be able to order VGS Renewable Natural Gas via VGSrsquo website (preferred method) calling VGS contact center or through the VGS Energy Services team An RNG calculator is available on VGSrsquo website httpswwwvermontgascomrenewablenaturalgasadder-calculator that can assist customers in estimating the costs of VGS Renewable Natural Gas at the various percentage levels based on the customerrsquos gas consumption VGS will inform customers of the current RNG Adder premium when they enroll Customers have two options when enrolling in the RNG program Customers may select their desired percentage of VGS Renewable Natural Gas ( 10 25 50 or 100) or they may allocate a fixed amount of RNG attributes (ldquoS-RNGrdquo) for each month that they are enrolled in Customer Care will then set up the billing on their account VGS will send an order confirmation via email or as a separate mailing (see Exhibit 51) thanking the customer for subscribing to VGS Renewable Natural Gas and informing the customer of the estimated impact on their bill As shown on Exhibit 51 the order confirmation letter will also include the RNG program guidelines These guidelines are discussed in section 53 below
52 VGS RENEWABLE NATURAL GAS WEBSITE AND FREQUENTLY ASKED QUESTIONS The VGS Renewable Natural Gas web page contains general VGS Renewable Natural Gas information an FAQ a VGS Renewable Natural Gas calculator current VGS Renewable Natural Gas Adder and an easy-to-use sign up form
For the most recent Frequently Answered Questions visit httpwwwvermontgascomVGS Renewable Natural Gas
VGS Renewable Natural Gas Program Manual
Page 15
53 VGS RENEWABLE NATURAL GAS PROGRAM GUIDELINES VGS Renewable Natural Gas customers will fall under VGSrsquo General Terms and Conditions outlined in VGSrsquo tariffs and PUC rules (ex Disconnection practices late fees taxes) VGS tariffs can be found at httpwwwvermontgascomaccountrates
VGS will notify VGS Renewable Natural Gas customers of rate changes in advance of implementation on both their individual bills and the Companyrsquos website RNG customers have the ability to cancel or modify their RNG account profile consistent with the tariff
VGSrsquo RNG customers can subscribe to VGS Renewable Natural Gas service with no term commitment and can cancel with three daysrsquo notice The RNG Adder will apply at either the percentage or fixed quantity allocated by the customer to the usage shown on the monthly bill regardless of enrollment or termination date The RNG Adder will not be pro-rated for partial-month usage
VGS customers receiving the low-income rate discount can subscribe to VGS Renewable Natural Gas however the 20 low income discount will not apply to the RNG Adder
Customers currently on a budget program will be encouraged to request a recalculation of their budget plan to adjust for the RNG Adder costs but it is not required
54 VGS RENEWABLE NATURAL GAS PROGRAM ASSURANCE
On an annual basis VGS will conduct a program review to ensure the VGS Renewable Natural Gas program is managed consistent with this manual The VGS Renewable Natural Gas program is a new product for the US natural gas utility industry and as such no industry specific standards exist VGS is working with on a national effort to develop a ldquoGreen-Erdquo certification process for Renewable Natural Gas programs that process is targeted for completion in 2020
SECTION 5 EXHIBITS
bull Exhibit 51 ECIS Customer Confirmation
VGS Renewable Natural Gas Program Manual
Page 16
EXHIBITS
Exhibit 21 VT PUC Approval Order
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Docket No 8667
Petition of Vermont Gas Systems Inc for aRenewable Natural Gas Program andOptional Tariff
)))
Hearing atMontpelier Vermont
September 22016
order entered q leacute I aon
PRBsBNI Andrea C McHugh Hearing Officer
AppeeReNcBs Peter H Zamore Esq
Owen J McClain EsqSheehey Furlong amp Behrn PCfor Vermont Gas Systems Inc
Louise C Porter EsqTimotthorn M Duggan Esq
for the Vermont Department of Public Service
Sandra Levine Esqfor Conservation Law Foundation
Gerald R Tarrant EsqTarcant Gillies amp Richardsonfor Lincoln Renewable Natural Gas LLC
I INrnooucrroN
This case involves a petition filed by Vermont Gas Systems Inc (VGS) with the
Vermont Public Utility Commission (oCommission) I for approval of a Renewable Natural Gas
(RNG) program and optional RNG tariff service for its customers The proposed RNG
progriquestigravem establishes a framework for VGS to offer its customers the option to purchase RNG for
I Pursuant to Section 9 of Act 53 of the 2017 legislafive session the Vermont Public Service Boards name waschanged to the Vermont Public Utility Commission effective July l 2017 For claity activities of the VermontPublic Service Board that occurred before the name change will be referred to in Commission documents as
activities of the Commission unless that would be conntildersing in the specific context
Docket No 8667 Page2
program establishes a framework for VGS to offer its customers the option to purchase RNG for
as a portion of their usage RNG is produced from materials such as agricultural waste manure
municipal waste plant material or compost and is also referred to as bio-methane In this
proposal for decision I recommend that the Commission approve the proposed RNG program
and require VGS to make compliance filings as set forth herein
il PnocnrunnlHrsroRY
On October 232015 VGS figraveled a petition for approval for its RNG program including
prefiled testimony and exhibits of Thomas Murray
On January 192016I held a prehearing conference and on January 252016I issued
an Order establishing a schedule
On February 122016 VGS filed a revised RNG Plan
On March 102016I held a workshop to discuss the proposed program
On March 152016I issued an Order revising the schedule
On March 222016 Conservation Law Foundation (CLF) and Lincoln Renewable
Natural Gas LLC (Lincoln) filed motions to intervene in this proceeding
On April 12016 VGS filed supplemental testimony and exhibits
On April 82016I issued an Order granting CLFs and Lincolns intervention requests
On July 72016 the Vermont Department of Public Service (Department) CLF and
Lincoln filed testimony
On August 82016 Lincoln filed supplemental testimony
A technical hearing was hthornld on September 22016
On September 30 20|6VGS filed a draft proposal for decision supported by the
Department In addition CLF filed a brief on the same date Reply briefs were filed by VGS
and CLF on October 142016
III Posnroxs oF THE PlRrlns
VGS
VGS requests approval of its proposed RNG program for the sale of RNG to customers
on a voluntary basis VGS claims that its proposal contains reasonable provisions to align its
RNG purchases with the amounts sold to its customers appropriate mechanisms to address over-
Docket No 8667 Page 3
or under-supply of RNG and verification requirements to ensure that sales in fact consist of
RNG VGS maintains that the RNG program is an appropriate first step in stimulating RNG
producer supply and customer demand and is oamply supported by Vermonts experience of
measured implementation of electric renewable pricing programs2 VGS argues that the
program is responsive to the Commissions condition in its Order in Docket 79701o develop a
proposal to promote bio-methane project development3
Department of Public Service
Although the Department did not file a brief or reply brief it did present witness
testimony and indicated its support for the draft proposal for decision filed by VGS The
Department recommends that VGS review all proposed RNG supply arrangements with the
Department (in addition to seeking 30 VSA $ 248 approval where required) and suggests that
in the event of an undersupply of RNG VGS obtain carbon offsets in an amount equivalent to
the unused customer contributions The Department recommends that the RNG program be
reviewed at the end of three years at which time the protocol regarding the purchase of offsets
would be revisited
C ons ervation Law Foundation
CLF urges that the Commission reject the RNG program and instead adopt an RNG
content standard similar to the electric renewable portfolio standarda CLF maintains that the
expected annual sales volume is not apace that is consistent with Vermonts legislative and
planning targets for meeting energy needs with renewable energy or for reducing greenhouse gas
emissionss CLF claims that the proposed voluntary tariff falls short of being a program or
strategy that promotes the increased use of RNG resources or supply or fosters bio-methane
projects in Addison county6
2 VGS reply brief aI23 In Docket 7970the Commission considered the petition of VGS for a certificate of public good (CPG) pursuant
to 30 VSA $ 248 authorizing the construction of the Addison Natural Gas Pipeline In an Order issued on
December 232013 the Commission granted the CPG As a condition of approval the Commission required VGSin consultation with the Department to file a petition with the [Commission] proposing a program to promote bio-methane project development Docket 7970 Order of l2l23ll3 at 147
a CLF brief at 12s CLF brief at 36 CLF brief at 4
Docket No 8667 Page 4
Lincoln
Lincoln maintains that itis essential to promote development of agricultural-based bio-
methane supply in VermontT Lincoln states that the Commission is not in a position to
adequately address VGSs proposed RNG program until negotiations for sale of itsoutput
involving VGS and Middlebury College are completes
IV Punrrc CounnnNrs
The Commission received three letters of support for VGSs RNG program On March 10
2016 the Chittenden County Transportation Authority filed comments indicating that it intends to
explore the possibility of utilizing RNG to cover a portion of the energy needs for its fleet of 70
buses On March 182016 Champlain College filed comments noting that it is interested in using
RNG for a portion of its energy needs that are currently met with conventional natural gas On
March 282016 Casella Waste Systems made a filing with the Commission stating its intention
to explore using RNG to meet some of its energy needs for its fleet of vehicles
V trrutrxcs
Based on the evidence of record I hereby report the following findings and
recommendations to the Commission in accordance with 30 VSA $ 8(c)
1 RNG is produced from raw materials such as agricultural waste manure municipal
waste plant material or food waste Decomposition or digestion of these materials produces
raw methane which is then cleaned or upgraded to bio-methane in order to meet the receiving
pipelines gas quality specifications prior to injection into an existing pipeline system Thomas
Murray VGS (Murray) supp pf at3
2 VGS is exploring options to purchase RNG supply from Lincoln and from landfill gas
projects located outside Vermont that would be received through the Trans-CanadaPipeline
(TCPL) system Murray supp pf at 8-9
7 Daniel Smith Lincoln Renewable Natural Gas LLC (Smith) supp pf at L8 On August 152016 Lincoln filed a motion to continue this proceeding for a period of not less than 60 days statingthat the continuance would allow [it] VGS and Middlebury College to complete discussions as to VGSsinvolvement in the RNG supply in Vermont and allow the record in this case to be properly developed VGS and
the Department opposed the request for continuance On August 222016I issued an Order denying Lincolnsrequest and determined that Lincoln did not demonstrate good cause to postpone the technical hearing
Docket No 8667 Page 5
3 Under the program retail customers would voluntarily purchase RNG in amounts equal to
l0oo25yo50o or 100 of their total monthly requirements at specified prices per Ccf as an
adder to other retail charges Customers could terminate RNG purchases upon providing three
days of advance notice to VGS Murray supp pf at l-2 exhs Pet-VGS-l and Pet-VGS-3
4 Intemrptible customers will have the opportunity to participate in the RNG program
through VGSs existing Lock Price Program which currently provides for up to a two-year
commitment Murray supp pf at 5
5 VGS will develop and file for Commission approval a separate tariff for use of RNG as a
transportation fuel This tariff will allow VGS to take advantage of the sale of the associated
Renewable Identification Numbers (ooRINs) When RNG is used as a transportation fuel it is
eligible to receive RINs under the Federal Renewable Fuel Standard RINs can be resold on the
wholesale market and would be used to offset the price of RNG to transportation customers
receiving service under the tariff Joan E White
Department (White) pf at7tr912116 at 62-
63 (White) exh Pet-VGS-5 Response 4
6 VGS will also initiate a review of the RNG program by the Commission Department and
others after three years White pf at9tr912116 (Munay) at24
7 The adder price for each Ccf of RNG will be equal to the average RNG commodity cost to
VGS less the average commodity cost of natural gas VGS will adjust the adder price per Ccf on
a quarterly basis as part of its Purchased Gas Adjustment (PGA) filing Murray supp pf at 4
8 The proposed RNG program will include a tariff that is very similar in concept to the
Green Mountain Power Corporation (GMP) Cow Power tariff However Cow Power is based
on a fixed rate per kWh no matter what the cost of the renewable energy Murray supp pf at llVhite pf at 4
9 VGSs RNG tariff will be calculated quarterly based on actual RNG and natural gas costs
and will provide accurate price signals as to the price differential between natural gas and RNG
White pf at 4
10 Based on a survey conducted by VGS 85 of its customers are willingto pay l0oo
more for a renewable product VGS projects that customers could potentially consume over
500000 Mcf of RNG over the next five years Murray supp pf at 5
DocketNo8667 Page 6
11 VGS will use a true-up period of up to 12 months in order to balance the difference
between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply)
Murray supp pf at 9
12 There is a risk that due to the voluntary nature of the RNG program supply and demand
will be mismatched White pf at41 David G Hill CLF (Hi11) pf at 9
13 If the available RNG supply during the previous 12 months is less than the amount
purchased by VGS customers the RNG program provides that VGS may use funds collected to
purchase carbon offsets from an established carbon registry such as the American Carbon
Registry VGS will purchase an amount of carbon offsets equal to the amount of the revenue
resulting from the undersupply in order to result in a revenue-neutral program At the time of the
three-year implementation review VGS will propose an environmental accounting protocol in
order to quantify the environmental benefits of the program and to evaluate the financial risk of
purchasing carbon offsets in an amount equivalent to the environmental benefits of unsold RNG
due to undersupply Murray supp pf at 6 l0 exh Pet-VGS-s Responses 1
14 The development and standardization of RNG attributes is in its infancy as compared to
the existing markets for the environmental attributes used in the electric industry (renewable
energy credits or (RECs)) Murray supp pf at 12
15 If carbon offsets are not available VGS will contribute the RNG program revenues to the
Clean Energy Development Fund or issue prorated credits to affected customers Exh Pet-
VGS-S Responses 3
16 If RNG supply exceeds customer demand VGS would seek to sell the excess RNG at
wholesale Murray supp pf at 10
17 VGS will provide proposed RNG supply contracts to the Department prior to execution
It will also consult with the Department before making decisions that could dramatically impact
price or the integrity of the RNG program Exh Pet-VGS-S Responses 2 White pf at 5
18 The estimated cost of RNG supply ranges from $l2lMcf to $25lMcf The cost of natural
gas is less than $3Mcf Murray supp pf at 8-9
19 VGS will implement an RNG Quality Assurance Plan establishing a testing and
monitoring process to ensure that RNG injected (via in-state RNG producers) into the VGS
system is pipeline quality and meets the specifications of the TCPL transportation tariff for bio-
methane gas quality Murray supp pf at 14 exh Pet-VGS-4
Docket No 8667 PageT
20 VGS will file an annual report on the RNG program with the Commission and the
Department containing the following information
1 Number of subscribers by customer class
2 Sales volume by customer class
3 Sales revenues
4 Any sales or purchases of carbon offsets
5 Supplyconsumption matching portfolio including any shortfall or excess
supply of RNG
6 True-up schedule for any imbalances
7 RNG supply verification
8 Quantification of the impact of any excess RNG costs flowing through the
PGA if VGS remains under altemative regulation
9 Accounting of any carbon ofszligets or other incentives
10 Status of any contracts for RNG including plans to acquire new supply
contracts
I 1 Revenue from Renewable Identification Number (RlN) sales and impact
on the transport tariff as well as any projections about the RIN market that are
available to VGS and
12 Complete reports and environmental verifications by an independent
verifier
Murray supp pf at 11 exh Pet-VGS-3 White pf at 8-9 tr912116 at23-24 (Munay)
21 Except as described below concerning RlN-eligible RNG VGS will annually verify that
the RNG was produced by a renewable gas production facility that VGS is the exclusive oryner
of any environmental attributes associated with RNG it sells under the program that it acquired
the RNG from its transferor and sold itatretail and that neither the RNG nor any renewable
attribute associated with the RNG has been sold twice at any point between RNG production and
sale to VGS whether by sales into carbon offset markets or otherwise This verification will be
based on certifications by VGSs suppliers and by an independent third party retained by VGS
for this purpose Exh Pet-VGS-3 exh Pet-VGS-s Response 5 White pf at 8
Docket No 8667 Page I
22 For RlN-eligible RNG used as vehicle fuel verification will be addressed in detail in the
future as part of VGSs proposed Renewable Vehicle Fuel Tariff Exh Pet VGS-5 Response 4
rr912116 at 65 (White)
23 There are few natural gas utilities currently offering RNG at retail VGS modeled its
RNG program after the program designed by FortisBC a local distribution company in British
Columbia Canada VGS also had discussions with SoCalGas in Southern California Both of
these companies are leaders in developing RNG offerings and fostering RNG supply resources
Murray supp pf at 7
24 VGS will file with the Commission and Department a marketing plan containing the
following elements
l An evaluation element that includes concrete metrics such as sales
volume targets and enrollment targets
2 Identification of target market segment(s)
3 Development of materials and language for customer-marketing efforts
that explain the RNG program in plain language easily understandable to the
average customer
4 An online bill calculator
5 An implementation plan that identifies specific activities and a timetable
and
6 Abudget
Exh Pet-VGS-5 White pf at 10 Tr912116 at22-23 (Munay)
25 VGS and the Department represent that the RNG progriquestun is responsive to the
Commissions condition in its Order in Docket 7970 rcquiring VGS to develop a proposal to
promote bio-methane project development Murray supp pf al 13-14tr912116 at 63 (Vhite)
26 VGS asserts that the RNG program represents appropriate progress toward the Vermont
Comprehensive Energy Plan (CEP) goal to meet90o of Vermonts energy needs through
renewable sources by 2050 Murray supp pf at 12-13
VI DlscussroN iexclxu Coxclustox
Vith this proposal for decision I recommend that the Commission approve the RNG
program in accordance with the findings described above and based upon the evidence in the
Docket No 8667 Page 9
record In Docket 7970 the Commission required VGS in consultation with the Department to
file a petition with the [Commission] proposing a program to promote bio-methane project
development It is reasonable to expectthat aprogram meant to stimulate development of a
specific energy source would look to stimulate demand for that resource by offering an
opportunity for customers to purchase supply from RNG producers
The RNG program proposed by VGS and supported by the Department seeks to offer
ratepayers the option to purchase renewable energy as part of their individual energy-use
portfolio Furthermore the program includes a provision requiring that VGS develop a detailed
marketing plan that will serve to educate customers on the availability costs and benefits of
such resources which could lead to increased demand for the product
VGS intends to take advantage of the existing market for RINs associated with RNG used
as transportation fuel by proposing a Renewable Vehicle Fuel Tariff As described above in the
Public Comments section the Chittenden County Transportation Authority and Casella Vaste
Systems are interested in exploring the use of RNG to fuel their vehicle fleets which
demonstrates that there is existing customer demand for this product
Unlike the markets relating to RNG supply used for transportation fuel or renewable
electric generation and the associated trading and verification of RECs the RNG market is in its
infancy At this time it would not be appropriate to expect VGS to implement an RNG program
utilizing an RNG content standard similar to the electric renewable portfolio standard as
recommended by CLF because the equivalent standards and processes do not exist However
the RNG program represents a meaningful first step in encouraging customer interest in
purchasing RNG at retail thereby stimulating supply of RNG into the market and is consistent
with the Commissions condition requiring VGS to develop a proposal to promote bio-methane
project development
VGSs RNG program includes appropriate mechanisms for periodic reporting and
verification of program activities as well as an opportunity to comprehensively review the
program after three years of implementation Furthermore determinations regarding recovery of
costs associated with the RNG program will be made in the context of future proceedings
regarding VGSs rates The RNG program should evolve with the RNG markets in the near-term
and over the course of the next several years which will allow progress towards achievement of
Vermonts 2050 CEP renewable energy goals
Docket No 8667 Page 10
Because not all parties to this proceeding have waived their rights under 3 VSA $ 811
to file written comments or present oral argument with respect to this proposal for decision I am
circulating the proposal for decision to the parties for their review and comment
Dated at Montpelier Vermont this rrtl day of QrIltt 2017a0AndreaHearing Officer
Docket No 8667 Page 11
VII Corumrssron Drscussrox
On August 22017 the Department filed a letter stating that it supports the issuance of an
Order by the Commission that adopts the proposal for decision in full
Also on August 22017 VGS filed comments on the proposal for decision requesting
that Finding 16 be modified as follows (additional text in italics) If RNG supply exceeds
customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary
flow any remaining RNG attribute inventory amounts through the PGA or through a rate case ifVGS was under traditional cost of service regulation (subject to [Commission] approval)
VGS asserts that [a]bsent such specific language it is possible that VGS would be unable [to]
defer such costs for future recovery and that removal of that component introduces uncertainty
about the potential procedural mechanisms available for cost recovery in the last resort VGS
states that with the Commissions consideraacutetion of this request it does not request oral argument
No other comments were filed on the proposal for decision
The Hearing Officer recommended that the Commission find that determinations
regarding recovery of costs associated with the RNG program will be made in the context of
future proceedings regarding VGSs rates We agree with this recommendation VGS should
have an opportunity to request rate recovery for excess RNG supply However this proceeding
is not the proper time for such a determination Accordingly Finding 16 is hereby modified as
follows If RNG supply exceeds customer demand VGS would first seek to sell the excess
RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any
remaining RNG attribute inventory amounts through the PGA or through arate case as part of
its cost of service if the PGA is no longer in effect atthat timeWe emphasize the importance of the successful implementation of the RNG program in
helping to meet the States renewable energy policy objectives The annual report on the
implementation of the RNG program will serve as a valuable tool to assess that progress In this
proceeding CLF has raised policy considerations that should serve to guide these future reviews
of the RNG program For example CLF has raised concerns regarding the effectiveness of the
voluntary nature of the program In assessing its program we expect VGS to revisit and report
on the feasibility of incorporating RNG as a portion of its supply mix in the future It is
important for VGSs RNG program to be sustainable and continue to evolve ensuring significant
DocketNo8667 Page 12
contributions toward meeting the States renewable energy goals and reducing the consumption
of fossil fuel Accordingly it is critical that the annual report and the three-year comprehensive
review address not only the effectiveness of the program but also its affordability and the
feasibility of other policy options to advance the production and use of RNG in Vermont
Docket No 8667 Page 13
VIII Onunn
Ir rs Hennsy oRDERED ADJUDGED AND DECRnnn by the Public Utility Commission of the
State of Vermont that
1 The findings conclusions and recommendations of the Hearing Officer are
adopted and the Renewable Natural Gas (RNG) program to be implemented by Vermont Gas
SystemsInc (VGS) is approved
2 When VGS has procured RNG supply in amounts reasonably estimated to be
sufficient for estimated customer demand it shall file a formal tariff including proposed rates for
sale of RNG The tariff shall be reviewedpursuantto the procedures of 30 VSA ccedilccedil225226
and227 and sales under the program shall begin after Commission approval of the tariff
3 VGS shall develop and file for Commission approval a separate Renewable
Vehicle Fuel Tariff to serve customers using RNG as a transportation fuel
4 VGS shall file a marketing plan for the RNG program consistent with the
requirements set forth above within one month of the issuance of this Order
5 VGS shall file an annual report consistent with the requirements set forth above
upon implementation of the RNG program
6 VGS shall file a comprehensive review of the performance of the program with
the Commission and the Department after three years of implementation This review will
include an environmental accounting protocol to quantiff the environmental benefits of the
progrfim
7 VGS shall review proposed RNG supply arrangements with the Department
Docket No 8667
Orprcp oF THE Crnm
Dated at Montpelier Vermont this day of+hb
Z Roisman
Cheney
Page 14
20t7
Puslrc Urrlnv
CovtriquestIssIoN
OP VERMONT
(
)))
)))
Fired otildeeglcL ( JotTAttest c
of the Commission
NorIcE To READERS This decision is subject to revision oftechnical errors Reqders are requested tonotify the Clerk of the Commission (by e-mail telephone or inwriting) or any appqrent errors in order that anynecessary corrections may be made (E-mail address pucclerkvermontgov)
Appeal of this decision to the Supreme Court of Vermont must befiledwith the Clerk of the Comnissionwithin thirty days Appeal will not stay the efect of thszlig Order absentfurther order by this Commission orappropriate actiacuteon by the Supreme Court of Vermont Motions for reconsideration or stay if any must be filed withthe Clerk of the Commissionwithin ten days of the date of this deciacutesion and Order
Exhibit 22 VGS RNG Tariff Rate Filing
Exhibit 23 PUC Approval of VGS RNG Rates
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Case No l8-03 13-TF
Petition of Vermont Gas Systems Inc fotapproval of a new tariff implementing theRenewable Natural Gas program
Order entered
OnonRAppnovINc Tiquestrurn
On January 302018 Vermont Gas Systems Inc (VGS) filed a petition for approval of
a new tariff implementing the Renewable Natural Gas (RNG) program approved by the
Vermont Public Utility Commission (Commission) in Docket No 8667 In that Docket the
Commission required VGS to file a tariff implementing the RNG program when it has procured
RNG supply in amounts reasonably estimated to be sufficient to meet customer demandl In
this Order the Commission approves the new tariff marketed under the name EcoGas with an
effective date of bills rendered on and after March 15 2018
VGS states that it has executed an RNG supply contract with deliveries scheduled for
2018 and that two additional contracts are being negotiated for deliveries beginningin2019
VGS is proposing to set its initial RNG adder at$ll749lCcf which represents a five-year
blended rate based on the three RNG supply arrangements VGS intends to account for the
difference between the cost of RNG supply and the RNG adder as a regulatory asset within gas
costs As additional lower-cost supply is added to the portfolio the regulatory asset balance will
be recovered from EcoGas participants with the goal of fully reducing the balance by the end of
five years Accordingly VGS states that the RNG program will be rate-neutral to VGS and its
non-RNG customers
On February 272018 the Vermont Department of Public Service (Department) filed a
letter recommending that the Commission approve the tariff without a hearing or further
investigation The Department states that the tariff filing and proposed accounting treatment
comply with Vermont rate-setting practices policies precedents and statutes
lslaotx
I Docket 8667 Order of 96117 at 13
Page2Case No 18-0313-TF
Based on the foregoing we hereby approve VGSs proposed RNG tariff to be effective
on a bills-rendered basis beginning on March 15 2018 Recovery of any regulatory asset
balance at the end of the fifth year would need to be approved by the Commission in a future
proceeding
So Omnnnn
Case No l8-0313-TF
8r- day of lruacuterLiquestiquest
Page 3
Dated at Montpelier Vermont this 2018
Roisman PueIrc Urlrrv
CoiriexcllriquestlssloN
Cheney
OF VERMONT
Sarah Hofmann
Onncp oF THE CLBRr
Filed huacuteveuroAacute- icirc dollAttest I
Clerk of the Commission
Notice to Readers This decision is subiect to revision oftechnical errors Readers are requested to notify
the Clerk of the Commission (by e-mail telephone or in writing) or qny qpparent errors in order that any
necessary corrections may be made (E-mail address pucclerkvermontgov)Appeal of this decisiacuteon to the Supreme Court of Yermont must be filed with the Clerk of the Commission
within 30 days Appeal will not stay the efect of this Order oslashbsent further order by this Commission or appropriate
action by the Supreme Court of Vermont Motionsthornr reconsideration or stay if any must befiledwith the Clerk ofthe Commissionwithin 28 doslashys of the date of this decision and Order
)))
))))
PUC Case No 18-0313-TF
Eileen SimollardesLauren HammerVermont Gas
85 Swift StreetSouth Burlington VT 05403
June E Tiemey CommissionerVermont Department of Public Service1 12 State StreetMontpelier VT 05620 -2601
Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
Exhibit 31 Accounting Procedures
Exhibit 31 Accounting for VGS Renewable Natural Gas (Ver-9202019)
1 Purchase of RNG Supply
RNG supply purchases are separated into the cost of the commodity and the cost of the renewable attribute The commodity portion is expensed to gas costs in the delivery month while the renewable attribute is booked to an inventory account referenced herein as the ldquoRenewable Inventory Accountrdquo Like VGSrsquo existing storage inventory accounting the Renewable Inventory Account will track both the dollar value of the renewable attribute and the renewable attribute Mcfs Renewable attribute dollar values are record to ldquo16410050 Inventory RNG Storagerdquo while Mcf values are recorded in the gas cost model maintained by accounting In the month VGS purchases the renewable attribute it is accrued in a book model and goes in to 16410150 Inventory RNG Accrued then moves to the 16410050 in a final model the following month for final
RNG may be purchased at different locations and using varying pricing structures While the accounting for RNG does not vary with the purchase location or price the determination of the value of the renewable attribute will vary depending on whether or not the supply pricing expressly values the renewable attribute as an adder or it is embedded in a fixed price Examples of each are shown below The accounting of RNG supply is intended to separate the cost of the renewable attribute from the cost of the commodity The examples below are not all inclusive of what may occur but intended to show the accounting procedures used to separate the renewable attribute from the commodity and specify ownership of each aspect
In all cases the commodity cost portion - which is the total cost of the RNG purchased excluding the renewable attribute - will be expensed in the delivery month as a cost of gas
Example 1 ndash The fixed price of RNG includes both the commodity and the renewable attribute
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The total cost of the RNG supply purchased during the month is calculated by Accounting within the gas cost model as follows
MMBtu Purchased (as validated in step 2) $ MMBtu purchase price (as provided in a supply confirmation provided by gas supply)
4 For purposes of booking the renewable attribute to inventory it is necessary to calculate the RNG cost per Mcf The RNG cost Mcf is calculated using the total cost of RNG supply as calculated in step 3 divided by the Mcf in step 1
5 The renewable attribute price per Mcf is calculated as follows
RNG cost per Mcf as determined in step 4 ndashplus ldquoother componentsrdquo as calculated pursuant to Attachment A ndash minus ldquoAverage Commodity Costrdquo as calculated pursuant to Attachment A The ldquoother componentsrdquo added to the RNG cost per Mcf will vary depending on where the RNG supply was delivered but in each case will be identified in the calculation shown on Attachment A
6 The renewable attribute price per Mcf the total RNG Mcf delivered is recorded in the Inventory RNG Storage account
7 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
Example 2 - RNG purchased at a renewable attribute price plus a daily or monthly index
Where the pricing of RNG specifically separates the commodity from the renewable attribute the renewable attribute price will be what is recorded in the Renewable Inventory Account
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The renewable attribute price per Mcf the total RNG Mcf delivered as determined in step 1 is recorded in the Renewable Inventory Account
4 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
2 Recalculating the RNG Adder
The RNG Adder paid by customers will be recalculated anytime the Natural Gas charge portion of rates changes The Manager of Gas SupplyGas control is responsible for recalculating the RNG Adder The calculation will be verified and approved by the Vice President ndash Regulatory Affairs The determination of the RNG Adder will be pursuant to the methodology shown in Attachment A The Regulatory Department will prepare the amended RNG Adder tariff for filing with the PUC Upon PUC approval of the RNG Adder the Regulatory Department will prepare a memorandum advising Accounting and Gas Supply of the new RNG Adder as approved
3 Customer purchases VGS Renewable Natural Gas
The RNG Adder at the percent selected by the customer will be applied to the entire monthrsquos usage on the customersrsquo next bill For customers utilizing the S-RNG adder the entire volume elected with be on the customersrsquo next bill The S-RNG Adder nor the RNG Adder and percentage selected will not be prorated based on enrollment or termination date
Customers may terminate or modify their RNG selection upon 3 dayrsquos notice to VGS The termination or modification will be effective on the customerrsquos next monthly bill
The customerrsquos usage for the month will be multiplied by the percentage and the approved RNG Adder For customers utilizing the S-RNG adder the volume elected will be multiplied by the approved RNG adder This amount will then be recorded to SAP accounts 4010015-40010021 depending on which rate class the customer is in The RNG Adder is the same regardless of which rate class a customer is in At the end of the month a report is run by billing from the customer information system that shows total usage and which percentage of RNG the customer has signed up for to calculate the number of MCFrsquos of renewable attribute sold during the billing period Billing also provides a report of the volumes sold through the S-RNG Tarriff The Inventory RNG Storage account maintained within the gas cost model by Accounting is reduced by these Mcf The MCFrsquos are then multiplied by the RNG Adder in effect for the billing month and an entry is made to remove that dollar amount from the Inventory RNG Storage account and into the monthly cost of gas The intent of this transaction is to ensure that cost of the renewable attribute is reflected in the cost of gas in the month it is purchased by the customer This results in a matching of the renewable attribute revenue and expense
The RNG Adder revenue and renewable attributes removed from storage will be included in the gas cost deferral calculation However because there is a matching of the renewable attribute revenue and expense the impact on the deferral calculation will be zero
The calculation of unbilled revenues will exclude RNG as a customer can cancel their participation prior to their next bill
In the event Vermont Gas issues a credit to a customer related to the RNG program the value of the renewable attribute credited and the associated Mcf will not be applied to the Renewable Inventory Account
4 Controls
A spreadsheet is maintained by accounting that shows the MCFrsquos and dollar values of the Renewable Inventory Account This is reconciled monthly by the accounting team and will be reviewed by the Manager Gas SupplyGas Control
Accounting will validate that the amount removed from the Renewable Inventory Account matches the RNG Adder revenue Any discrepancies will be reviewed and corrected
A report will be run for each bill cycle that shows any changes to the RNG percentages selected this will include customers opting to withdraw from the RNG program The customer care team will validate any changes against customer confirmation paperwork
5 Renewable Inventory Account Reconciliation and Forecast
The PUC Order approving the RNG program contains provisions describing how RNG supply and demand imbalances will be addressed These provisions and how VGS will track and comply with them are as discussed in this section The PUC Order approving the RNG Program provides that if the available RNG supply during the previous 12 months is less than the amount purchased by customers VGS may use the funds collected to purchase carbon offsets (Finding 13) If carbon offset are not available VGS will contribute the RNG program revenues to the Clean Energy Development Fund or issue prorated credits to affected customers (Finding 15) The Order also provides that in the event RNG supply exceeds customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any remaining RNG attribute inventory amounts through the PGA or through a rate case as part of its cost of service if the s PGA is no longer in effect at that time (Finding 16 as modified) Finding 11 provides that VGS will use a ldquotrue-uprdquo period of up to 12 months in order to balance the difference between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply) Taken together these provisions require VGS to evaluate the imbalance after 12-months and then true-up the imbalance over the next twelve months To provide a forecast of the supplydemand imbalance quarterly the billing area will run a report showing the expected RNG volumes based on current customer commitments by month for the next 12-months Current customers commitments will be calculated based on the previous 12 months of usage multiplied by the RNG percentage currently signed up for The marketing department will provide their forecast of new RNG sales for the next 12-months Both will be provided to the Manager Gas SupplyGas Control The Manager Gas SupplyGas Control will compare the forecasted RNG sales known and expected to RNG supply commitments and provide a 24-month forecast of the supplydemand balance The supplydemand balance will be reviewed at the risk management meeting The strategy for addressing the imbalance consistent with the PUC order will be determined by the risk management committee
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
VGS Renewable Natural Gas Program Manual
Page 6
Order Requirement Status and Compliance Date
3 VGS shall file a marketing plan for the RNGprogram consistent with the requirements setforth in the order within one month of the issuanceof this Oder
Completed - October 6 2017
4 VGS shall file an annual report consistent withthe requirements of the Order uponimplementation of the RNG program
Initial filing completed ndash filed June 2018 and 2019
5 VGS shall file a comprehensive review of theperformance of the program with the Commissionand Department after 3 years of implementationThis review will include an environmentalaccounting protocol to quantify the environmentalbenefits of the program
Pending ndash Due by March 15 2021
6 VGS shall review proposed RNG supplyarrangements with the Department
Completed - Initial review 11618 Review of subsequent contract also completed and approved by PUC
On October 4 2018 the Company filed with the PUC for a new RNG tariff offering ldquoS-RNGrdquo Adder which has the same pricing as the RNG Adder The new offering allows customers to purchase a fixed amount of RNG per month that would be unbundled from the customerrsquos metered gas consumption and offers customers who are consumers of natural gas but do not have an account for metered gas service with the Company the ability to purchase RNG attributes The PUC approved the S-RNG Adder to take effect with bills rendered on or after December 1 2018 (see Exhibit 24)
22 VGS RENEWABLE NATURAL GAS ADDER TARIFF The PUC order provides ldquoWhen VGS has procured RNG supplyhellipit shall file a formal tariff including proposed ratesrdquo On January 30 2018 after contracting for the initial RNG supply VGS filed the VGS Renewable Natural Gas Adder Tariff (see Exhibit 22) On March 9 2018 the PUC approved the initial RNG Adder for effect with bills rendered on and after March 15 2018 (see Exhibit 23)
In simple terms the RNG Adder reflects the difference between the cost of RNG and the cost of conventional gas This is calculated by subtracting the average commodity cost for conventional natural gas from the average commodity cost for RNG as indicated in the following example
VGS Renewable Natural Gas Program Manual
Page 7
VGS Renewable Natural Gas Adder Calculation Average RNG Commodity Cost
Minus Average Natural Gas Charge Equals VGS Renewable Natural Gas Adder
Exhibit 22 provides the detailed calculations
This formula identifies the current premium to be paid per CCF of RNG This premium also represents the value of the ldquoVGS Renewable Natural Gas Attributerdquo that VGS will withdraw from the VGS Renewable Natural Gas Attribute Inventory described below
To full reflect the cost of the initial RNG supply with future RNG supply contracts the initial RNG Adder was based on a blended rate of the cost of the first and the expected costs of future RNG purchases over the next 5 years The PUC has authorized this blended approach
The RNG Adder will change whenever the PUC authorizes a change in the Natural Gas Charge portion of the tariff Currently this change occurs quarterly
23 ANNUAL RNG REPORT An Annual RNG Report will be filed with PUC and Vermont Department of Public Service (ldquoDepartmentrdquo) each year in June The first annual report was filed in June 2018 In accordance with the PUC final order approving the Program the annual report will include the following information
1 Number of subscribers by class2 Sales volume by customer class3 Sales Revenues4 Any sales or purchases of carbon offsets5 Supply Consumption matching portfolio including any shortfall or excess supply of
RNG6 True-up schedule for any imbalances7 RNG supply verification8 Quantification of the impact of any excess RNG costs flowing through the PGA if
VGS remains under alternative regulation9 Accounting of any carbon offsets or other incentives10 Status of any contracts for RNG including plans to acquire new supply contracts11 Revenue from Renewable Identification Number (ldquoRINrdquo) sales and impact on the
transport (transportation) tariff as well as any projections about the RIN marketthat are available to VGS and
12 Complete reports and environmental verifications by an independent verifier
The annual report will also address the effectiveness of the program and its affordability
VGS Renewable Natural Gas Program Manual
Page 8
24 THREE-YEAR IMPLEMENTATION REVIEW In accordance with the PUC Order in March 2021 (the third year of the Program) VGS will file a comprehensive review of the performance of the Program The review will include an environmental accounting protocol to quantify the environmental benefits of the program The three-year comprehensive program review will also address the effectiveness of the program its affordability and the feasibility of other policy options to advance the production and use of RNG in Vermont
SECTION 2 EXHIBITS
bull Exhibit 21 VT PUC Approval Orderbull Exhibit 22 VGS RNG Tariff Rate Filingbull Exhibit 23 PUC Approval of VGS RNG Ratesbull Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
VGS Renewable Natural Gas Program Manual
Page 9
Section 3 Supply Procurement and Accounting
KEY VGS RENEWABLE NATURAL GAS SUPPLY AND ACCOUNTING STEPS
Item Description Schedule Owner RNG Supply Contracts
Procuring RNG Supply As needed Gas Supply
RNG Supply True-Up
Balancing RNG supply sales and retiring attributes
Monthly Finance
RNG Supply Verification
Verifying ldquorenewabilityrdquo of RNG Supply
Annually Gas SupplyThird- Party
31 VGS RENEWABLE NATURAL GAS SUPPLY OVERVIEW
VGS intends to contract with a variety of RNG supply sources to meet its customer demand in the RNG Program RNG supply is currently available from a limited number of landfill and digester projects in Canada or US states other than Vermont In Vermont at least one local supply project is currently under development
Today there is no central ldquomarketplacerdquo for RNG suppliers and buyers to trade RNG supply contracts RNG buyers such as VGS transact with individual producersprojects or work through RNG brokers to acquire RNG supply or the environmental attributes associated with RNG in bilateral transactions VGSrsquo initial RNG supply contract in 2018 was with BP Canada Energy Group ULC and sourced from the EBI Inc13 biogas production facility located in Ste Genevieve Quebec In 2019 VGSrsquo purchased RNG supply from a waste water treatment facility in Dubuque Iowa
In 2020 VGS plans to begin receiving RNG supply from a Vermont farm digester and a Canadian digester facility The Vermont farm digester located in Salisbury Vermont is slated for completion in late 2020 producing 180000 MMbtursquos per year The Canadian digester project is located in London Ontario VGS has agreed to purchased 100 of the supply from this facility up to 120000 MMbtursquosyear for 15 years VGS sought and received PUC approval for this Ontario supply in 2018 and received approval for an amendment in 2019 To meet anticipated demand for RNG until these two resources come on line the Company purchased short-term supply of RNG from the Iowa facility in 2019 We anticipate that these supply sources will satisfy the VGS Renewable Natural Gas Program supply needs for the first few years of the Program If we are unsuccessful
13 EBIrsquos Facility was recognized in 2016 (httpswwwdesjardinscomcavideossinglejspdocName=vid-ebi-e)
VGS Renewable Natural Gas Program Manual
Page 10
in procuring supply from these sources or if demand exceeds these planned supplies VGS will seek additional RNG supply in the marketplace
32 VGS RENEWABLE NATURAL GAS SUPPLY CONTRACTS VGS will utilize standard industry or comparable contract vehicles to procure RNG supply with site-specific terms and conditions Given the unique nature of the in-state RNG project the gas supply contract is a 3 way agreement between the producer VGS and an end user Accordingly the form of the contract does not resemble industry standard supply agreements but contains all appropriate business terms The first two contracts signed by VGS utilize a gas utility standard base contract with signed transaction confirmation documents that specify the specific details of each deal These contracts will require the RNG supplier to certify the renewable attributes and that VGS has full and sole ownership of those attributes As required by the PUC Order RNG Suppliers will also be required to allow VGS independent verification of the production and transactions related to VGS supply volumes The specific PUC requirements are found in finding 21 page 7 of Exhibit 21 - VT PUC Approval Order
33 VGS RENEWABLE NATURAL GAS ACCOUNTING Like accounting practices in the renewable electric industry Vermont Gas will have the obligation to match RNG supply volumes with customer RNG purchase volumes over time As discussed in Section 22 the premium for RNG above the cost of conventional natural gas establishes the value of the renewable attribute purchased by the customer These attributes are tracked in a separate inventory account and then matched with actual retail VGS Renewable Natural Gas sales Once these renewable attributes are matched with VGS Renewable Natural Gas sales they are ldquoretiredrdquo and cannot be resold in any manner or used to satisfy another obligation by VGS As provided in the PUC order ldquoVGS will use a ldquotrue-uprdquo period of up to 12 months to balance the difference between RNG attributes sold to customers (demand) and RNG attributes purchased by VGS from suppliers (supply)rdquo This true-up period allows RNG attribute ldquooversupplyrdquo and ldquoundersupplyrdquo to be balanced as described below
In an ldquooversupplyrdquo situation where forecasted RNG attribute purchases exceed the number of RNG attributes that VGS forecasts selling to its customers through the RNG Program VGS will first seek to market the excess RNG and the environmental attributes back through the wholesale supply channels If this oversupply extends beyond the 12-month true-up window VGS may seek PUC permission to flow any remaining RNG attribute inventory amounts through the Purchase Gas Adjustment (ldquoPGArdquo) or through its cost of service if the PGA is no longer in effect at that time
An ldquoundersupplyrdquo situation would occur if customer purchases of RNG attributes exceeded the amount available under VGSrsquo RNG supply contracts in the forward looking 12-month true-up window If the RNG supply purchases are lagging the RNG sales VGS
VGS Renewable Natural Gas Program Manual
Page 11
will true-up or balance this undersupply over the upcoming 12-month period through existing or additional RNG supply purchases
If VGS is unable to eliminate an undersupply imbalance after the 12-month true-up period VGS would need to purchase carbon offsets in the dollar amount equal to VGS Renewable Natural Gas revenues collected associated with the undersupply (See Exhibit 21 Order Finding 13 and 15) Carbon offsets are listed on one of several Carbon Registries such as the American Carbon Registry If carbon offsets are not available VGS has the option to contribute these RNG revenues to the statersquos Clean Energy Development Fund or issue prorated credits to affected customers It should be noted that while purchasing offsets is a tool for VGS it is not the intent of the VGS Renewable Natural Gas Program and if an undersupply situation persisted VGS would likely petition the PUC to modify or suspend the VGS Renewable Natural Gas Program prospectively
VGS will manage the RNG Program to closely match supply and demand and utilizing our RNG wholesale cost mitigation tools to avoid RNG supply challenges
As renewable programs evolve in the energy and natural gas industry Vermont Gas will adjust its accounting procedures to reflect industry standards and revise this manual to reflect any modifications or changes
34 RENEWABLE VERIFICATION VGS is committed to transparency and the integrity of this innovative program is essential to success Toward that end no step is more essential than the verification of the renewability claims of our VGS Renewable Natural Gas supply The PUC reinforced this commitment in the RNG approval order as follows
ldquoVGS will annually verify that the RNG was produced by a renewable gas production facility that VGS is the exclusive owner of any environmental attributes associated with RNG it sells under the program that it acquired the RNG from its transferor and sold it at retail and that the RNG has not been sold twice at any point between RNG production and sale to VGS whether by sales into carbon offset markets or otherwise This verification will be based on certifications of VGSrsquos suppliers and of an independent third party retained by VGS for this purposerdquo
VGS will use an independent third-party to verify the renewable claims for the VGS Renewable Natural Gas supply including the following
bull Confirm the renewable fuel feedstock identificationbull Confirm the product renewable fuel identificationbull Review and confirm the renewable fuel production processbull Review of fuel flow measurement and quality monitoring process and equipment
VGS Renewable Natural Gas Program Manual
Page 12
bull Review of contracts and affidavits governing the transfer of the RNG from theoriginal source to the end user(s)
bull Review of evidence confirming the existence of a physical path (common carrierpipeline) for RNG transfer and distribution to end users
SECTION 3 EXHIBITS
bull Exhibit 31-Accounting Proceduresbull Exhibit 32-Verification from Suppliersbull Exhibit 33-Third Party Verification
VGS Renewable Natural Gas Program Manual
Page 13
Section 4 Marketing
KEY MARKETING STEPS Item Description Owner VGS Renewable Natural Gas Branding
Maintain product and brand integrity Communications
Product Definition Ensuring proper VGS Renewable Natural Gas description in all materials
Communications
External Review Verification of Marketing claims Communications
41 MARKETING PLAN Exhibit 41 is the 2018 version of the Marketing Plan filed with the PUC This document may be updated from time to time as we adjust our marketing strategy
42 MARKETING CLAIMS VGS is committed to making clear and accurate claims about the environmental benefits of VGS Renewable Natural Gas We have enlisted the assistance of a law firm specializing in marketing renewable products to review VGSrsquo marketing materials and claims In addition VGSrsquo annual third-party review of our program will focus on the integrity of our administration of the VGS Renewable Natural Gas program (see Section 54)
43 VGS RENEWABLE NATURAL GAS ldquoPRODUCT CONTENT LABELrdquo The Product Content Label is intended to be prominently displayed on the VGS web site and in correspondence to customers when they enroll in this program
Product Content Label
By participating in the VGS Renewable Natural Gas program you are purchasing the renewable attributes associated with the production of renewable natural gas (ldquoRNGrdquo) which may also be referred to as biogas or bio-methane A unit of VGS Renewable Natural Gas measured in hundred cubic feet (CCF) represents the environmental attribute of 1 CCF of biogas VGS reserves the right to purchase carbon offsets if RNG supply is not available VGS will notify customers if this occurs The Product Content Label is available at httpswwwvermontgascomrenewablenaturalgas
SECTION 4 EXHIBITS
bull Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)bull Exhibit 42 VGS Renewable Natural Gas Trademark
VGS Renewable Natural Gas Program Manual
Page 14
Section 5 Customer Information and Billing
KEY BILLING AND REVENUE STEPS Item Description Owner Billing Enrollment of VGS Renewable Natural Gas
Customers Contact Center
Notice Customer Notice of VGS Renewable Natural Gas Rates
Contact CenterBilling Group
Program Assurance Verification of VGS Renewable Natural Gas program procedures
Billing and Finance
51 CUSTOMER ENROLLMENT AND BILLING PROCESS The VGS Customer Care team will enroll customers and establish the VGS Renewable Natural Gas Adder on customer accounts Customers will be able to order VGS Renewable Natural Gas via VGSrsquo website (preferred method) calling VGS contact center or through the VGS Energy Services team An RNG calculator is available on VGSrsquo website httpswwwvermontgascomrenewablenaturalgasadder-calculator that can assist customers in estimating the costs of VGS Renewable Natural Gas at the various percentage levels based on the customerrsquos gas consumption VGS will inform customers of the current RNG Adder premium when they enroll Customers have two options when enrolling in the RNG program Customers may select their desired percentage of VGS Renewable Natural Gas ( 10 25 50 or 100) or they may allocate a fixed amount of RNG attributes (ldquoS-RNGrdquo) for each month that they are enrolled in Customer Care will then set up the billing on their account VGS will send an order confirmation via email or as a separate mailing (see Exhibit 51) thanking the customer for subscribing to VGS Renewable Natural Gas and informing the customer of the estimated impact on their bill As shown on Exhibit 51 the order confirmation letter will also include the RNG program guidelines These guidelines are discussed in section 53 below
52 VGS RENEWABLE NATURAL GAS WEBSITE AND FREQUENTLY ASKED QUESTIONS The VGS Renewable Natural Gas web page contains general VGS Renewable Natural Gas information an FAQ a VGS Renewable Natural Gas calculator current VGS Renewable Natural Gas Adder and an easy-to-use sign up form
For the most recent Frequently Answered Questions visit httpwwwvermontgascomVGS Renewable Natural Gas
VGS Renewable Natural Gas Program Manual
Page 15
53 VGS RENEWABLE NATURAL GAS PROGRAM GUIDELINES VGS Renewable Natural Gas customers will fall under VGSrsquo General Terms and Conditions outlined in VGSrsquo tariffs and PUC rules (ex Disconnection practices late fees taxes) VGS tariffs can be found at httpwwwvermontgascomaccountrates
VGS will notify VGS Renewable Natural Gas customers of rate changes in advance of implementation on both their individual bills and the Companyrsquos website RNG customers have the ability to cancel or modify their RNG account profile consistent with the tariff
VGSrsquo RNG customers can subscribe to VGS Renewable Natural Gas service with no term commitment and can cancel with three daysrsquo notice The RNG Adder will apply at either the percentage or fixed quantity allocated by the customer to the usage shown on the monthly bill regardless of enrollment or termination date The RNG Adder will not be pro-rated for partial-month usage
VGS customers receiving the low-income rate discount can subscribe to VGS Renewable Natural Gas however the 20 low income discount will not apply to the RNG Adder
Customers currently on a budget program will be encouraged to request a recalculation of their budget plan to adjust for the RNG Adder costs but it is not required
54 VGS RENEWABLE NATURAL GAS PROGRAM ASSURANCE
On an annual basis VGS will conduct a program review to ensure the VGS Renewable Natural Gas program is managed consistent with this manual The VGS Renewable Natural Gas program is a new product for the US natural gas utility industry and as such no industry specific standards exist VGS is working with on a national effort to develop a ldquoGreen-Erdquo certification process for Renewable Natural Gas programs that process is targeted for completion in 2020
SECTION 5 EXHIBITS
bull Exhibit 51 ECIS Customer Confirmation
VGS Renewable Natural Gas Program Manual
Page 16
EXHIBITS
Exhibit 21 VT PUC Approval Order
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Docket No 8667
Petition of Vermont Gas Systems Inc for aRenewable Natural Gas Program andOptional Tariff
)))
Hearing atMontpelier Vermont
September 22016
order entered q leacute I aon
PRBsBNI Andrea C McHugh Hearing Officer
AppeeReNcBs Peter H Zamore Esq
Owen J McClain EsqSheehey Furlong amp Behrn PCfor Vermont Gas Systems Inc
Louise C Porter EsqTimotthorn M Duggan Esq
for the Vermont Department of Public Service
Sandra Levine Esqfor Conservation Law Foundation
Gerald R Tarrant EsqTarcant Gillies amp Richardsonfor Lincoln Renewable Natural Gas LLC
I INrnooucrroN
This case involves a petition filed by Vermont Gas Systems Inc (VGS) with the
Vermont Public Utility Commission (oCommission) I for approval of a Renewable Natural Gas
(RNG) program and optional RNG tariff service for its customers The proposed RNG
progriquestigravem establishes a framework for VGS to offer its customers the option to purchase RNG for
I Pursuant to Section 9 of Act 53 of the 2017 legislafive session the Vermont Public Service Boards name waschanged to the Vermont Public Utility Commission effective July l 2017 For claity activities of the VermontPublic Service Board that occurred before the name change will be referred to in Commission documents as
activities of the Commission unless that would be conntildersing in the specific context
Docket No 8667 Page2
program establishes a framework for VGS to offer its customers the option to purchase RNG for
as a portion of their usage RNG is produced from materials such as agricultural waste manure
municipal waste plant material or compost and is also referred to as bio-methane In this
proposal for decision I recommend that the Commission approve the proposed RNG program
and require VGS to make compliance filings as set forth herein
il PnocnrunnlHrsroRY
On October 232015 VGS figraveled a petition for approval for its RNG program including
prefiled testimony and exhibits of Thomas Murray
On January 192016I held a prehearing conference and on January 252016I issued
an Order establishing a schedule
On February 122016 VGS filed a revised RNG Plan
On March 102016I held a workshop to discuss the proposed program
On March 152016I issued an Order revising the schedule
On March 222016 Conservation Law Foundation (CLF) and Lincoln Renewable
Natural Gas LLC (Lincoln) filed motions to intervene in this proceeding
On April 12016 VGS filed supplemental testimony and exhibits
On April 82016I issued an Order granting CLFs and Lincolns intervention requests
On July 72016 the Vermont Department of Public Service (Department) CLF and
Lincoln filed testimony
On August 82016 Lincoln filed supplemental testimony
A technical hearing was hthornld on September 22016
On September 30 20|6VGS filed a draft proposal for decision supported by the
Department In addition CLF filed a brief on the same date Reply briefs were filed by VGS
and CLF on October 142016
III Posnroxs oF THE PlRrlns
VGS
VGS requests approval of its proposed RNG program for the sale of RNG to customers
on a voluntary basis VGS claims that its proposal contains reasonable provisions to align its
RNG purchases with the amounts sold to its customers appropriate mechanisms to address over-
Docket No 8667 Page 3
or under-supply of RNG and verification requirements to ensure that sales in fact consist of
RNG VGS maintains that the RNG program is an appropriate first step in stimulating RNG
producer supply and customer demand and is oamply supported by Vermonts experience of
measured implementation of electric renewable pricing programs2 VGS argues that the
program is responsive to the Commissions condition in its Order in Docket 79701o develop a
proposal to promote bio-methane project development3
Department of Public Service
Although the Department did not file a brief or reply brief it did present witness
testimony and indicated its support for the draft proposal for decision filed by VGS The
Department recommends that VGS review all proposed RNG supply arrangements with the
Department (in addition to seeking 30 VSA $ 248 approval where required) and suggests that
in the event of an undersupply of RNG VGS obtain carbon offsets in an amount equivalent to
the unused customer contributions The Department recommends that the RNG program be
reviewed at the end of three years at which time the protocol regarding the purchase of offsets
would be revisited
C ons ervation Law Foundation
CLF urges that the Commission reject the RNG program and instead adopt an RNG
content standard similar to the electric renewable portfolio standarda CLF maintains that the
expected annual sales volume is not apace that is consistent with Vermonts legislative and
planning targets for meeting energy needs with renewable energy or for reducing greenhouse gas
emissionss CLF claims that the proposed voluntary tariff falls short of being a program or
strategy that promotes the increased use of RNG resources or supply or fosters bio-methane
projects in Addison county6
2 VGS reply brief aI23 In Docket 7970the Commission considered the petition of VGS for a certificate of public good (CPG) pursuant
to 30 VSA $ 248 authorizing the construction of the Addison Natural Gas Pipeline In an Order issued on
December 232013 the Commission granted the CPG As a condition of approval the Commission required VGSin consultation with the Department to file a petition with the [Commission] proposing a program to promote bio-methane project development Docket 7970 Order of l2l23ll3 at 147
a CLF brief at 12s CLF brief at 36 CLF brief at 4
Docket No 8667 Page 4
Lincoln
Lincoln maintains that itis essential to promote development of agricultural-based bio-
methane supply in VermontT Lincoln states that the Commission is not in a position to
adequately address VGSs proposed RNG program until negotiations for sale of itsoutput
involving VGS and Middlebury College are completes
IV Punrrc CounnnNrs
The Commission received three letters of support for VGSs RNG program On March 10
2016 the Chittenden County Transportation Authority filed comments indicating that it intends to
explore the possibility of utilizing RNG to cover a portion of the energy needs for its fleet of 70
buses On March 182016 Champlain College filed comments noting that it is interested in using
RNG for a portion of its energy needs that are currently met with conventional natural gas On
March 282016 Casella Waste Systems made a filing with the Commission stating its intention
to explore using RNG to meet some of its energy needs for its fleet of vehicles
V trrutrxcs
Based on the evidence of record I hereby report the following findings and
recommendations to the Commission in accordance with 30 VSA $ 8(c)
1 RNG is produced from raw materials such as agricultural waste manure municipal
waste plant material or food waste Decomposition or digestion of these materials produces
raw methane which is then cleaned or upgraded to bio-methane in order to meet the receiving
pipelines gas quality specifications prior to injection into an existing pipeline system Thomas
Murray VGS (Murray) supp pf at3
2 VGS is exploring options to purchase RNG supply from Lincoln and from landfill gas
projects located outside Vermont that would be received through the Trans-CanadaPipeline
(TCPL) system Murray supp pf at 8-9
7 Daniel Smith Lincoln Renewable Natural Gas LLC (Smith) supp pf at L8 On August 152016 Lincoln filed a motion to continue this proceeding for a period of not less than 60 days statingthat the continuance would allow [it] VGS and Middlebury College to complete discussions as to VGSsinvolvement in the RNG supply in Vermont and allow the record in this case to be properly developed VGS and
the Department opposed the request for continuance On August 222016I issued an Order denying Lincolnsrequest and determined that Lincoln did not demonstrate good cause to postpone the technical hearing
Docket No 8667 Page 5
3 Under the program retail customers would voluntarily purchase RNG in amounts equal to
l0oo25yo50o or 100 of their total monthly requirements at specified prices per Ccf as an
adder to other retail charges Customers could terminate RNG purchases upon providing three
days of advance notice to VGS Murray supp pf at l-2 exhs Pet-VGS-l and Pet-VGS-3
4 Intemrptible customers will have the opportunity to participate in the RNG program
through VGSs existing Lock Price Program which currently provides for up to a two-year
commitment Murray supp pf at 5
5 VGS will develop and file for Commission approval a separate tariff for use of RNG as a
transportation fuel This tariff will allow VGS to take advantage of the sale of the associated
Renewable Identification Numbers (ooRINs) When RNG is used as a transportation fuel it is
eligible to receive RINs under the Federal Renewable Fuel Standard RINs can be resold on the
wholesale market and would be used to offset the price of RNG to transportation customers
receiving service under the tariff Joan E White
Department (White) pf at7tr912116 at 62-
63 (White) exh Pet-VGS-5 Response 4
6 VGS will also initiate a review of the RNG program by the Commission Department and
others after three years White pf at9tr912116 (Munay) at24
7 The adder price for each Ccf of RNG will be equal to the average RNG commodity cost to
VGS less the average commodity cost of natural gas VGS will adjust the adder price per Ccf on
a quarterly basis as part of its Purchased Gas Adjustment (PGA) filing Murray supp pf at 4
8 The proposed RNG program will include a tariff that is very similar in concept to the
Green Mountain Power Corporation (GMP) Cow Power tariff However Cow Power is based
on a fixed rate per kWh no matter what the cost of the renewable energy Murray supp pf at llVhite pf at 4
9 VGSs RNG tariff will be calculated quarterly based on actual RNG and natural gas costs
and will provide accurate price signals as to the price differential between natural gas and RNG
White pf at 4
10 Based on a survey conducted by VGS 85 of its customers are willingto pay l0oo
more for a renewable product VGS projects that customers could potentially consume over
500000 Mcf of RNG over the next five years Murray supp pf at 5
DocketNo8667 Page 6
11 VGS will use a true-up period of up to 12 months in order to balance the difference
between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply)
Murray supp pf at 9
12 There is a risk that due to the voluntary nature of the RNG program supply and demand
will be mismatched White pf at41 David G Hill CLF (Hi11) pf at 9
13 If the available RNG supply during the previous 12 months is less than the amount
purchased by VGS customers the RNG program provides that VGS may use funds collected to
purchase carbon offsets from an established carbon registry such as the American Carbon
Registry VGS will purchase an amount of carbon offsets equal to the amount of the revenue
resulting from the undersupply in order to result in a revenue-neutral program At the time of the
three-year implementation review VGS will propose an environmental accounting protocol in
order to quantify the environmental benefits of the program and to evaluate the financial risk of
purchasing carbon offsets in an amount equivalent to the environmental benefits of unsold RNG
due to undersupply Murray supp pf at 6 l0 exh Pet-VGS-s Responses 1
14 The development and standardization of RNG attributes is in its infancy as compared to
the existing markets for the environmental attributes used in the electric industry (renewable
energy credits or (RECs)) Murray supp pf at 12
15 If carbon offsets are not available VGS will contribute the RNG program revenues to the
Clean Energy Development Fund or issue prorated credits to affected customers Exh Pet-
VGS-S Responses 3
16 If RNG supply exceeds customer demand VGS would seek to sell the excess RNG at
wholesale Murray supp pf at 10
17 VGS will provide proposed RNG supply contracts to the Department prior to execution
It will also consult with the Department before making decisions that could dramatically impact
price or the integrity of the RNG program Exh Pet-VGS-S Responses 2 White pf at 5
18 The estimated cost of RNG supply ranges from $l2lMcf to $25lMcf The cost of natural
gas is less than $3Mcf Murray supp pf at 8-9
19 VGS will implement an RNG Quality Assurance Plan establishing a testing and
monitoring process to ensure that RNG injected (via in-state RNG producers) into the VGS
system is pipeline quality and meets the specifications of the TCPL transportation tariff for bio-
methane gas quality Murray supp pf at 14 exh Pet-VGS-4
Docket No 8667 PageT
20 VGS will file an annual report on the RNG program with the Commission and the
Department containing the following information
1 Number of subscribers by customer class
2 Sales volume by customer class
3 Sales revenues
4 Any sales or purchases of carbon offsets
5 Supplyconsumption matching portfolio including any shortfall or excess
supply of RNG
6 True-up schedule for any imbalances
7 RNG supply verification
8 Quantification of the impact of any excess RNG costs flowing through the
PGA if VGS remains under altemative regulation
9 Accounting of any carbon ofszligets or other incentives
10 Status of any contracts for RNG including plans to acquire new supply
contracts
I 1 Revenue from Renewable Identification Number (RlN) sales and impact
on the transport tariff as well as any projections about the RIN market that are
available to VGS and
12 Complete reports and environmental verifications by an independent
verifier
Murray supp pf at 11 exh Pet-VGS-3 White pf at 8-9 tr912116 at23-24 (Munay)
21 Except as described below concerning RlN-eligible RNG VGS will annually verify that
the RNG was produced by a renewable gas production facility that VGS is the exclusive oryner
of any environmental attributes associated with RNG it sells under the program that it acquired
the RNG from its transferor and sold itatretail and that neither the RNG nor any renewable
attribute associated with the RNG has been sold twice at any point between RNG production and
sale to VGS whether by sales into carbon offset markets or otherwise This verification will be
based on certifications by VGSs suppliers and by an independent third party retained by VGS
for this purpose Exh Pet-VGS-3 exh Pet-VGS-s Response 5 White pf at 8
Docket No 8667 Page I
22 For RlN-eligible RNG used as vehicle fuel verification will be addressed in detail in the
future as part of VGSs proposed Renewable Vehicle Fuel Tariff Exh Pet VGS-5 Response 4
rr912116 at 65 (White)
23 There are few natural gas utilities currently offering RNG at retail VGS modeled its
RNG program after the program designed by FortisBC a local distribution company in British
Columbia Canada VGS also had discussions with SoCalGas in Southern California Both of
these companies are leaders in developing RNG offerings and fostering RNG supply resources
Murray supp pf at 7
24 VGS will file with the Commission and Department a marketing plan containing the
following elements
l An evaluation element that includes concrete metrics such as sales
volume targets and enrollment targets
2 Identification of target market segment(s)
3 Development of materials and language for customer-marketing efforts
that explain the RNG program in plain language easily understandable to the
average customer
4 An online bill calculator
5 An implementation plan that identifies specific activities and a timetable
and
6 Abudget
Exh Pet-VGS-5 White pf at 10 Tr912116 at22-23 (Munay)
25 VGS and the Department represent that the RNG progriquestun is responsive to the
Commissions condition in its Order in Docket 7970 rcquiring VGS to develop a proposal to
promote bio-methane project development Murray supp pf al 13-14tr912116 at 63 (Vhite)
26 VGS asserts that the RNG program represents appropriate progress toward the Vermont
Comprehensive Energy Plan (CEP) goal to meet90o of Vermonts energy needs through
renewable sources by 2050 Murray supp pf at 12-13
VI DlscussroN iexclxu Coxclustox
Vith this proposal for decision I recommend that the Commission approve the RNG
program in accordance with the findings described above and based upon the evidence in the
Docket No 8667 Page 9
record In Docket 7970 the Commission required VGS in consultation with the Department to
file a petition with the [Commission] proposing a program to promote bio-methane project
development It is reasonable to expectthat aprogram meant to stimulate development of a
specific energy source would look to stimulate demand for that resource by offering an
opportunity for customers to purchase supply from RNG producers
The RNG program proposed by VGS and supported by the Department seeks to offer
ratepayers the option to purchase renewable energy as part of their individual energy-use
portfolio Furthermore the program includes a provision requiring that VGS develop a detailed
marketing plan that will serve to educate customers on the availability costs and benefits of
such resources which could lead to increased demand for the product
VGS intends to take advantage of the existing market for RINs associated with RNG used
as transportation fuel by proposing a Renewable Vehicle Fuel Tariff As described above in the
Public Comments section the Chittenden County Transportation Authority and Casella Vaste
Systems are interested in exploring the use of RNG to fuel their vehicle fleets which
demonstrates that there is existing customer demand for this product
Unlike the markets relating to RNG supply used for transportation fuel or renewable
electric generation and the associated trading and verification of RECs the RNG market is in its
infancy At this time it would not be appropriate to expect VGS to implement an RNG program
utilizing an RNG content standard similar to the electric renewable portfolio standard as
recommended by CLF because the equivalent standards and processes do not exist However
the RNG program represents a meaningful first step in encouraging customer interest in
purchasing RNG at retail thereby stimulating supply of RNG into the market and is consistent
with the Commissions condition requiring VGS to develop a proposal to promote bio-methane
project development
VGSs RNG program includes appropriate mechanisms for periodic reporting and
verification of program activities as well as an opportunity to comprehensively review the
program after three years of implementation Furthermore determinations regarding recovery of
costs associated with the RNG program will be made in the context of future proceedings
regarding VGSs rates The RNG program should evolve with the RNG markets in the near-term
and over the course of the next several years which will allow progress towards achievement of
Vermonts 2050 CEP renewable energy goals
Docket No 8667 Page 10
Because not all parties to this proceeding have waived their rights under 3 VSA $ 811
to file written comments or present oral argument with respect to this proposal for decision I am
circulating the proposal for decision to the parties for their review and comment
Dated at Montpelier Vermont this rrtl day of QrIltt 2017a0AndreaHearing Officer
Docket No 8667 Page 11
VII Corumrssron Drscussrox
On August 22017 the Department filed a letter stating that it supports the issuance of an
Order by the Commission that adopts the proposal for decision in full
Also on August 22017 VGS filed comments on the proposal for decision requesting
that Finding 16 be modified as follows (additional text in italics) If RNG supply exceeds
customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary
flow any remaining RNG attribute inventory amounts through the PGA or through a rate case ifVGS was under traditional cost of service regulation (subject to [Commission] approval)
VGS asserts that [a]bsent such specific language it is possible that VGS would be unable [to]
defer such costs for future recovery and that removal of that component introduces uncertainty
about the potential procedural mechanisms available for cost recovery in the last resort VGS
states that with the Commissions consideraacutetion of this request it does not request oral argument
No other comments were filed on the proposal for decision
The Hearing Officer recommended that the Commission find that determinations
regarding recovery of costs associated with the RNG program will be made in the context of
future proceedings regarding VGSs rates We agree with this recommendation VGS should
have an opportunity to request rate recovery for excess RNG supply However this proceeding
is not the proper time for such a determination Accordingly Finding 16 is hereby modified as
follows If RNG supply exceeds customer demand VGS would first seek to sell the excess
RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any
remaining RNG attribute inventory amounts through the PGA or through arate case as part of
its cost of service if the PGA is no longer in effect atthat timeWe emphasize the importance of the successful implementation of the RNG program in
helping to meet the States renewable energy policy objectives The annual report on the
implementation of the RNG program will serve as a valuable tool to assess that progress In this
proceeding CLF has raised policy considerations that should serve to guide these future reviews
of the RNG program For example CLF has raised concerns regarding the effectiveness of the
voluntary nature of the program In assessing its program we expect VGS to revisit and report
on the feasibility of incorporating RNG as a portion of its supply mix in the future It is
important for VGSs RNG program to be sustainable and continue to evolve ensuring significant
DocketNo8667 Page 12
contributions toward meeting the States renewable energy goals and reducing the consumption
of fossil fuel Accordingly it is critical that the annual report and the three-year comprehensive
review address not only the effectiveness of the program but also its affordability and the
feasibility of other policy options to advance the production and use of RNG in Vermont
Docket No 8667 Page 13
VIII Onunn
Ir rs Hennsy oRDERED ADJUDGED AND DECRnnn by the Public Utility Commission of the
State of Vermont that
1 The findings conclusions and recommendations of the Hearing Officer are
adopted and the Renewable Natural Gas (RNG) program to be implemented by Vermont Gas
SystemsInc (VGS) is approved
2 When VGS has procured RNG supply in amounts reasonably estimated to be
sufficient for estimated customer demand it shall file a formal tariff including proposed rates for
sale of RNG The tariff shall be reviewedpursuantto the procedures of 30 VSA ccedilccedil225226
and227 and sales under the program shall begin after Commission approval of the tariff
3 VGS shall develop and file for Commission approval a separate Renewable
Vehicle Fuel Tariff to serve customers using RNG as a transportation fuel
4 VGS shall file a marketing plan for the RNG program consistent with the
requirements set forth above within one month of the issuance of this Order
5 VGS shall file an annual report consistent with the requirements set forth above
upon implementation of the RNG program
6 VGS shall file a comprehensive review of the performance of the program with
the Commission and the Department after three years of implementation This review will
include an environmental accounting protocol to quantiff the environmental benefits of the
progrfim
7 VGS shall review proposed RNG supply arrangements with the Department
Docket No 8667
Orprcp oF THE Crnm
Dated at Montpelier Vermont this day of+hb
Z Roisman
Cheney
Page 14
20t7
Puslrc Urrlnv
CovtriquestIssIoN
OP VERMONT
(
)))
)))
Fired otildeeglcL ( JotTAttest c
of the Commission
NorIcE To READERS This decision is subject to revision oftechnical errors Reqders are requested tonotify the Clerk of the Commission (by e-mail telephone or inwriting) or any appqrent errors in order that anynecessary corrections may be made (E-mail address pucclerkvermontgov)
Appeal of this decision to the Supreme Court of Vermont must befiledwith the Clerk of the Comnissionwithin thirty days Appeal will not stay the efect of thszlig Order absentfurther order by this Commission orappropriate actiacuteon by the Supreme Court of Vermont Motions for reconsideration or stay if any must be filed withthe Clerk of the Commissionwithin ten days of the date of this deciacutesion and Order
Exhibit 22 VGS RNG Tariff Rate Filing
Exhibit 23 PUC Approval of VGS RNG Rates
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Case No l8-03 13-TF
Petition of Vermont Gas Systems Inc fotapproval of a new tariff implementing theRenewable Natural Gas program
Order entered
OnonRAppnovINc Tiquestrurn
On January 302018 Vermont Gas Systems Inc (VGS) filed a petition for approval of
a new tariff implementing the Renewable Natural Gas (RNG) program approved by the
Vermont Public Utility Commission (Commission) in Docket No 8667 In that Docket the
Commission required VGS to file a tariff implementing the RNG program when it has procured
RNG supply in amounts reasonably estimated to be sufficient to meet customer demandl In
this Order the Commission approves the new tariff marketed under the name EcoGas with an
effective date of bills rendered on and after March 15 2018
VGS states that it has executed an RNG supply contract with deliveries scheduled for
2018 and that two additional contracts are being negotiated for deliveries beginningin2019
VGS is proposing to set its initial RNG adder at$ll749lCcf which represents a five-year
blended rate based on the three RNG supply arrangements VGS intends to account for the
difference between the cost of RNG supply and the RNG adder as a regulatory asset within gas
costs As additional lower-cost supply is added to the portfolio the regulatory asset balance will
be recovered from EcoGas participants with the goal of fully reducing the balance by the end of
five years Accordingly VGS states that the RNG program will be rate-neutral to VGS and its
non-RNG customers
On February 272018 the Vermont Department of Public Service (Department) filed a
letter recommending that the Commission approve the tariff without a hearing or further
investigation The Department states that the tariff filing and proposed accounting treatment
comply with Vermont rate-setting practices policies precedents and statutes
lslaotx
I Docket 8667 Order of 96117 at 13
Page2Case No 18-0313-TF
Based on the foregoing we hereby approve VGSs proposed RNG tariff to be effective
on a bills-rendered basis beginning on March 15 2018 Recovery of any regulatory asset
balance at the end of the fifth year would need to be approved by the Commission in a future
proceeding
So Omnnnn
Case No l8-0313-TF
8r- day of lruacuterLiquestiquest
Page 3
Dated at Montpelier Vermont this 2018
Roisman PueIrc Urlrrv
CoiriexcllriquestlssloN
Cheney
OF VERMONT
Sarah Hofmann
Onncp oF THE CLBRr
Filed huacuteveuroAacute- icirc dollAttest I
Clerk of the Commission
Notice to Readers This decision is subiect to revision oftechnical errors Readers are requested to notify
the Clerk of the Commission (by e-mail telephone or in writing) or qny qpparent errors in order that any
necessary corrections may be made (E-mail address pucclerkvermontgov)Appeal of this decisiacuteon to the Supreme Court of Yermont must be filed with the Clerk of the Commission
within 30 days Appeal will not stay the efect of this Order oslashbsent further order by this Commission or appropriate
action by the Supreme Court of Vermont Motionsthornr reconsideration or stay if any must befiledwith the Clerk ofthe Commissionwithin 28 doslashys of the date of this decision and Order
)))
))))
PUC Case No 18-0313-TF
Eileen SimollardesLauren HammerVermont Gas
85 Swift StreetSouth Burlington VT 05403
June E Tiemey CommissionerVermont Department of Public Service1 12 State StreetMontpelier VT 05620 -2601
Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
Exhibit 31 Accounting Procedures
Exhibit 31 Accounting for VGS Renewable Natural Gas (Ver-9202019)
1 Purchase of RNG Supply
RNG supply purchases are separated into the cost of the commodity and the cost of the renewable attribute The commodity portion is expensed to gas costs in the delivery month while the renewable attribute is booked to an inventory account referenced herein as the ldquoRenewable Inventory Accountrdquo Like VGSrsquo existing storage inventory accounting the Renewable Inventory Account will track both the dollar value of the renewable attribute and the renewable attribute Mcfs Renewable attribute dollar values are record to ldquo16410050 Inventory RNG Storagerdquo while Mcf values are recorded in the gas cost model maintained by accounting In the month VGS purchases the renewable attribute it is accrued in a book model and goes in to 16410150 Inventory RNG Accrued then moves to the 16410050 in a final model the following month for final
RNG may be purchased at different locations and using varying pricing structures While the accounting for RNG does not vary with the purchase location or price the determination of the value of the renewable attribute will vary depending on whether or not the supply pricing expressly values the renewable attribute as an adder or it is embedded in a fixed price Examples of each are shown below The accounting of RNG supply is intended to separate the cost of the renewable attribute from the cost of the commodity The examples below are not all inclusive of what may occur but intended to show the accounting procedures used to separate the renewable attribute from the commodity and specify ownership of each aspect
In all cases the commodity cost portion - which is the total cost of the RNG purchased excluding the renewable attribute - will be expensed in the delivery month as a cost of gas
Example 1 ndash The fixed price of RNG includes both the commodity and the renewable attribute
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The total cost of the RNG supply purchased during the month is calculated by Accounting within the gas cost model as follows
MMBtu Purchased (as validated in step 2) $ MMBtu purchase price (as provided in a supply confirmation provided by gas supply)
4 For purposes of booking the renewable attribute to inventory it is necessary to calculate the RNG cost per Mcf The RNG cost Mcf is calculated using the total cost of RNG supply as calculated in step 3 divided by the Mcf in step 1
5 The renewable attribute price per Mcf is calculated as follows
RNG cost per Mcf as determined in step 4 ndashplus ldquoother componentsrdquo as calculated pursuant to Attachment A ndash minus ldquoAverage Commodity Costrdquo as calculated pursuant to Attachment A The ldquoother componentsrdquo added to the RNG cost per Mcf will vary depending on where the RNG supply was delivered but in each case will be identified in the calculation shown on Attachment A
6 The renewable attribute price per Mcf the total RNG Mcf delivered is recorded in the Inventory RNG Storage account
7 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
Example 2 - RNG purchased at a renewable attribute price plus a daily or monthly index
Where the pricing of RNG specifically separates the commodity from the renewable attribute the renewable attribute price will be what is recorded in the Renewable Inventory Account
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The renewable attribute price per Mcf the total RNG Mcf delivered as determined in step 1 is recorded in the Renewable Inventory Account
4 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
2 Recalculating the RNG Adder
The RNG Adder paid by customers will be recalculated anytime the Natural Gas charge portion of rates changes The Manager of Gas SupplyGas control is responsible for recalculating the RNG Adder The calculation will be verified and approved by the Vice President ndash Regulatory Affairs The determination of the RNG Adder will be pursuant to the methodology shown in Attachment A The Regulatory Department will prepare the amended RNG Adder tariff for filing with the PUC Upon PUC approval of the RNG Adder the Regulatory Department will prepare a memorandum advising Accounting and Gas Supply of the new RNG Adder as approved
3 Customer purchases VGS Renewable Natural Gas
The RNG Adder at the percent selected by the customer will be applied to the entire monthrsquos usage on the customersrsquo next bill For customers utilizing the S-RNG adder the entire volume elected with be on the customersrsquo next bill The S-RNG Adder nor the RNG Adder and percentage selected will not be prorated based on enrollment or termination date
Customers may terminate or modify their RNG selection upon 3 dayrsquos notice to VGS The termination or modification will be effective on the customerrsquos next monthly bill
The customerrsquos usage for the month will be multiplied by the percentage and the approved RNG Adder For customers utilizing the S-RNG adder the volume elected will be multiplied by the approved RNG adder This amount will then be recorded to SAP accounts 4010015-40010021 depending on which rate class the customer is in The RNG Adder is the same regardless of which rate class a customer is in At the end of the month a report is run by billing from the customer information system that shows total usage and which percentage of RNG the customer has signed up for to calculate the number of MCFrsquos of renewable attribute sold during the billing period Billing also provides a report of the volumes sold through the S-RNG Tarriff The Inventory RNG Storage account maintained within the gas cost model by Accounting is reduced by these Mcf The MCFrsquos are then multiplied by the RNG Adder in effect for the billing month and an entry is made to remove that dollar amount from the Inventory RNG Storage account and into the monthly cost of gas The intent of this transaction is to ensure that cost of the renewable attribute is reflected in the cost of gas in the month it is purchased by the customer This results in a matching of the renewable attribute revenue and expense
The RNG Adder revenue and renewable attributes removed from storage will be included in the gas cost deferral calculation However because there is a matching of the renewable attribute revenue and expense the impact on the deferral calculation will be zero
The calculation of unbilled revenues will exclude RNG as a customer can cancel their participation prior to their next bill
In the event Vermont Gas issues a credit to a customer related to the RNG program the value of the renewable attribute credited and the associated Mcf will not be applied to the Renewable Inventory Account
4 Controls
A spreadsheet is maintained by accounting that shows the MCFrsquos and dollar values of the Renewable Inventory Account This is reconciled monthly by the accounting team and will be reviewed by the Manager Gas SupplyGas Control
Accounting will validate that the amount removed from the Renewable Inventory Account matches the RNG Adder revenue Any discrepancies will be reviewed and corrected
A report will be run for each bill cycle that shows any changes to the RNG percentages selected this will include customers opting to withdraw from the RNG program The customer care team will validate any changes against customer confirmation paperwork
5 Renewable Inventory Account Reconciliation and Forecast
The PUC Order approving the RNG program contains provisions describing how RNG supply and demand imbalances will be addressed These provisions and how VGS will track and comply with them are as discussed in this section The PUC Order approving the RNG Program provides that if the available RNG supply during the previous 12 months is less than the amount purchased by customers VGS may use the funds collected to purchase carbon offsets (Finding 13) If carbon offset are not available VGS will contribute the RNG program revenues to the Clean Energy Development Fund or issue prorated credits to affected customers (Finding 15) The Order also provides that in the event RNG supply exceeds customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any remaining RNG attribute inventory amounts through the PGA or through a rate case as part of its cost of service if the s PGA is no longer in effect at that time (Finding 16 as modified) Finding 11 provides that VGS will use a ldquotrue-uprdquo period of up to 12 months in order to balance the difference between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply) Taken together these provisions require VGS to evaluate the imbalance after 12-months and then true-up the imbalance over the next twelve months To provide a forecast of the supplydemand imbalance quarterly the billing area will run a report showing the expected RNG volumes based on current customer commitments by month for the next 12-months Current customers commitments will be calculated based on the previous 12 months of usage multiplied by the RNG percentage currently signed up for The marketing department will provide their forecast of new RNG sales for the next 12-months Both will be provided to the Manager Gas SupplyGas Control The Manager Gas SupplyGas Control will compare the forecasted RNG sales known and expected to RNG supply commitments and provide a 24-month forecast of the supplydemand balance The supplydemand balance will be reviewed at the risk management meeting The strategy for addressing the imbalance consistent with the PUC order will be determined by the risk management committee
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
VGS Renewable Natural Gas Program Manual
Page 7
VGS Renewable Natural Gas Adder Calculation Average RNG Commodity Cost
Minus Average Natural Gas Charge Equals VGS Renewable Natural Gas Adder
Exhibit 22 provides the detailed calculations
This formula identifies the current premium to be paid per CCF of RNG This premium also represents the value of the ldquoVGS Renewable Natural Gas Attributerdquo that VGS will withdraw from the VGS Renewable Natural Gas Attribute Inventory described below
To full reflect the cost of the initial RNG supply with future RNG supply contracts the initial RNG Adder was based on a blended rate of the cost of the first and the expected costs of future RNG purchases over the next 5 years The PUC has authorized this blended approach
The RNG Adder will change whenever the PUC authorizes a change in the Natural Gas Charge portion of the tariff Currently this change occurs quarterly
23 ANNUAL RNG REPORT An Annual RNG Report will be filed with PUC and Vermont Department of Public Service (ldquoDepartmentrdquo) each year in June The first annual report was filed in June 2018 In accordance with the PUC final order approving the Program the annual report will include the following information
1 Number of subscribers by class2 Sales volume by customer class3 Sales Revenues4 Any sales or purchases of carbon offsets5 Supply Consumption matching portfolio including any shortfall or excess supply of
RNG6 True-up schedule for any imbalances7 RNG supply verification8 Quantification of the impact of any excess RNG costs flowing through the PGA if
VGS remains under alternative regulation9 Accounting of any carbon offsets or other incentives10 Status of any contracts for RNG including plans to acquire new supply contracts11 Revenue from Renewable Identification Number (ldquoRINrdquo) sales and impact on the
transport (transportation) tariff as well as any projections about the RIN marketthat are available to VGS and
12 Complete reports and environmental verifications by an independent verifier
The annual report will also address the effectiveness of the program and its affordability
VGS Renewable Natural Gas Program Manual
Page 8
24 THREE-YEAR IMPLEMENTATION REVIEW In accordance with the PUC Order in March 2021 (the third year of the Program) VGS will file a comprehensive review of the performance of the Program The review will include an environmental accounting protocol to quantify the environmental benefits of the program The three-year comprehensive program review will also address the effectiveness of the program its affordability and the feasibility of other policy options to advance the production and use of RNG in Vermont
SECTION 2 EXHIBITS
bull Exhibit 21 VT PUC Approval Orderbull Exhibit 22 VGS RNG Tariff Rate Filingbull Exhibit 23 PUC Approval of VGS RNG Ratesbull Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
VGS Renewable Natural Gas Program Manual
Page 9
Section 3 Supply Procurement and Accounting
KEY VGS RENEWABLE NATURAL GAS SUPPLY AND ACCOUNTING STEPS
Item Description Schedule Owner RNG Supply Contracts
Procuring RNG Supply As needed Gas Supply
RNG Supply True-Up
Balancing RNG supply sales and retiring attributes
Monthly Finance
RNG Supply Verification
Verifying ldquorenewabilityrdquo of RNG Supply
Annually Gas SupplyThird- Party
31 VGS RENEWABLE NATURAL GAS SUPPLY OVERVIEW
VGS intends to contract with a variety of RNG supply sources to meet its customer demand in the RNG Program RNG supply is currently available from a limited number of landfill and digester projects in Canada or US states other than Vermont In Vermont at least one local supply project is currently under development
Today there is no central ldquomarketplacerdquo for RNG suppliers and buyers to trade RNG supply contracts RNG buyers such as VGS transact with individual producersprojects or work through RNG brokers to acquire RNG supply or the environmental attributes associated with RNG in bilateral transactions VGSrsquo initial RNG supply contract in 2018 was with BP Canada Energy Group ULC and sourced from the EBI Inc13 biogas production facility located in Ste Genevieve Quebec In 2019 VGSrsquo purchased RNG supply from a waste water treatment facility in Dubuque Iowa
In 2020 VGS plans to begin receiving RNG supply from a Vermont farm digester and a Canadian digester facility The Vermont farm digester located in Salisbury Vermont is slated for completion in late 2020 producing 180000 MMbtursquos per year The Canadian digester project is located in London Ontario VGS has agreed to purchased 100 of the supply from this facility up to 120000 MMbtursquosyear for 15 years VGS sought and received PUC approval for this Ontario supply in 2018 and received approval for an amendment in 2019 To meet anticipated demand for RNG until these two resources come on line the Company purchased short-term supply of RNG from the Iowa facility in 2019 We anticipate that these supply sources will satisfy the VGS Renewable Natural Gas Program supply needs for the first few years of the Program If we are unsuccessful
13 EBIrsquos Facility was recognized in 2016 (httpswwwdesjardinscomcavideossinglejspdocName=vid-ebi-e)
VGS Renewable Natural Gas Program Manual
Page 10
in procuring supply from these sources or if demand exceeds these planned supplies VGS will seek additional RNG supply in the marketplace
32 VGS RENEWABLE NATURAL GAS SUPPLY CONTRACTS VGS will utilize standard industry or comparable contract vehicles to procure RNG supply with site-specific terms and conditions Given the unique nature of the in-state RNG project the gas supply contract is a 3 way agreement between the producer VGS and an end user Accordingly the form of the contract does not resemble industry standard supply agreements but contains all appropriate business terms The first two contracts signed by VGS utilize a gas utility standard base contract with signed transaction confirmation documents that specify the specific details of each deal These contracts will require the RNG supplier to certify the renewable attributes and that VGS has full and sole ownership of those attributes As required by the PUC Order RNG Suppliers will also be required to allow VGS independent verification of the production and transactions related to VGS supply volumes The specific PUC requirements are found in finding 21 page 7 of Exhibit 21 - VT PUC Approval Order
33 VGS RENEWABLE NATURAL GAS ACCOUNTING Like accounting practices in the renewable electric industry Vermont Gas will have the obligation to match RNG supply volumes with customer RNG purchase volumes over time As discussed in Section 22 the premium for RNG above the cost of conventional natural gas establishes the value of the renewable attribute purchased by the customer These attributes are tracked in a separate inventory account and then matched with actual retail VGS Renewable Natural Gas sales Once these renewable attributes are matched with VGS Renewable Natural Gas sales they are ldquoretiredrdquo and cannot be resold in any manner or used to satisfy another obligation by VGS As provided in the PUC order ldquoVGS will use a ldquotrue-uprdquo period of up to 12 months to balance the difference between RNG attributes sold to customers (demand) and RNG attributes purchased by VGS from suppliers (supply)rdquo This true-up period allows RNG attribute ldquooversupplyrdquo and ldquoundersupplyrdquo to be balanced as described below
In an ldquooversupplyrdquo situation where forecasted RNG attribute purchases exceed the number of RNG attributes that VGS forecasts selling to its customers through the RNG Program VGS will first seek to market the excess RNG and the environmental attributes back through the wholesale supply channels If this oversupply extends beyond the 12-month true-up window VGS may seek PUC permission to flow any remaining RNG attribute inventory amounts through the Purchase Gas Adjustment (ldquoPGArdquo) or through its cost of service if the PGA is no longer in effect at that time
An ldquoundersupplyrdquo situation would occur if customer purchases of RNG attributes exceeded the amount available under VGSrsquo RNG supply contracts in the forward looking 12-month true-up window If the RNG supply purchases are lagging the RNG sales VGS
VGS Renewable Natural Gas Program Manual
Page 11
will true-up or balance this undersupply over the upcoming 12-month period through existing or additional RNG supply purchases
If VGS is unable to eliminate an undersupply imbalance after the 12-month true-up period VGS would need to purchase carbon offsets in the dollar amount equal to VGS Renewable Natural Gas revenues collected associated with the undersupply (See Exhibit 21 Order Finding 13 and 15) Carbon offsets are listed on one of several Carbon Registries such as the American Carbon Registry If carbon offsets are not available VGS has the option to contribute these RNG revenues to the statersquos Clean Energy Development Fund or issue prorated credits to affected customers It should be noted that while purchasing offsets is a tool for VGS it is not the intent of the VGS Renewable Natural Gas Program and if an undersupply situation persisted VGS would likely petition the PUC to modify or suspend the VGS Renewable Natural Gas Program prospectively
VGS will manage the RNG Program to closely match supply and demand and utilizing our RNG wholesale cost mitigation tools to avoid RNG supply challenges
As renewable programs evolve in the energy and natural gas industry Vermont Gas will adjust its accounting procedures to reflect industry standards and revise this manual to reflect any modifications or changes
34 RENEWABLE VERIFICATION VGS is committed to transparency and the integrity of this innovative program is essential to success Toward that end no step is more essential than the verification of the renewability claims of our VGS Renewable Natural Gas supply The PUC reinforced this commitment in the RNG approval order as follows
ldquoVGS will annually verify that the RNG was produced by a renewable gas production facility that VGS is the exclusive owner of any environmental attributes associated with RNG it sells under the program that it acquired the RNG from its transferor and sold it at retail and that the RNG has not been sold twice at any point between RNG production and sale to VGS whether by sales into carbon offset markets or otherwise This verification will be based on certifications of VGSrsquos suppliers and of an independent third party retained by VGS for this purposerdquo
VGS will use an independent third-party to verify the renewable claims for the VGS Renewable Natural Gas supply including the following
bull Confirm the renewable fuel feedstock identificationbull Confirm the product renewable fuel identificationbull Review and confirm the renewable fuel production processbull Review of fuel flow measurement and quality monitoring process and equipment
VGS Renewable Natural Gas Program Manual
Page 12
bull Review of contracts and affidavits governing the transfer of the RNG from theoriginal source to the end user(s)
bull Review of evidence confirming the existence of a physical path (common carrierpipeline) for RNG transfer and distribution to end users
SECTION 3 EXHIBITS
bull Exhibit 31-Accounting Proceduresbull Exhibit 32-Verification from Suppliersbull Exhibit 33-Third Party Verification
VGS Renewable Natural Gas Program Manual
Page 13
Section 4 Marketing
KEY MARKETING STEPS Item Description Owner VGS Renewable Natural Gas Branding
Maintain product and brand integrity Communications
Product Definition Ensuring proper VGS Renewable Natural Gas description in all materials
Communications
External Review Verification of Marketing claims Communications
41 MARKETING PLAN Exhibit 41 is the 2018 version of the Marketing Plan filed with the PUC This document may be updated from time to time as we adjust our marketing strategy
42 MARKETING CLAIMS VGS is committed to making clear and accurate claims about the environmental benefits of VGS Renewable Natural Gas We have enlisted the assistance of a law firm specializing in marketing renewable products to review VGSrsquo marketing materials and claims In addition VGSrsquo annual third-party review of our program will focus on the integrity of our administration of the VGS Renewable Natural Gas program (see Section 54)
43 VGS RENEWABLE NATURAL GAS ldquoPRODUCT CONTENT LABELrdquo The Product Content Label is intended to be prominently displayed on the VGS web site and in correspondence to customers when they enroll in this program
Product Content Label
By participating in the VGS Renewable Natural Gas program you are purchasing the renewable attributes associated with the production of renewable natural gas (ldquoRNGrdquo) which may also be referred to as biogas or bio-methane A unit of VGS Renewable Natural Gas measured in hundred cubic feet (CCF) represents the environmental attribute of 1 CCF of biogas VGS reserves the right to purchase carbon offsets if RNG supply is not available VGS will notify customers if this occurs The Product Content Label is available at httpswwwvermontgascomrenewablenaturalgas
SECTION 4 EXHIBITS
bull Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)bull Exhibit 42 VGS Renewable Natural Gas Trademark
VGS Renewable Natural Gas Program Manual
Page 14
Section 5 Customer Information and Billing
KEY BILLING AND REVENUE STEPS Item Description Owner Billing Enrollment of VGS Renewable Natural Gas
Customers Contact Center
Notice Customer Notice of VGS Renewable Natural Gas Rates
Contact CenterBilling Group
Program Assurance Verification of VGS Renewable Natural Gas program procedures
Billing and Finance
51 CUSTOMER ENROLLMENT AND BILLING PROCESS The VGS Customer Care team will enroll customers and establish the VGS Renewable Natural Gas Adder on customer accounts Customers will be able to order VGS Renewable Natural Gas via VGSrsquo website (preferred method) calling VGS contact center or through the VGS Energy Services team An RNG calculator is available on VGSrsquo website httpswwwvermontgascomrenewablenaturalgasadder-calculator that can assist customers in estimating the costs of VGS Renewable Natural Gas at the various percentage levels based on the customerrsquos gas consumption VGS will inform customers of the current RNG Adder premium when they enroll Customers have two options when enrolling in the RNG program Customers may select their desired percentage of VGS Renewable Natural Gas ( 10 25 50 or 100) or they may allocate a fixed amount of RNG attributes (ldquoS-RNGrdquo) for each month that they are enrolled in Customer Care will then set up the billing on their account VGS will send an order confirmation via email or as a separate mailing (see Exhibit 51) thanking the customer for subscribing to VGS Renewable Natural Gas and informing the customer of the estimated impact on their bill As shown on Exhibit 51 the order confirmation letter will also include the RNG program guidelines These guidelines are discussed in section 53 below
52 VGS RENEWABLE NATURAL GAS WEBSITE AND FREQUENTLY ASKED QUESTIONS The VGS Renewable Natural Gas web page contains general VGS Renewable Natural Gas information an FAQ a VGS Renewable Natural Gas calculator current VGS Renewable Natural Gas Adder and an easy-to-use sign up form
For the most recent Frequently Answered Questions visit httpwwwvermontgascomVGS Renewable Natural Gas
VGS Renewable Natural Gas Program Manual
Page 15
53 VGS RENEWABLE NATURAL GAS PROGRAM GUIDELINES VGS Renewable Natural Gas customers will fall under VGSrsquo General Terms and Conditions outlined in VGSrsquo tariffs and PUC rules (ex Disconnection practices late fees taxes) VGS tariffs can be found at httpwwwvermontgascomaccountrates
VGS will notify VGS Renewable Natural Gas customers of rate changes in advance of implementation on both their individual bills and the Companyrsquos website RNG customers have the ability to cancel or modify their RNG account profile consistent with the tariff
VGSrsquo RNG customers can subscribe to VGS Renewable Natural Gas service with no term commitment and can cancel with three daysrsquo notice The RNG Adder will apply at either the percentage or fixed quantity allocated by the customer to the usage shown on the monthly bill regardless of enrollment or termination date The RNG Adder will not be pro-rated for partial-month usage
VGS customers receiving the low-income rate discount can subscribe to VGS Renewable Natural Gas however the 20 low income discount will not apply to the RNG Adder
Customers currently on a budget program will be encouraged to request a recalculation of their budget plan to adjust for the RNG Adder costs but it is not required
54 VGS RENEWABLE NATURAL GAS PROGRAM ASSURANCE
On an annual basis VGS will conduct a program review to ensure the VGS Renewable Natural Gas program is managed consistent with this manual The VGS Renewable Natural Gas program is a new product for the US natural gas utility industry and as such no industry specific standards exist VGS is working with on a national effort to develop a ldquoGreen-Erdquo certification process for Renewable Natural Gas programs that process is targeted for completion in 2020
SECTION 5 EXHIBITS
bull Exhibit 51 ECIS Customer Confirmation
VGS Renewable Natural Gas Program Manual
Page 16
EXHIBITS
Exhibit 21 VT PUC Approval Order
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Docket No 8667
Petition of Vermont Gas Systems Inc for aRenewable Natural Gas Program andOptional Tariff
)))
Hearing atMontpelier Vermont
September 22016
order entered q leacute I aon
PRBsBNI Andrea C McHugh Hearing Officer
AppeeReNcBs Peter H Zamore Esq
Owen J McClain EsqSheehey Furlong amp Behrn PCfor Vermont Gas Systems Inc
Louise C Porter EsqTimotthorn M Duggan Esq
for the Vermont Department of Public Service
Sandra Levine Esqfor Conservation Law Foundation
Gerald R Tarrant EsqTarcant Gillies amp Richardsonfor Lincoln Renewable Natural Gas LLC
I INrnooucrroN
This case involves a petition filed by Vermont Gas Systems Inc (VGS) with the
Vermont Public Utility Commission (oCommission) I for approval of a Renewable Natural Gas
(RNG) program and optional RNG tariff service for its customers The proposed RNG
progriquestigravem establishes a framework for VGS to offer its customers the option to purchase RNG for
I Pursuant to Section 9 of Act 53 of the 2017 legislafive session the Vermont Public Service Boards name waschanged to the Vermont Public Utility Commission effective July l 2017 For claity activities of the VermontPublic Service Board that occurred before the name change will be referred to in Commission documents as
activities of the Commission unless that would be conntildersing in the specific context
Docket No 8667 Page2
program establishes a framework for VGS to offer its customers the option to purchase RNG for
as a portion of their usage RNG is produced from materials such as agricultural waste manure
municipal waste plant material or compost and is also referred to as bio-methane In this
proposal for decision I recommend that the Commission approve the proposed RNG program
and require VGS to make compliance filings as set forth herein
il PnocnrunnlHrsroRY
On October 232015 VGS figraveled a petition for approval for its RNG program including
prefiled testimony and exhibits of Thomas Murray
On January 192016I held a prehearing conference and on January 252016I issued
an Order establishing a schedule
On February 122016 VGS filed a revised RNG Plan
On March 102016I held a workshop to discuss the proposed program
On March 152016I issued an Order revising the schedule
On March 222016 Conservation Law Foundation (CLF) and Lincoln Renewable
Natural Gas LLC (Lincoln) filed motions to intervene in this proceeding
On April 12016 VGS filed supplemental testimony and exhibits
On April 82016I issued an Order granting CLFs and Lincolns intervention requests
On July 72016 the Vermont Department of Public Service (Department) CLF and
Lincoln filed testimony
On August 82016 Lincoln filed supplemental testimony
A technical hearing was hthornld on September 22016
On September 30 20|6VGS filed a draft proposal for decision supported by the
Department In addition CLF filed a brief on the same date Reply briefs were filed by VGS
and CLF on October 142016
III Posnroxs oF THE PlRrlns
VGS
VGS requests approval of its proposed RNG program for the sale of RNG to customers
on a voluntary basis VGS claims that its proposal contains reasonable provisions to align its
RNG purchases with the amounts sold to its customers appropriate mechanisms to address over-
Docket No 8667 Page 3
or under-supply of RNG and verification requirements to ensure that sales in fact consist of
RNG VGS maintains that the RNG program is an appropriate first step in stimulating RNG
producer supply and customer demand and is oamply supported by Vermonts experience of
measured implementation of electric renewable pricing programs2 VGS argues that the
program is responsive to the Commissions condition in its Order in Docket 79701o develop a
proposal to promote bio-methane project development3
Department of Public Service
Although the Department did not file a brief or reply brief it did present witness
testimony and indicated its support for the draft proposal for decision filed by VGS The
Department recommends that VGS review all proposed RNG supply arrangements with the
Department (in addition to seeking 30 VSA $ 248 approval where required) and suggests that
in the event of an undersupply of RNG VGS obtain carbon offsets in an amount equivalent to
the unused customer contributions The Department recommends that the RNG program be
reviewed at the end of three years at which time the protocol regarding the purchase of offsets
would be revisited
C ons ervation Law Foundation
CLF urges that the Commission reject the RNG program and instead adopt an RNG
content standard similar to the electric renewable portfolio standarda CLF maintains that the
expected annual sales volume is not apace that is consistent with Vermonts legislative and
planning targets for meeting energy needs with renewable energy or for reducing greenhouse gas
emissionss CLF claims that the proposed voluntary tariff falls short of being a program or
strategy that promotes the increased use of RNG resources or supply or fosters bio-methane
projects in Addison county6
2 VGS reply brief aI23 In Docket 7970the Commission considered the petition of VGS for a certificate of public good (CPG) pursuant
to 30 VSA $ 248 authorizing the construction of the Addison Natural Gas Pipeline In an Order issued on
December 232013 the Commission granted the CPG As a condition of approval the Commission required VGSin consultation with the Department to file a petition with the [Commission] proposing a program to promote bio-methane project development Docket 7970 Order of l2l23ll3 at 147
a CLF brief at 12s CLF brief at 36 CLF brief at 4
Docket No 8667 Page 4
Lincoln
Lincoln maintains that itis essential to promote development of agricultural-based bio-
methane supply in VermontT Lincoln states that the Commission is not in a position to
adequately address VGSs proposed RNG program until negotiations for sale of itsoutput
involving VGS and Middlebury College are completes
IV Punrrc CounnnNrs
The Commission received three letters of support for VGSs RNG program On March 10
2016 the Chittenden County Transportation Authority filed comments indicating that it intends to
explore the possibility of utilizing RNG to cover a portion of the energy needs for its fleet of 70
buses On March 182016 Champlain College filed comments noting that it is interested in using
RNG for a portion of its energy needs that are currently met with conventional natural gas On
March 282016 Casella Waste Systems made a filing with the Commission stating its intention
to explore using RNG to meet some of its energy needs for its fleet of vehicles
V trrutrxcs
Based on the evidence of record I hereby report the following findings and
recommendations to the Commission in accordance with 30 VSA $ 8(c)
1 RNG is produced from raw materials such as agricultural waste manure municipal
waste plant material or food waste Decomposition or digestion of these materials produces
raw methane which is then cleaned or upgraded to bio-methane in order to meet the receiving
pipelines gas quality specifications prior to injection into an existing pipeline system Thomas
Murray VGS (Murray) supp pf at3
2 VGS is exploring options to purchase RNG supply from Lincoln and from landfill gas
projects located outside Vermont that would be received through the Trans-CanadaPipeline
(TCPL) system Murray supp pf at 8-9
7 Daniel Smith Lincoln Renewable Natural Gas LLC (Smith) supp pf at L8 On August 152016 Lincoln filed a motion to continue this proceeding for a period of not less than 60 days statingthat the continuance would allow [it] VGS and Middlebury College to complete discussions as to VGSsinvolvement in the RNG supply in Vermont and allow the record in this case to be properly developed VGS and
the Department opposed the request for continuance On August 222016I issued an Order denying Lincolnsrequest and determined that Lincoln did not demonstrate good cause to postpone the technical hearing
Docket No 8667 Page 5
3 Under the program retail customers would voluntarily purchase RNG in amounts equal to
l0oo25yo50o or 100 of their total monthly requirements at specified prices per Ccf as an
adder to other retail charges Customers could terminate RNG purchases upon providing three
days of advance notice to VGS Murray supp pf at l-2 exhs Pet-VGS-l and Pet-VGS-3
4 Intemrptible customers will have the opportunity to participate in the RNG program
through VGSs existing Lock Price Program which currently provides for up to a two-year
commitment Murray supp pf at 5
5 VGS will develop and file for Commission approval a separate tariff for use of RNG as a
transportation fuel This tariff will allow VGS to take advantage of the sale of the associated
Renewable Identification Numbers (ooRINs) When RNG is used as a transportation fuel it is
eligible to receive RINs under the Federal Renewable Fuel Standard RINs can be resold on the
wholesale market and would be used to offset the price of RNG to transportation customers
receiving service under the tariff Joan E White
Department (White) pf at7tr912116 at 62-
63 (White) exh Pet-VGS-5 Response 4
6 VGS will also initiate a review of the RNG program by the Commission Department and
others after three years White pf at9tr912116 (Munay) at24
7 The adder price for each Ccf of RNG will be equal to the average RNG commodity cost to
VGS less the average commodity cost of natural gas VGS will adjust the adder price per Ccf on
a quarterly basis as part of its Purchased Gas Adjustment (PGA) filing Murray supp pf at 4
8 The proposed RNG program will include a tariff that is very similar in concept to the
Green Mountain Power Corporation (GMP) Cow Power tariff However Cow Power is based
on a fixed rate per kWh no matter what the cost of the renewable energy Murray supp pf at llVhite pf at 4
9 VGSs RNG tariff will be calculated quarterly based on actual RNG and natural gas costs
and will provide accurate price signals as to the price differential between natural gas and RNG
White pf at 4
10 Based on a survey conducted by VGS 85 of its customers are willingto pay l0oo
more for a renewable product VGS projects that customers could potentially consume over
500000 Mcf of RNG over the next five years Murray supp pf at 5
DocketNo8667 Page 6
11 VGS will use a true-up period of up to 12 months in order to balance the difference
between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply)
Murray supp pf at 9
12 There is a risk that due to the voluntary nature of the RNG program supply and demand
will be mismatched White pf at41 David G Hill CLF (Hi11) pf at 9
13 If the available RNG supply during the previous 12 months is less than the amount
purchased by VGS customers the RNG program provides that VGS may use funds collected to
purchase carbon offsets from an established carbon registry such as the American Carbon
Registry VGS will purchase an amount of carbon offsets equal to the amount of the revenue
resulting from the undersupply in order to result in a revenue-neutral program At the time of the
three-year implementation review VGS will propose an environmental accounting protocol in
order to quantify the environmental benefits of the program and to evaluate the financial risk of
purchasing carbon offsets in an amount equivalent to the environmental benefits of unsold RNG
due to undersupply Murray supp pf at 6 l0 exh Pet-VGS-s Responses 1
14 The development and standardization of RNG attributes is in its infancy as compared to
the existing markets for the environmental attributes used in the electric industry (renewable
energy credits or (RECs)) Murray supp pf at 12
15 If carbon offsets are not available VGS will contribute the RNG program revenues to the
Clean Energy Development Fund or issue prorated credits to affected customers Exh Pet-
VGS-S Responses 3
16 If RNG supply exceeds customer demand VGS would seek to sell the excess RNG at
wholesale Murray supp pf at 10
17 VGS will provide proposed RNG supply contracts to the Department prior to execution
It will also consult with the Department before making decisions that could dramatically impact
price or the integrity of the RNG program Exh Pet-VGS-S Responses 2 White pf at 5
18 The estimated cost of RNG supply ranges from $l2lMcf to $25lMcf The cost of natural
gas is less than $3Mcf Murray supp pf at 8-9
19 VGS will implement an RNG Quality Assurance Plan establishing a testing and
monitoring process to ensure that RNG injected (via in-state RNG producers) into the VGS
system is pipeline quality and meets the specifications of the TCPL transportation tariff for bio-
methane gas quality Murray supp pf at 14 exh Pet-VGS-4
Docket No 8667 PageT
20 VGS will file an annual report on the RNG program with the Commission and the
Department containing the following information
1 Number of subscribers by customer class
2 Sales volume by customer class
3 Sales revenues
4 Any sales or purchases of carbon offsets
5 Supplyconsumption matching portfolio including any shortfall or excess
supply of RNG
6 True-up schedule for any imbalances
7 RNG supply verification
8 Quantification of the impact of any excess RNG costs flowing through the
PGA if VGS remains under altemative regulation
9 Accounting of any carbon ofszligets or other incentives
10 Status of any contracts for RNG including plans to acquire new supply
contracts
I 1 Revenue from Renewable Identification Number (RlN) sales and impact
on the transport tariff as well as any projections about the RIN market that are
available to VGS and
12 Complete reports and environmental verifications by an independent
verifier
Murray supp pf at 11 exh Pet-VGS-3 White pf at 8-9 tr912116 at23-24 (Munay)
21 Except as described below concerning RlN-eligible RNG VGS will annually verify that
the RNG was produced by a renewable gas production facility that VGS is the exclusive oryner
of any environmental attributes associated with RNG it sells under the program that it acquired
the RNG from its transferor and sold itatretail and that neither the RNG nor any renewable
attribute associated with the RNG has been sold twice at any point between RNG production and
sale to VGS whether by sales into carbon offset markets or otherwise This verification will be
based on certifications by VGSs suppliers and by an independent third party retained by VGS
for this purpose Exh Pet-VGS-3 exh Pet-VGS-s Response 5 White pf at 8
Docket No 8667 Page I
22 For RlN-eligible RNG used as vehicle fuel verification will be addressed in detail in the
future as part of VGSs proposed Renewable Vehicle Fuel Tariff Exh Pet VGS-5 Response 4
rr912116 at 65 (White)
23 There are few natural gas utilities currently offering RNG at retail VGS modeled its
RNG program after the program designed by FortisBC a local distribution company in British
Columbia Canada VGS also had discussions with SoCalGas in Southern California Both of
these companies are leaders in developing RNG offerings and fostering RNG supply resources
Murray supp pf at 7
24 VGS will file with the Commission and Department a marketing plan containing the
following elements
l An evaluation element that includes concrete metrics such as sales
volume targets and enrollment targets
2 Identification of target market segment(s)
3 Development of materials and language for customer-marketing efforts
that explain the RNG program in plain language easily understandable to the
average customer
4 An online bill calculator
5 An implementation plan that identifies specific activities and a timetable
and
6 Abudget
Exh Pet-VGS-5 White pf at 10 Tr912116 at22-23 (Munay)
25 VGS and the Department represent that the RNG progriquestun is responsive to the
Commissions condition in its Order in Docket 7970 rcquiring VGS to develop a proposal to
promote bio-methane project development Murray supp pf al 13-14tr912116 at 63 (Vhite)
26 VGS asserts that the RNG program represents appropriate progress toward the Vermont
Comprehensive Energy Plan (CEP) goal to meet90o of Vermonts energy needs through
renewable sources by 2050 Murray supp pf at 12-13
VI DlscussroN iexclxu Coxclustox
Vith this proposal for decision I recommend that the Commission approve the RNG
program in accordance with the findings described above and based upon the evidence in the
Docket No 8667 Page 9
record In Docket 7970 the Commission required VGS in consultation with the Department to
file a petition with the [Commission] proposing a program to promote bio-methane project
development It is reasonable to expectthat aprogram meant to stimulate development of a
specific energy source would look to stimulate demand for that resource by offering an
opportunity for customers to purchase supply from RNG producers
The RNG program proposed by VGS and supported by the Department seeks to offer
ratepayers the option to purchase renewable energy as part of their individual energy-use
portfolio Furthermore the program includes a provision requiring that VGS develop a detailed
marketing plan that will serve to educate customers on the availability costs and benefits of
such resources which could lead to increased demand for the product
VGS intends to take advantage of the existing market for RINs associated with RNG used
as transportation fuel by proposing a Renewable Vehicle Fuel Tariff As described above in the
Public Comments section the Chittenden County Transportation Authority and Casella Vaste
Systems are interested in exploring the use of RNG to fuel their vehicle fleets which
demonstrates that there is existing customer demand for this product
Unlike the markets relating to RNG supply used for transportation fuel or renewable
electric generation and the associated trading and verification of RECs the RNG market is in its
infancy At this time it would not be appropriate to expect VGS to implement an RNG program
utilizing an RNG content standard similar to the electric renewable portfolio standard as
recommended by CLF because the equivalent standards and processes do not exist However
the RNG program represents a meaningful first step in encouraging customer interest in
purchasing RNG at retail thereby stimulating supply of RNG into the market and is consistent
with the Commissions condition requiring VGS to develop a proposal to promote bio-methane
project development
VGSs RNG program includes appropriate mechanisms for periodic reporting and
verification of program activities as well as an opportunity to comprehensively review the
program after three years of implementation Furthermore determinations regarding recovery of
costs associated with the RNG program will be made in the context of future proceedings
regarding VGSs rates The RNG program should evolve with the RNG markets in the near-term
and over the course of the next several years which will allow progress towards achievement of
Vermonts 2050 CEP renewable energy goals
Docket No 8667 Page 10
Because not all parties to this proceeding have waived their rights under 3 VSA $ 811
to file written comments or present oral argument with respect to this proposal for decision I am
circulating the proposal for decision to the parties for their review and comment
Dated at Montpelier Vermont this rrtl day of QrIltt 2017a0AndreaHearing Officer
Docket No 8667 Page 11
VII Corumrssron Drscussrox
On August 22017 the Department filed a letter stating that it supports the issuance of an
Order by the Commission that adopts the proposal for decision in full
Also on August 22017 VGS filed comments on the proposal for decision requesting
that Finding 16 be modified as follows (additional text in italics) If RNG supply exceeds
customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary
flow any remaining RNG attribute inventory amounts through the PGA or through a rate case ifVGS was under traditional cost of service regulation (subject to [Commission] approval)
VGS asserts that [a]bsent such specific language it is possible that VGS would be unable [to]
defer such costs for future recovery and that removal of that component introduces uncertainty
about the potential procedural mechanisms available for cost recovery in the last resort VGS
states that with the Commissions consideraacutetion of this request it does not request oral argument
No other comments were filed on the proposal for decision
The Hearing Officer recommended that the Commission find that determinations
regarding recovery of costs associated with the RNG program will be made in the context of
future proceedings regarding VGSs rates We agree with this recommendation VGS should
have an opportunity to request rate recovery for excess RNG supply However this proceeding
is not the proper time for such a determination Accordingly Finding 16 is hereby modified as
follows If RNG supply exceeds customer demand VGS would first seek to sell the excess
RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any
remaining RNG attribute inventory amounts through the PGA or through arate case as part of
its cost of service if the PGA is no longer in effect atthat timeWe emphasize the importance of the successful implementation of the RNG program in
helping to meet the States renewable energy policy objectives The annual report on the
implementation of the RNG program will serve as a valuable tool to assess that progress In this
proceeding CLF has raised policy considerations that should serve to guide these future reviews
of the RNG program For example CLF has raised concerns regarding the effectiveness of the
voluntary nature of the program In assessing its program we expect VGS to revisit and report
on the feasibility of incorporating RNG as a portion of its supply mix in the future It is
important for VGSs RNG program to be sustainable and continue to evolve ensuring significant
DocketNo8667 Page 12
contributions toward meeting the States renewable energy goals and reducing the consumption
of fossil fuel Accordingly it is critical that the annual report and the three-year comprehensive
review address not only the effectiveness of the program but also its affordability and the
feasibility of other policy options to advance the production and use of RNG in Vermont
Docket No 8667 Page 13
VIII Onunn
Ir rs Hennsy oRDERED ADJUDGED AND DECRnnn by the Public Utility Commission of the
State of Vermont that
1 The findings conclusions and recommendations of the Hearing Officer are
adopted and the Renewable Natural Gas (RNG) program to be implemented by Vermont Gas
SystemsInc (VGS) is approved
2 When VGS has procured RNG supply in amounts reasonably estimated to be
sufficient for estimated customer demand it shall file a formal tariff including proposed rates for
sale of RNG The tariff shall be reviewedpursuantto the procedures of 30 VSA ccedilccedil225226
and227 and sales under the program shall begin after Commission approval of the tariff
3 VGS shall develop and file for Commission approval a separate Renewable
Vehicle Fuel Tariff to serve customers using RNG as a transportation fuel
4 VGS shall file a marketing plan for the RNG program consistent with the
requirements set forth above within one month of the issuance of this Order
5 VGS shall file an annual report consistent with the requirements set forth above
upon implementation of the RNG program
6 VGS shall file a comprehensive review of the performance of the program with
the Commission and the Department after three years of implementation This review will
include an environmental accounting protocol to quantiff the environmental benefits of the
progrfim
7 VGS shall review proposed RNG supply arrangements with the Department
Docket No 8667
Orprcp oF THE Crnm
Dated at Montpelier Vermont this day of+hb
Z Roisman
Cheney
Page 14
20t7
Puslrc Urrlnv
CovtriquestIssIoN
OP VERMONT
(
)))
)))
Fired otildeeglcL ( JotTAttest c
of the Commission
NorIcE To READERS This decision is subject to revision oftechnical errors Reqders are requested tonotify the Clerk of the Commission (by e-mail telephone or inwriting) or any appqrent errors in order that anynecessary corrections may be made (E-mail address pucclerkvermontgov)
Appeal of this decision to the Supreme Court of Vermont must befiledwith the Clerk of the Comnissionwithin thirty days Appeal will not stay the efect of thszlig Order absentfurther order by this Commission orappropriate actiacuteon by the Supreme Court of Vermont Motions for reconsideration or stay if any must be filed withthe Clerk of the Commissionwithin ten days of the date of this deciacutesion and Order
Exhibit 22 VGS RNG Tariff Rate Filing
Exhibit 23 PUC Approval of VGS RNG Rates
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Case No l8-03 13-TF
Petition of Vermont Gas Systems Inc fotapproval of a new tariff implementing theRenewable Natural Gas program
Order entered
OnonRAppnovINc Tiquestrurn
On January 302018 Vermont Gas Systems Inc (VGS) filed a petition for approval of
a new tariff implementing the Renewable Natural Gas (RNG) program approved by the
Vermont Public Utility Commission (Commission) in Docket No 8667 In that Docket the
Commission required VGS to file a tariff implementing the RNG program when it has procured
RNG supply in amounts reasonably estimated to be sufficient to meet customer demandl In
this Order the Commission approves the new tariff marketed under the name EcoGas with an
effective date of bills rendered on and after March 15 2018
VGS states that it has executed an RNG supply contract with deliveries scheduled for
2018 and that two additional contracts are being negotiated for deliveries beginningin2019
VGS is proposing to set its initial RNG adder at$ll749lCcf which represents a five-year
blended rate based on the three RNG supply arrangements VGS intends to account for the
difference between the cost of RNG supply and the RNG adder as a regulatory asset within gas
costs As additional lower-cost supply is added to the portfolio the regulatory asset balance will
be recovered from EcoGas participants with the goal of fully reducing the balance by the end of
five years Accordingly VGS states that the RNG program will be rate-neutral to VGS and its
non-RNG customers
On February 272018 the Vermont Department of Public Service (Department) filed a
letter recommending that the Commission approve the tariff without a hearing or further
investigation The Department states that the tariff filing and proposed accounting treatment
comply with Vermont rate-setting practices policies precedents and statutes
lslaotx
I Docket 8667 Order of 96117 at 13
Page2Case No 18-0313-TF
Based on the foregoing we hereby approve VGSs proposed RNG tariff to be effective
on a bills-rendered basis beginning on March 15 2018 Recovery of any regulatory asset
balance at the end of the fifth year would need to be approved by the Commission in a future
proceeding
So Omnnnn
Case No l8-0313-TF
8r- day of lruacuterLiquestiquest
Page 3
Dated at Montpelier Vermont this 2018
Roisman PueIrc Urlrrv
CoiriexcllriquestlssloN
Cheney
OF VERMONT
Sarah Hofmann
Onncp oF THE CLBRr
Filed huacuteveuroAacute- icirc dollAttest I
Clerk of the Commission
Notice to Readers This decision is subiect to revision oftechnical errors Readers are requested to notify
the Clerk of the Commission (by e-mail telephone or in writing) or qny qpparent errors in order that any
necessary corrections may be made (E-mail address pucclerkvermontgov)Appeal of this decisiacuteon to the Supreme Court of Yermont must be filed with the Clerk of the Commission
within 30 days Appeal will not stay the efect of this Order oslashbsent further order by this Commission or appropriate
action by the Supreme Court of Vermont Motionsthornr reconsideration or stay if any must befiledwith the Clerk ofthe Commissionwithin 28 doslashys of the date of this decision and Order
)))
))))
PUC Case No 18-0313-TF
Eileen SimollardesLauren HammerVermont Gas
85 Swift StreetSouth Burlington VT 05403
June E Tiemey CommissionerVermont Department of Public Service1 12 State StreetMontpelier VT 05620 -2601
Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
Exhibit 31 Accounting Procedures
Exhibit 31 Accounting for VGS Renewable Natural Gas (Ver-9202019)
1 Purchase of RNG Supply
RNG supply purchases are separated into the cost of the commodity and the cost of the renewable attribute The commodity portion is expensed to gas costs in the delivery month while the renewable attribute is booked to an inventory account referenced herein as the ldquoRenewable Inventory Accountrdquo Like VGSrsquo existing storage inventory accounting the Renewable Inventory Account will track both the dollar value of the renewable attribute and the renewable attribute Mcfs Renewable attribute dollar values are record to ldquo16410050 Inventory RNG Storagerdquo while Mcf values are recorded in the gas cost model maintained by accounting In the month VGS purchases the renewable attribute it is accrued in a book model and goes in to 16410150 Inventory RNG Accrued then moves to the 16410050 in a final model the following month for final
RNG may be purchased at different locations and using varying pricing structures While the accounting for RNG does not vary with the purchase location or price the determination of the value of the renewable attribute will vary depending on whether or not the supply pricing expressly values the renewable attribute as an adder or it is embedded in a fixed price Examples of each are shown below The accounting of RNG supply is intended to separate the cost of the renewable attribute from the cost of the commodity The examples below are not all inclusive of what may occur but intended to show the accounting procedures used to separate the renewable attribute from the commodity and specify ownership of each aspect
In all cases the commodity cost portion - which is the total cost of the RNG purchased excluding the renewable attribute - will be expensed in the delivery month as a cost of gas
Example 1 ndash The fixed price of RNG includes both the commodity and the renewable attribute
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The total cost of the RNG supply purchased during the month is calculated by Accounting within the gas cost model as follows
MMBtu Purchased (as validated in step 2) $ MMBtu purchase price (as provided in a supply confirmation provided by gas supply)
4 For purposes of booking the renewable attribute to inventory it is necessary to calculate the RNG cost per Mcf The RNG cost Mcf is calculated using the total cost of RNG supply as calculated in step 3 divided by the Mcf in step 1
5 The renewable attribute price per Mcf is calculated as follows
RNG cost per Mcf as determined in step 4 ndashplus ldquoother componentsrdquo as calculated pursuant to Attachment A ndash minus ldquoAverage Commodity Costrdquo as calculated pursuant to Attachment A The ldquoother componentsrdquo added to the RNG cost per Mcf will vary depending on where the RNG supply was delivered but in each case will be identified in the calculation shown on Attachment A
6 The renewable attribute price per Mcf the total RNG Mcf delivered is recorded in the Inventory RNG Storage account
7 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
Example 2 - RNG purchased at a renewable attribute price plus a daily or monthly index
Where the pricing of RNG specifically separates the commodity from the renewable attribute the renewable attribute price will be what is recorded in the Renewable Inventory Account
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The renewable attribute price per Mcf the total RNG Mcf delivered as determined in step 1 is recorded in the Renewable Inventory Account
4 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
2 Recalculating the RNG Adder
The RNG Adder paid by customers will be recalculated anytime the Natural Gas charge portion of rates changes The Manager of Gas SupplyGas control is responsible for recalculating the RNG Adder The calculation will be verified and approved by the Vice President ndash Regulatory Affairs The determination of the RNG Adder will be pursuant to the methodology shown in Attachment A The Regulatory Department will prepare the amended RNG Adder tariff for filing with the PUC Upon PUC approval of the RNG Adder the Regulatory Department will prepare a memorandum advising Accounting and Gas Supply of the new RNG Adder as approved
3 Customer purchases VGS Renewable Natural Gas
The RNG Adder at the percent selected by the customer will be applied to the entire monthrsquos usage on the customersrsquo next bill For customers utilizing the S-RNG adder the entire volume elected with be on the customersrsquo next bill The S-RNG Adder nor the RNG Adder and percentage selected will not be prorated based on enrollment or termination date
Customers may terminate or modify their RNG selection upon 3 dayrsquos notice to VGS The termination or modification will be effective on the customerrsquos next monthly bill
The customerrsquos usage for the month will be multiplied by the percentage and the approved RNG Adder For customers utilizing the S-RNG adder the volume elected will be multiplied by the approved RNG adder This amount will then be recorded to SAP accounts 4010015-40010021 depending on which rate class the customer is in The RNG Adder is the same regardless of which rate class a customer is in At the end of the month a report is run by billing from the customer information system that shows total usage and which percentage of RNG the customer has signed up for to calculate the number of MCFrsquos of renewable attribute sold during the billing period Billing also provides a report of the volumes sold through the S-RNG Tarriff The Inventory RNG Storage account maintained within the gas cost model by Accounting is reduced by these Mcf The MCFrsquos are then multiplied by the RNG Adder in effect for the billing month and an entry is made to remove that dollar amount from the Inventory RNG Storage account and into the monthly cost of gas The intent of this transaction is to ensure that cost of the renewable attribute is reflected in the cost of gas in the month it is purchased by the customer This results in a matching of the renewable attribute revenue and expense
The RNG Adder revenue and renewable attributes removed from storage will be included in the gas cost deferral calculation However because there is a matching of the renewable attribute revenue and expense the impact on the deferral calculation will be zero
The calculation of unbilled revenues will exclude RNG as a customer can cancel their participation prior to their next bill
In the event Vermont Gas issues a credit to a customer related to the RNG program the value of the renewable attribute credited and the associated Mcf will not be applied to the Renewable Inventory Account
4 Controls
A spreadsheet is maintained by accounting that shows the MCFrsquos and dollar values of the Renewable Inventory Account This is reconciled monthly by the accounting team and will be reviewed by the Manager Gas SupplyGas Control
Accounting will validate that the amount removed from the Renewable Inventory Account matches the RNG Adder revenue Any discrepancies will be reviewed and corrected
A report will be run for each bill cycle that shows any changes to the RNG percentages selected this will include customers opting to withdraw from the RNG program The customer care team will validate any changes against customer confirmation paperwork
5 Renewable Inventory Account Reconciliation and Forecast
The PUC Order approving the RNG program contains provisions describing how RNG supply and demand imbalances will be addressed These provisions and how VGS will track and comply with them are as discussed in this section The PUC Order approving the RNG Program provides that if the available RNG supply during the previous 12 months is less than the amount purchased by customers VGS may use the funds collected to purchase carbon offsets (Finding 13) If carbon offset are not available VGS will contribute the RNG program revenues to the Clean Energy Development Fund or issue prorated credits to affected customers (Finding 15) The Order also provides that in the event RNG supply exceeds customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any remaining RNG attribute inventory amounts through the PGA or through a rate case as part of its cost of service if the s PGA is no longer in effect at that time (Finding 16 as modified) Finding 11 provides that VGS will use a ldquotrue-uprdquo period of up to 12 months in order to balance the difference between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply) Taken together these provisions require VGS to evaluate the imbalance after 12-months and then true-up the imbalance over the next twelve months To provide a forecast of the supplydemand imbalance quarterly the billing area will run a report showing the expected RNG volumes based on current customer commitments by month for the next 12-months Current customers commitments will be calculated based on the previous 12 months of usage multiplied by the RNG percentage currently signed up for The marketing department will provide their forecast of new RNG sales for the next 12-months Both will be provided to the Manager Gas SupplyGas Control The Manager Gas SupplyGas Control will compare the forecasted RNG sales known and expected to RNG supply commitments and provide a 24-month forecast of the supplydemand balance The supplydemand balance will be reviewed at the risk management meeting The strategy for addressing the imbalance consistent with the PUC order will be determined by the risk management committee
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
VGS Renewable Natural Gas Program Manual
Page 8
24 THREE-YEAR IMPLEMENTATION REVIEW In accordance with the PUC Order in March 2021 (the third year of the Program) VGS will file a comprehensive review of the performance of the Program The review will include an environmental accounting protocol to quantify the environmental benefits of the program The three-year comprehensive program review will also address the effectiveness of the program its affordability and the feasibility of other policy options to advance the production and use of RNG in Vermont
SECTION 2 EXHIBITS
bull Exhibit 21 VT PUC Approval Orderbull Exhibit 22 VGS RNG Tariff Rate Filingbull Exhibit 23 PUC Approval of VGS RNG Ratesbull Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
VGS Renewable Natural Gas Program Manual
Page 9
Section 3 Supply Procurement and Accounting
KEY VGS RENEWABLE NATURAL GAS SUPPLY AND ACCOUNTING STEPS
Item Description Schedule Owner RNG Supply Contracts
Procuring RNG Supply As needed Gas Supply
RNG Supply True-Up
Balancing RNG supply sales and retiring attributes
Monthly Finance
RNG Supply Verification
Verifying ldquorenewabilityrdquo of RNG Supply
Annually Gas SupplyThird- Party
31 VGS RENEWABLE NATURAL GAS SUPPLY OVERVIEW
VGS intends to contract with a variety of RNG supply sources to meet its customer demand in the RNG Program RNG supply is currently available from a limited number of landfill and digester projects in Canada or US states other than Vermont In Vermont at least one local supply project is currently under development
Today there is no central ldquomarketplacerdquo for RNG suppliers and buyers to trade RNG supply contracts RNG buyers such as VGS transact with individual producersprojects or work through RNG brokers to acquire RNG supply or the environmental attributes associated with RNG in bilateral transactions VGSrsquo initial RNG supply contract in 2018 was with BP Canada Energy Group ULC and sourced from the EBI Inc13 biogas production facility located in Ste Genevieve Quebec In 2019 VGSrsquo purchased RNG supply from a waste water treatment facility in Dubuque Iowa
In 2020 VGS plans to begin receiving RNG supply from a Vermont farm digester and a Canadian digester facility The Vermont farm digester located in Salisbury Vermont is slated for completion in late 2020 producing 180000 MMbtursquos per year The Canadian digester project is located in London Ontario VGS has agreed to purchased 100 of the supply from this facility up to 120000 MMbtursquosyear for 15 years VGS sought and received PUC approval for this Ontario supply in 2018 and received approval for an amendment in 2019 To meet anticipated demand for RNG until these two resources come on line the Company purchased short-term supply of RNG from the Iowa facility in 2019 We anticipate that these supply sources will satisfy the VGS Renewable Natural Gas Program supply needs for the first few years of the Program If we are unsuccessful
13 EBIrsquos Facility was recognized in 2016 (httpswwwdesjardinscomcavideossinglejspdocName=vid-ebi-e)
VGS Renewable Natural Gas Program Manual
Page 10
in procuring supply from these sources or if demand exceeds these planned supplies VGS will seek additional RNG supply in the marketplace
32 VGS RENEWABLE NATURAL GAS SUPPLY CONTRACTS VGS will utilize standard industry or comparable contract vehicles to procure RNG supply with site-specific terms and conditions Given the unique nature of the in-state RNG project the gas supply contract is a 3 way agreement between the producer VGS and an end user Accordingly the form of the contract does not resemble industry standard supply agreements but contains all appropriate business terms The first two contracts signed by VGS utilize a gas utility standard base contract with signed transaction confirmation documents that specify the specific details of each deal These contracts will require the RNG supplier to certify the renewable attributes and that VGS has full and sole ownership of those attributes As required by the PUC Order RNG Suppliers will also be required to allow VGS independent verification of the production and transactions related to VGS supply volumes The specific PUC requirements are found in finding 21 page 7 of Exhibit 21 - VT PUC Approval Order
33 VGS RENEWABLE NATURAL GAS ACCOUNTING Like accounting practices in the renewable electric industry Vermont Gas will have the obligation to match RNG supply volumes with customer RNG purchase volumes over time As discussed in Section 22 the premium for RNG above the cost of conventional natural gas establishes the value of the renewable attribute purchased by the customer These attributes are tracked in a separate inventory account and then matched with actual retail VGS Renewable Natural Gas sales Once these renewable attributes are matched with VGS Renewable Natural Gas sales they are ldquoretiredrdquo and cannot be resold in any manner or used to satisfy another obligation by VGS As provided in the PUC order ldquoVGS will use a ldquotrue-uprdquo period of up to 12 months to balance the difference between RNG attributes sold to customers (demand) and RNG attributes purchased by VGS from suppliers (supply)rdquo This true-up period allows RNG attribute ldquooversupplyrdquo and ldquoundersupplyrdquo to be balanced as described below
In an ldquooversupplyrdquo situation where forecasted RNG attribute purchases exceed the number of RNG attributes that VGS forecasts selling to its customers through the RNG Program VGS will first seek to market the excess RNG and the environmental attributes back through the wholesale supply channels If this oversupply extends beyond the 12-month true-up window VGS may seek PUC permission to flow any remaining RNG attribute inventory amounts through the Purchase Gas Adjustment (ldquoPGArdquo) or through its cost of service if the PGA is no longer in effect at that time
An ldquoundersupplyrdquo situation would occur if customer purchases of RNG attributes exceeded the amount available under VGSrsquo RNG supply contracts in the forward looking 12-month true-up window If the RNG supply purchases are lagging the RNG sales VGS
VGS Renewable Natural Gas Program Manual
Page 11
will true-up or balance this undersupply over the upcoming 12-month period through existing or additional RNG supply purchases
If VGS is unable to eliminate an undersupply imbalance after the 12-month true-up period VGS would need to purchase carbon offsets in the dollar amount equal to VGS Renewable Natural Gas revenues collected associated with the undersupply (See Exhibit 21 Order Finding 13 and 15) Carbon offsets are listed on one of several Carbon Registries such as the American Carbon Registry If carbon offsets are not available VGS has the option to contribute these RNG revenues to the statersquos Clean Energy Development Fund or issue prorated credits to affected customers It should be noted that while purchasing offsets is a tool for VGS it is not the intent of the VGS Renewable Natural Gas Program and if an undersupply situation persisted VGS would likely petition the PUC to modify or suspend the VGS Renewable Natural Gas Program prospectively
VGS will manage the RNG Program to closely match supply and demand and utilizing our RNG wholesale cost mitigation tools to avoid RNG supply challenges
As renewable programs evolve in the energy and natural gas industry Vermont Gas will adjust its accounting procedures to reflect industry standards and revise this manual to reflect any modifications or changes
34 RENEWABLE VERIFICATION VGS is committed to transparency and the integrity of this innovative program is essential to success Toward that end no step is more essential than the verification of the renewability claims of our VGS Renewable Natural Gas supply The PUC reinforced this commitment in the RNG approval order as follows
ldquoVGS will annually verify that the RNG was produced by a renewable gas production facility that VGS is the exclusive owner of any environmental attributes associated with RNG it sells under the program that it acquired the RNG from its transferor and sold it at retail and that the RNG has not been sold twice at any point between RNG production and sale to VGS whether by sales into carbon offset markets or otherwise This verification will be based on certifications of VGSrsquos suppliers and of an independent third party retained by VGS for this purposerdquo
VGS will use an independent third-party to verify the renewable claims for the VGS Renewable Natural Gas supply including the following
bull Confirm the renewable fuel feedstock identificationbull Confirm the product renewable fuel identificationbull Review and confirm the renewable fuel production processbull Review of fuel flow measurement and quality monitoring process and equipment
VGS Renewable Natural Gas Program Manual
Page 12
bull Review of contracts and affidavits governing the transfer of the RNG from theoriginal source to the end user(s)
bull Review of evidence confirming the existence of a physical path (common carrierpipeline) for RNG transfer and distribution to end users
SECTION 3 EXHIBITS
bull Exhibit 31-Accounting Proceduresbull Exhibit 32-Verification from Suppliersbull Exhibit 33-Third Party Verification
VGS Renewable Natural Gas Program Manual
Page 13
Section 4 Marketing
KEY MARKETING STEPS Item Description Owner VGS Renewable Natural Gas Branding
Maintain product and brand integrity Communications
Product Definition Ensuring proper VGS Renewable Natural Gas description in all materials
Communications
External Review Verification of Marketing claims Communications
41 MARKETING PLAN Exhibit 41 is the 2018 version of the Marketing Plan filed with the PUC This document may be updated from time to time as we adjust our marketing strategy
42 MARKETING CLAIMS VGS is committed to making clear and accurate claims about the environmental benefits of VGS Renewable Natural Gas We have enlisted the assistance of a law firm specializing in marketing renewable products to review VGSrsquo marketing materials and claims In addition VGSrsquo annual third-party review of our program will focus on the integrity of our administration of the VGS Renewable Natural Gas program (see Section 54)
43 VGS RENEWABLE NATURAL GAS ldquoPRODUCT CONTENT LABELrdquo The Product Content Label is intended to be prominently displayed on the VGS web site and in correspondence to customers when they enroll in this program
Product Content Label
By participating in the VGS Renewable Natural Gas program you are purchasing the renewable attributes associated with the production of renewable natural gas (ldquoRNGrdquo) which may also be referred to as biogas or bio-methane A unit of VGS Renewable Natural Gas measured in hundred cubic feet (CCF) represents the environmental attribute of 1 CCF of biogas VGS reserves the right to purchase carbon offsets if RNG supply is not available VGS will notify customers if this occurs The Product Content Label is available at httpswwwvermontgascomrenewablenaturalgas
SECTION 4 EXHIBITS
bull Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)bull Exhibit 42 VGS Renewable Natural Gas Trademark
VGS Renewable Natural Gas Program Manual
Page 14
Section 5 Customer Information and Billing
KEY BILLING AND REVENUE STEPS Item Description Owner Billing Enrollment of VGS Renewable Natural Gas
Customers Contact Center
Notice Customer Notice of VGS Renewable Natural Gas Rates
Contact CenterBilling Group
Program Assurance Verification of VGS Renewable Natural Gas program procedures
Billing and Finance
51 CUSTOMER ENROLLMENT AND BILLING PROCESS The VGS Customer Care team will enroll customers and establish the VGS Renewable Natural Gas Adder on customer accounts Customers will be able to order VGS Renewable Natural Gas via VGSrsquo website (preferred method) calling VGS contact center or through the VGS Energy Services team An RNG calculator is available on VGSrsquo website httpswwwvermontgascomrenewablenaturalgasadder-calculator that can assist customers in estimating the costs of VGS Renewable Natural Gas at the various percentage levels based on the customerrsquos gas consumption VGS will inform customers of the current RNG Adder premium when they enroll Customers have two options when enrolling in the RNG program Customers may select their desired percentage of VGS Renewable Natural Gas ( 10 25 50 or 100) or they may allocate a fixed amount of RNG attributes (ldquoS-RNGrdquo) for each month that they are enrolled in Customer Care will then set up the billing on their account VGS will send an order confirmation via email or as a separate mailing (see Exhibit 51) thanking the customer for subscribing to VGS Renewable Natural Gas and informing the customer of the estimated impact on their bill As shown on Exhibit 51 the order confirmation letter will also include the RNG program guidelines These guidelines are discussed in section 53 below
52 VGS RENEWABLE NATURAL GAS WEBSITE AND FREQUENTLY ASKED QUESTIONS The VGS Renewable Natural Gas web page contains general VGS Renewable Natural Gas information an FAQ a VGS Renewable Natural Gas calculator current VGS Renewable Natural Gas Adder and an easy-to-use sign up form
For the most recent Frequently Answered Questions visit httpwwwvermontgascomVGS Renewable Natural Gas
VGS Renewable Natural Gas Program Manual
Page 15
53 VGS RENEWABLE NATURAL GAS PROGRAM GUIDELINES VGS Renewable Natural Gas customers will fall under VGSrsquo General Terms and Conditions outlined in VGSrsquo tariffs and PUC rules (ex Disconnection practices late fees taxes) VGS tariffs can be found at httpwwwvermontgascomaccountrates
VGS will notify VGS Renewable Natural Gas customers of rate changes in advance of implementation on both their individual bills and the Companyrsquos website RNG customers have the ability to cancel or modify their RNG account profile consistent with the tariff
VGSrsquo RNG customers can subscribe to VGS Renewable Natural Gas service with no term commitment and can cancel with three daysrsquo notice The RNG Adder will apply at either the percentage or fixed quantity allocated by the customer to the usage shown on the monthly bill regardless of enrollment or termination date The RNG Adder will not be pro-rated for partial-month usage
VGS customers receiving the low-income rate discount can subscribe to VGS Renewable Natural Gas however the 20 low income discount will not apply to the RNG Adder
Customers currently on a budget program will be encouraged to request a recalculation of their budget plan to adjust for the RNG Adder costs but it is not required
54 VGS RENEWABLE NATURAL GAS PROGRAM ASSURANCE
On an annual basis VGS will conduct a program review to ensure the VGS Renewable Natural Gas program is managed consistent with this manual The VGS Renewable Natural Gas program is a new product for the US natural gas utility industry and as such no industry specific standards exist VGS is working with on a national effort to develop a ldquoGreen-Erdquo certification process for Renewable Natural Gas programs that process is targeted for completion in 2020
SECTION 5 EXHIBITS
bull Exhibit 51 ECIS Customer Confirmation
VGS Renewable Natural Gas Program Manual
Page 16
EXHIBITS
Exhibit 21 VT PUC Approval Order
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Docket No 8667
Petition of Vermont Gas Systems Inc for aRenewable Natural Gas Program andOptional Tariff
)))
Hearing atMontpelier Vermont
September 22016
order entered q leacute I aon
PRBsBNI Andrea C McHugh Hearing Officer
AppeeReNcBs Peter H Zamore Esq
Owen J McClain EsqSheehey Furlong amp Behrn PCfor Vermont Gas Systems Inc
Louise C Porter EsqTimotthorn M Duggan Esq
for the Vermont Department of Public Service
Sandra Levine Esqfor Conservation Law Foundation
Gerald R Tarrant EsqTarcant Gillies amp Richardsonfor Lincoln Renewable Natural Gas LLC
I INrnooucrroN
This case involves a petition filed by Vermont Gas Systems Inc (VGS) with the
Vermont Public Utility Commission (oCommission) I for approval of a Renewable Natural Gas
(RNG) program and optional RNG tariff service for its customers The proposed RNG
progriquestigravem establishes a framework for VGS to offer its customers the option to purchase RNG for
I Pursuant to Section 9 of Act 53 of the 2017 legislafive session the Vermont Public Service Boards name waschanged to the Vermont Public Utility Commission effective July l 2017 For claity activities of the VermontPublic Service Board that occurred before the name change will be referred to in Commission documents as
activities of the Commission unless that would be conntildersing in the specific context
Docket No 8667 Page2
program establishes a framework for VGS to offer its customers the option to purchase RNG for
as a portion of their usage RNG is produced from materials such as agricultural waste manure
municipal waste plant material or compost and is also referred to as bio-methane In this
proposal for decision I recommend that the Commission approve the proposed RNG program
and require VGS to make compliance filings as set forth herein
il PnocnrunnlHrsroRY
On October 232015 VGS figraveled a petition for approval for its RNG program including
prefiled testimony and exhibits of Thomas Murray
On January 192016I held a prehearing conference and on January 252016I issued
an Order establishing a schedule
On February 122016 VGS filed a revised RNG Plan
On March 102016I held a workshop to discuss the proposed program
On March 152016I issued an Order revising the schedule
On March 222016 Conservation Law Foundation (CLF) and Lincoln Renewable
Natural Gas LLC (Lincoln) filed motions to intervene in this proceeding
On April 12016 VGS filed supplemental testimony and exhibits
On April 82016I issued an Order granting CLFs and Lincolns intervention requests
On July 72016 the Vermont Department of Public Service (Department) CLF and
Lincoln filed testimony
On August 82016 Lincoln filed supplemental testimony
A technical hearing was hthornld on September 22016
On September 30 20|6VGS filed a draft proposal for decision supported by the
Department In addition CLF filed a brief on the same date Reply briefs were filed by VGS
and CLF on October 142016
III Posnroxs oF THE PlRrlns
VGS
VGS requests approval of its proposed RNG program for the sale of RNG to customers
on a voluntary basis VGS claims that its proposal contains reasonable provisions to align its
RNG purchases with the amounts sold to its customers appropriate mechanisms to address over-
Docket No 8667 Page 3
or under-supply of RNG and verification requirements to ensure that sales in fact consist of
RNG VGS maintains that the RNG program is an appropriate first step in stimulating RNG
producer supply and customer demand and is oamply supported by Vermonts experience of
measured implementation of electric renewable pricing programs2 VGS argues that the
program is responsive to the Commissions condition in its Order in Docket 79701o develop a
proposal to promote bio-methane project development3
Department of Public Service
Although the Department did not file a brief or reply brief it did present witness
testimony and indicated its support for the draft proposal for decision filed by VGS The
Department recommends that VGS review all proposed RNG supply arrangements with the
Department (in addition to seeking 30 VSA $ 248 approval where required) and suggests that
in the event of an undersupply of RNG VGS obtain carbon offsets in an amount equivalent to
the unused customer contributions The Department recommends that the RNG program be
reviewed at the end of three years at which time the protocol regarding the purchase of offsets
would be revisited
C ons ervation Law Foundation
CLF urges that the Commission reject the RNG program and instead adopt an RNG
content standard similar to the electric renewable portfolio standarda CLF maintains that the
expected annual sales volume is not apace that is consistent with Vermonts legislative and
planning targets for meeting energy needs with renewable energy or for reducing greenhouse gas
emissionss CLF claims that the proposed voluntary tariff falls short of being a program or
strategy that promotes the increased use of RNG resources or supply or fosters bio-methane
projects in Addison county6
2 VGS reply brief aI23 In Docket 7970the Commission considered the petition of VGS for a certificate of public good (CPG) pursuant
to 30 VSA $ 248 authorizing the construction of the Addison Natural Gas Pipeline In an Order issued on
December 232013 the Commission granted the CPG As a condition of approval the Commission required VGSin consultation with the Department to file a petition with the [Commission] proposing a program to promote bio-methane project development Docket 7970 Order of l2l23ll3 at 147
a CLF brief at 12s CLF brief at 36 CLF brief at 4
Docket No 8667 Page 4
Lincoln
Lincoln maintains that itis essential to promote development of agricultural-based bio-
methane supply in VermontT Lincoln states that the Commission is not in a position to
adequately address VGSs proposed RNG program until negotiations for sale of itsoutput
involving VGS and Middlebury College are completes
IV Punrrc CounnnNrs
The Commission received three letters of support for VGSs RNG program On March 10
2016 the Chittenden County Transportation Authority filed comments indicating that it intends to
explore the possibility of utilizing RNG to cover a portion of the energy needs for its fleet of 70
buses On March 182016 Champlain College filed comments noting that it is interested in using
RNG for a portion of its energy needs that are currently met with conventional natural gas On
March 282016 Casella Waste Systems made a filing with the Commission stating its intention
to explore using RNG to meet some of its energy needs for its fleet of vehicles
V trrutrxcs
Based on the evidence of record I hereby report the following findings and
recommendations to the Commission in accordance with 30 VSA $ 8(c)
1 RNG is produced from raw materials such as agricultural waste manure municipal
waste plant material or food waste Decomposition or digestion of these materials produces
raw methane which is then cleaned or upgraded to bio-methane in order to meet the receiving
pipelines gas quality specifications prior to injection into an existing pipeline system Thomas
Murray VGS (Murray) supp pf at3
2 VGS is exploring options to purchase RNG supply from Lincoln and from landfill gas
projects located outside Vermont that would be received through the Trans-CanadaPipeline
(TCPL) system Murray supp pf at 8-9
7 Daniel Smith Lincoln Renewable Natural Gas LLC (Smith) supp pf at L8 On August 152016 Lincoln filed a motion to continue this proceeding for a period of not less than 60 days statingthat the continuance would allow [it] VGS and Middlebury College to complete discussions as to VGSsinvolvement in the RNG supply in Vermont and allow the record in this case to be properly developed VGS and
the Department opposed the request for continuance On August 222016I issued an Order denying Lincolnsrequest and determined that Lincoln did not demonstrate good cause to postpone the technical hearing
Docket No 8667 Page 5
3 Under the program retail customers would voluntarily purchase RNG in amounts equal to
l0oo25yo50o or 100 of their total monthly requirements at specified prices per Ccf as an
adder to other retail charges Customers could terminate RNG purchases upon providing three
days of advance notice to VGS Murray supp pf at l-2 exhs Pet-VGS-l and Pet-VGS-3
4 Intemrptible customers will have the opportunity to participate in the RNG program
through VGSs existing Lock Price Program which currently provides for up to a two-year
commitment Murray supp pf at 5
5 VGS will develop and file for Commission approval a separate tariff for use of RNG as a
transportation fuel This tariff will allow VGS to take advantage of the sale of the associated
Renewable Identification Numbers (ooRINs) When RNG is used as a transportation fuel it is
eligible to receive RINs under the Federal Renewable Fuel Standard RINs can be resold on the
wholesale market and would be used to offset the price of RNG to transportation customers
receiving service under the tariff Joan E White
Department (White) pf at7tr912116 at 62-
63 (White) exh Pet-VGS-5 Response 4
6 VGS will also initiate a review of the RNG program by the Commission Department and
others after three years White pf at9tr912116 (Munay) at24
7 The adder price for each Ccf of RNG will be equal to the average RNG commodity cost to
VGS less the average commodity cost of natural gas VGS will adjust the adder price per Ccf on
a quarterly basis as part of its Purchased Gas Adjustment (PGA) filing Murray supp pf at 4
8 The proposed RNG program will include a tariff that is very similar in concept to the
Green Mountain Power Corporation (GMP) Cow Power tariff However Cow Power is based
on a fixed rate per kWh no matter what the cost of the renewable energy Murray supp pf at llVhite pf at 4
9 VGSs RNG tariff will be calculated quarterly based on actual RNG and natural gas costs
and will provide accurate price signals as to the price differential between natural gas and RNG
White pf at 4
10 Based on a survey conducted by VGS 85 of its customers are willingto pay l0oo
more for a renewable product VGS projects that customers could potentially consume over
500000 Mcf of RNG over the next five years Murray supp pf at 5
DocketNo8667 Page 6
11 VGS will use a true-up period of up to 12 months in order to balance the difference
between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply)
Murray supp pf at 9
12 There is a risk that due to the voluntary nature of the RNG program supply and demand
will be mismatched White pf at41 David G Hill CLF (Hi11) pf at 9
13 If the available RNG supply during the previous 12 months is less than the amount
purchased by VGS customers the RNG program provides that VGS may use funds collected to
purchase carbon offsets from an established carbon registry such as the American Carbon
Registry VGS will purchase an amount of carbon offsets equal to the amount of the revenue
resulting from the undersupply in order to result in a revenue-neutral program At the time of the
three-year implementation review VGS will propose an environmental accounting protocol in
order to quantify the environmental benefits of the program and to evaluate the financial risk of
purchasing carbon offsets in an amount equivalent to the environmental benefits of unsold RNG
due to undersupply Murray supp pf at 6 l0 exh Pet-VGS-s Responses 1
14 The development and standardization of RNG attributes is in its infancy as compared to
the existing markets for the environmental attributes used in the electric industry (renewable
energy credits or (RECs)) Murray supp pf at 12
15 If carbon offsets are not available VGS will contribute the RNG program revenues to the
Clean Energy Development Fund or issue prorated credits to affected customers Exh Pet-
VGS-S Responses 3
16 If RNG supply exceeds customer demand VGS would seek to sell the excess RNG at
wholesale Murray supp pf at 10
17 VGS will provide proposed RNG supply contracts to the Department prior to execution
It will also consult with the Department before making decisions that could dramatically impact
price or the integrity of the RNG program Exh Pet-VGS-S Responses 2 White pf at 5
18 The estimated cost of RNG supply ranges from $l2lMcf to $25lMcf The cost of natural
gas is less than $3Mcf Murray supp pf at 8-9
19 VGS will implement an RNG Quality Assurance Plan establishing a testing and
monitoring process to ensure that RNG injected (via in-state RNG producers) into the VGS
system is pipeline quality and meets the specifications of the TCPL transportation tariff for bio-
methane gas quality Murray supp pf at 14 exh Pet-VGS-4
Docket No 8667 PageT
20 VGS will file an annual report on the RNG program with the Commission and the
Department containing the following information
1 Number of subscribers by customer class
2 Sales volume by customer class
3 Sales revenues
4 Any sales or purchases of carbon offsets
5 Supplyconsumption matching portfolio including any shortfall or excess
supply of RNG
6 True-up schedule for any imbalances
7 RNG supply verification
8 Quantification of the impact of any excess RNG costs flowing through the
PGA if VGS remains under altemative regulation
9 Accounting of any carbon ofszligets or other incentives
10 Status of any contracts for RNG including plans to acquire new supply
contracts
I 1 Revenue from Renewable Identification Number (RlN) sales and impact
on the transport tariff as well as any projections about the RIN market that are
available to VGS and
12 Complete reports and environmental verifications by an independent
verifier
Murray supp pf at 11 exh Pet-VGS-3 White pf at 8-9 tr912116 at23-24 (Munay)
21 Except as described below concerning RlN-eligible RNG VGS will annually verify that
the RNG was produced by a renewable gas production facility that VGS is the exclusive oryner
of any environmental attributes associated with RNG it sells under the program that it acquired
the RNG from its transferor and sold itatretail and that neither the RNG nor any renewable
attribute associated with the RNG has been sold twice at any point between RNG production and
sale to VGS whether by sales into carbon offset markets or otherwise This verification will be
based on certifications by VGSs suppliers and by an independent third party retained by VGS
for this purpose Exh Pet-VGS-3 exh Pet-VGS-s Response 5 White pf at 8
Docket No 8667 Page I
22 For RlN-eligible RNG used as vehicle fuel verification will be addressed in detail in the
future as part of VGSs proposed Renewable Vehicle Fuel Tariff Exh Pet VGS-5 Response 4
rr912116 at 65 (White)
23 There are few natural gas utilities currently offering RNG at retail VGS modeled its
RNG program after the program designed by FortisBC a local distribution company in British
Columbia Canada VGS also had discussions with SoCalGas in Southern California Both of
these companies are leaders in developing RNG offerings and fostering RNG supply resources
Murray supp pf at 7
24 VGS will file with the Commission and Department a marketing plan containing the
following elements
l An evaluation element that includes concrete metrics such as sales
volume targets and enrollment targets
2 Identification of target market segment(s)
3 Development of materials and language for customer-marketing efforts
that explain the RNG program in plain language easily understandable to the
average customer
4 An online bill calculator
5 An implementation plan that identifies specific activities and a timetable
and
6 Abudget
Exh Pet-VGS-5 White pf at 10 Tr912116 at22-23 (Munay)
25 VGS and the Department represent that the RNG progriquestun is responsive to the
Commissions condition in its Order in Docket 7970 rcquiring VGS to develop a proposal to
promote bio-methane project development Murray supp pf al 13-14tr912116 at 63 (Vhite)
26 VGS asserts that the RNG program represents appropriate progress toward the Vermont
Comprehensive Energy Plan (CEP) goal to meet90o of Vermonts energy needs through
renewable sources by 2050 Murray supp pf at 12-13
VI DlscussroN iexclxu Coxclustox
Vith this proposal for decision I recommend that the Commission approve the RNG
program in accordance with the findings described above and based upon the evidence in the
Docket No 8667 Page 9
record In Docket 7970 the Commission required VGS in consultation with the Department to
file a petition with the [Commission] proposing a program to promote bio-methane project
development It is reasonable to expectthat aprogram meant to stimulate development of a
specific energy source would look to stimulate demand for that resource by offering an
opportunity for customers to purchase supply from RNG producers
The RNG program proposed by VGS and supported by the Department seeks to offer
ratepayers the option to purchase renewable energy as part of their individual energy-use
portfolio Furthermore the program includes a provision requiring that VGS develop a detailed
marketing plan that will serve to educate customers on the availability costs and benefits of
such resources which could lead to increased demand for the product
VGS intends to take advantage of the existing market for RINs associated with RNG used
as transportation fuel by proposing a Renewable Vehicle Fuel Tariff As described above in the
Public Comments section the Chittenden County Transportation Authority and Casella Vaste
Systems are interested in exploring the use of RNG to fuel their vehicle fleets which
demonstrates that there is existing customer demand for this product
Unlike the markets relating to RNG supply used for transportation fuel or renewable
electric generation and the associated trading and verification of RECs the RNG market is in its
infancy At this time it would not be appropriate to expect VGS to implement an RNG program
utilizing an RNG content standard similar to the electric renewable portfolio standard as
recommended by CLF because the equivalent standards and processes do not exist However
the RNG program represents a meaningful first step in encouraging customer interest in
purchasing RNG at retail thereby stimulating supply of RNG into the market and is consistent
with the Commissions condition requiring VGS to develop a proposal to promote bio-methane
project development
VGSs RNG program includes appropriate mechanisms for periodic reporting and
verification of program activities as well as an opportunity to comprehensively review the
program after three years of implementation Furthermore determinations regarding recovery of
costs associated with the RNG program will be made in the context of future proceedings
regarding VGSs rates The RNG program should evolve with the RNG markets in the near-term
and over the course of the next several years which will allow progress towards achievement of
Vermonts 2050 CEP renewable energy goals
Docket No 8667 Page 10
Because not all parties to this proceeding have waived their rights under 3 VSA $ 811
to file written comments or present oral argument with respect to this proposal for decision I am
circulating the proposal for decision to the parties for their review and comment
Dated at Montpelier Vermont this rrtl day of QrIltt 2017a0AndreaHearing Officer
Docket No 8667 Page 11
VII Corumrssron Drscussrox
On August 22017 the Department filed a letter stating that it supports the issuance of an
Order by the Commission that adopts the proposal for decision in full
Also on August 22017 VGS filed comments on the proposal for decision requesting
that Finding 16 be modified as follows (additional text in italics) If RNG supply exceeds
customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary
flow any remaining RNG attribute inventory amounts through the PGA or through a rate case ifVGS was under traditional cost of service regulation (subject to [Commission] approval)
VGS asserts that [a]bsent such specific language it is possible that VGS would be unable [to]
defer such costs for future recovery and that removal of that component introduces uncertainty
about the potential procedural mechanisms available for cost recovery in the last resort VGS
states that with the Commissions consideraacutetion of this request it does not request oral argument
No other comments were filed on the proposal for decision
The Hearing Officer recommended that the Commission find that determinations
regarding recovery of costs associated with the RNG program will be made in the context of
future proceedings regarding VGSs rates We agree with this recommendation VGS should
have an opportunity to request rate recovery for excess RNG supply However this proceeding
is not the proper time for such a determination Accordingly Finding 16 is hereby modified as
follows If RNG supply exceeds customer demand VGS would first seek to sell the excess
RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any
remaining RNG attribute inventory amounts through the PGA or through arate case as part of
its cost of service if the PGA is no longer in effect atthat timeWe emphasize the importance of the successful implementation of the RNG program in
helping to meet the States renewable energy policy objectives The annual report on the
implementation of the RNG program will serve as a valuable tool to assess that progress In this
proceeding CLF has raised policy considerations that should serve to guide these future reviews
of the RNG program For example CLF has raised concerns regarding the effectiveness of the
voluntary nature of the program In assessing its program we expect VGS to revisit and report
on the feasibility of incorporating RNG as a portion of its supply mix in the future It is
important for VGSs RNG program to be sustainable and continue to evolve ensuring significant
DocketNo8667 Page 12
contributions toward meeting the States renewable energy goals and reducing the consumption
of fossil fuel Accordingly it is critical that the annual report and the three-year comprehensive
review address not only the effectiveness of the program but also its affordability and the
feasibility of other policy options to advance the production and use of RNG in Vermont
Docket No 8667 Page 13
VIII Onunn
Ir rs Hennsy oRDERED ADJUDGED AND DECRnnn by the Public Utility Commission of the
State of Vermont that
1 The findings conclusions and recommendations of the Hearing Officer are
adopted and the Renewable Natural Gas (RNG) program to be implemented by Vermont Gas
SystemsInc (VGS) is approved
2 When VGS has procured RNG supply in amounts reasonably estimated to be
sufficient for estimated customer demand it shall file a formal tariff including proposed rates for
sale of RNG The tariff shall be reviewedpursuantto the procedures of 30 VSA ccedilccedil225226
and227 and sales under the program shall begin after Commission approval of the tariff
3 VGS shall develop and file for Commission approval a separate Renewable
Vehicle Fuel Tariff to serve customers using RNG as a transportation fuel
4 VGS shall file a marketing plan for the RNG program consistent with the
requirements set forth above within one month of the issuance of this Order
5 VGS shall file an annual report consistent with the requirements set forth above
upon implementation of the RNG program
6 VGS shall file a comprehensive review of the performance of the program with
the Commission and the Department after three years of implementation This review will
include an environmental accounting protocol to quantiff the environmental benefits of the
progrfim
7 VGS shall review proposed RNG supply arrangements with the Department
Docket No 8667
Orprcp oF THE Crnm
Dated at Montpelier Vermont this day of+hb
Z Roisman
Cheney
Page 14
20t7
Puslrc Urrlnv
CovtriquestIssIoN
OP VERMONT
(
)))
)))
Fired otildeeglcL ( JotTAttest c
of the Commission
NorIcE To READERS This decision is subject to revision oftechnical errors Reqders are requested tonotify the Clerk of the Commission (by e-mail telephone or inwriting) or any appqrent errors in order that anynecessary corrections may be made (E-mail address pucclerkvermontgov)
Appeal of this decision to the Supreme Court of Vermont must befiledwith the Clerk of the Comnissionwithin thirty days Appeal will not stay the efect of thszlig Order absentfurther order by this Commission orappropriate actiacuteon by the Supreme Court of Vermont Motions for reconsideration or stay if any must be filed withthe Clerk of the Commissionwithin ten days of the date of this deciacutesion and Order
Exhibit 22 VGS RNG Tariff Rate Filing
Exhibit 23 PUC Approval of VGS RNG Rates
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Case No l8-03 13-TF
Petition of Vermont Gas Systems Inc fotapproval of a new tariff implementing theRenewable Natural Gas program
Order entered
OnonRAppnovINc Tiquestrurn
On January 302018 Vermont Gas Systems Inc (VGS) filed a petition for approval of
a new tariff implementing the Renewable Natural Gas (RNG) program approved by the
Vermont Public Utility Commission (Commission) in Docket No 8667 In that Docket the
Commission required VGS to file a tariff implementing the RNG program when it has procured
RNG supply in amounts reasonably estimated to be sufficient to meet customer demandl In
this Order the Commission approves the new tariff marketed under the name EcoGas with an
effective date of bills rendered on and after March 15 2018
VGS states that it has executed an RNG supply contract with deliveries scheduled for
2018 and that two additional contracts are being negotiated for deliveries beginningin2019
VGS is proposing to set its initial RNG adder at$ll749lCcf which represents a five-year
blended rate based on the three RNG supply arrangements VGS intends to account for the
difference between the cost of RNG supply and the RNG adder as a regulatory asset within gas
costs As additional lower-cost supply is added to the portfolio the regulatory asset balance will
be recovered from EcoGas participants with the goal of fully reducing the balance by the end of
five years Accordingly VGS states that the RNG program will be rate-neutral to VGS and its
non-RNG customers
On February 272018 the Vermont Department of Public Service (Department) filed a
letter recommending that the Commission approve the tariff without a hearing or further
investigation The Department states that the tariff filing and proposed accounting treatment
comply with Vermont rate-setting practices policies precedents and statutes
lslaotx
I Docket 8667 Order of 96117 at 13
Page2Case No 18-0313-TF
Based on the foregoing we hereby approve VGSs proposed RNG tariff to be effective
on a bills-rendered basis beginning on March 15 2018 Recovery of any regulatory asset
balance at the end of the fifth year would need to be approved by the Commission in a future
proceeding
So Omnnnn
Case No l8-0313-TF
8r- day of lruacuterLiquestiquest
Page 3
Dated at Montpelier Vermont this 2018
Roisman PueIrc Urlrrv
CoiriexcllriquestlssloN
Cheney
OF VERMONT
Sarah Hofmann
Onncp oF THE CLBRr
Filed huacuteveuroAacute- icirc dollAttest I
Clerk of the Commission
Notice to Readers This decision is subiect to revision oftechnical errors Readers are requested to notify
the Clerk of the Commission (by e-mail telephone or in writing) or qny qpparent errors in order that any
necessary corrections may be made (E-mail address pucclerkvermontgov)Appeal of this decisiacuteon to the Supreme Court of Yermont must be filed with the Clerk of the Commission
within 30 days Appeal will not stay the efect of this Order oslashbsent further order by this Commission or appropriate
action by the Supreme Court of Vermont Motionsthornr reconsideration or stay if any must befiledwith the Clerk ofthe Commissionwithin 28 doslashys of the date of this decision and Order
)))
))))
PUC Case No 18-0313-TF
Eileen SimollardesLauren HammerVermont Gas
85 Swift StreetSouth Burlington VT 05403
June E Tiemey CommissionerVermont Department of Public Service1 12 State StreetMontpelier VT 05620 -2601
Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
Exhibit 31 Accounting Procedures
Exhibit 31 Accounting for VGS Renewable Natural Gas (Ver-9202019)
1 Purchase of RNG Supply
RNG supply purchases are separated into the cost of the commodity and the cost of the renewable attribute The commodity portion is expensed to gas costs in the delivery month while the renewable attribute is booked to an inventory account referenced herein as the ldquoRenewable Inventory Accountrdquo Like VGSrsquo existing storage inventory accounting the Renewable Inventory Account will track both the dollar value of the renewable attribute and the renewable attribute Mcfs Renewable attribute dollar values are record to ldquo16410050 Inventory RNG Storagerdquo while Mcf values are recorded in the gas cost model maintained by accounting In the month VGS purchases the renewable attribute it is accrued in a book model and goes in to 16410150 Inventory RNG Accrued then moves to the 16410050 in a final model the following month for final
RNG may be purchased at different locations and using varying pricing structures While the accounting for RNG does not vary with the purchase location or price the determination of the value of the renewable attribute will vary depending on whether or not the supply pricing expressly values the renewable attribute as an adder or it is embedded in a fixed price Examples of each are shown below The accounting of RNG supply is intended to separate the cost of the renewable attribute from the cost of the commodity The examples below are not all inclusive of what may occur but intended to show the accounting procedures used to separate the renewable attribute from the commodity and specify ownership of each aspect
In all cases the commodity cost portion - which is the total cost of the RNG purchased excluding the renewable attribute - will be expensed in the delivery month as a cost of gas
Example 1 ndash The fixed price of RNG includes both the commodity and the renewable attribute
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The total cost of the RNG supply purchased during the month is calculated by Accounting within the gas cost model as follows
MMBtu Purchased (as validated in step 2) $ MMBtu purchase price (as provided in a supply confirmation provided by gas supply)
4 For purposes of booking the renewable attribute to inventory it is necessary to calculate the RNG cost per Mcf The RNG cost Mcf is calculated using the total cost of RNG supply as calculated in step 3 divided by the Mcf in step 1
5 The renewable attribute price per Mcf is calculated as follows
RNG cost per Mcf as determined in step 4 ndashplus ldquoother componentsrdquo as calculated pursuant to Attachment A ndash minus ldquoAverage Commodity Costrdquo as calculated pursuant to Attachment A The ldquoother componentsrdquo added to the RNG cost per Mcf will vary depending on where the RNG supply was delivered but in each case will be identified in the calculation shown on Attachment A
6 The renewable attribute price per Mcf the total RNG Mcf delivered is recorded in the Inventory RNG Storage account
7 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
Example 2 - RNG purchased at a renewable attribute price plus a daily or monthly index
Where the pricing of RNG specifically separates the commodity from the renewable attribute the renewable attribute price will be what is recorded in the Renewable Inventory Account
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The renewable attribute price per Mcf the total RNG Mcf delivered as determined in step 1 is recorded in the Renewable Inventory Account
4 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
2 Recalculating the RNG Adder
The RNG Adder paid by customers will be recalculated anytime the Natural Gas charge portion of rates changes The Manager of Gas SupplyGas control is responsible for recalculating the RNG Adder The calculation will be verified and approved by the Vice President ndash Regulatory Affairs The determination of the RNG Adder will be pursuant to the methodology shown in Attachment A The Regulatory Department will prepare the amended RNG Adder tariff for filing with the PUC Upon PUC approval of the RNG Adder the Regulatory Department will prepare a memorandum advising Accounting and Gas Supply of the new RNG Adder as approved
3 Customer purchases VGS Renewable Natural Gas
The RNG Adder at the percent selected by the customer will be applied to the entire monthrsquos usage on the customersrsquo next bill For customers utilizing the S-RNG adder the entire volume elected with be on the customersrsquo next bill The S-RNG Adder nor the RNG Adder and percentage selected will not be prorated based on enrollment or termination date
Customers may terminate or modify their RNG selection upon 3 dayrsquos notice to VGS The termination or modification will be effective on the customerrsquos next monthly bill
The customerrsquos usage for the month will be multiplied by the percentage and the approved RNG Adder For customers utilizing the S-RNG adder the volume elected will be multiplied by the approved RNG adder This amount will then be recorded to SAP accounts 4010015-40010021 depending on which rate class the customer is in The RNG Adder is the same regardless of which rate class a customer is in At the end of the month a report is run by billing from the customer information system that shows total usage and which percentage of RNG the customer has signed up for to calculate the number of MCFrsquos of renewable attribute sold during the billing period Billing also provides a report of the volumes sold through the S-RNG Tarriff The Inventory RNG Storage account maintained within the gas cost model by Accounting is reduced by these Mcf The MCFrsquos are then multiplied by the RNG Adder in effect for the billing month and an entry is made to remove that dollar amount from the Inventory RNG Storage account and into the monthly cost of gas The intent of this transaction is to ensure that cost of the renewable attribute is reflected in the cost of gas in the month it is purchased by the customer This results in a matching of the renewable attribute revenue and expense
The RNG Adder revenue and renewable attributes removed from storage will be included in the gas cost deferral calculation However because there is a matching of the renewable attribute revenue and expense the impact on the deferral calculation will be zero
The calculation of unbilled revenues will exclude RNG as a customer can cancel their participation prior to their next bill
In the event Vermont Gas issues a credit to a customer related to the RNG program the value of the renewable attribute credited and the associated Mcf will not be applied to the Renewable Inventory Account
4 Controls
A spreadsheet is maintained by accounting that shows the MCFrsquos and dollar values of the Renewable Inventory Account This is reconciled monthly by the accounting team and will be reviewed by the Manager Gas SupplyGas Control
Accounting will validate that the amount removed from the Renewable Inventory Account matches the RNG Adder revenue Any discrepancies will be reviewed and corrected
A report will be run for each bill cycle that shows any changes to the RNG percentages selected this will include customers opting to withdraw from the RNG program The customer care team will validate any changes against customer confirmation paperwork
5 Renewable Inventory Account Reconciliation and Forecast
The PUC Order approving the RNG program contains provisions describing how RNG supply and demand imbalances will be addressed These provisions and how VGS will track and comply with them are as discussed in this section The PUC Order approving the RNG Program provides that if the available RNG supply during the previous 12 months is less than the amount purchased by customers VGS may use the funds collected to purchase carbon offsets (Finding 13) If carbon offset are not available VGS will contribute the RNG program revenues to the Clean Energy Development Fund or issue prorated credits to affected customers (Finding 15) The Order also provides that in the event RNG supply exceeds customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any remaining RNG attribute inventory amounts through the PGA or through a rate case as part of its cost of service if the s PGA is no longer in effect at that time (Finding 16 as modified) Finding 11 provides that VGS will use a ldquotrue-uprdquo period of up to 12 months in order to balance the difference between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply) Taken together these provisions require VGS to evaluate the imbalance after 12-months and then true-up the imbalance over the next twelve months To provide a forecast of the supplydemand imbalance quarterly the billing area will run a report showing the expected RNG volumes based on current customer commitments by month for the next 12-months Current customers commitments will be calculated based on the previous 12 months of usage multiplied by the RNG percentage currently signed up for The marketing department will provide their forecast of new RNG sales for the next 12-months Both will be provided to the Manager Gas SupplyGas Control The Manager Gas SupplyGas Control will compare the forecasted RNG sales known and expected to RNG supply commitments and provide a 24-month forecast of the supplydemand balance The supplydemand balance will be reviewed at the risk management meeting The strategy for addressing the imbalance consistent with the PUC order will be determined by the risk management committee
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
VGS Renewable Natural Gas Program Manual
Page 9
Section 3 Supply Procurement and Accounting
KEY VGS RENEWABLE NATURAL GAS SUPPLY AND ACCOUNTING STEPS
Item Description Schedule Owner RNG Supply Contracts
Procuring RNG Supply As needed Gas Supply
RNG Supply True-Up
Balancing RNG supply sales and retiring attributes
Monthly Finance
RNG Supply Verification
Verifying ldquorenewabilityrdquo of RNG Supply
Annually Gas SupplyThird- Party
31 VGS RENEWABLE NATURAL GAS SUPPLY OVERVIEW
VGS intends to contract with a variety of RNG supply sources to meet its customer demand in the RNG Program RNG supply is currently available from a limited number of landfill and digester projects in Canada or US states other than Vermont In Vermont at least one local supply project is currently under development
Today there is no central ldquomarketplacerdquo for RNG suppliers and buyers to trade RNG supply contracts RNG buyers such as VGS transact with individual producersprojects or work through RNG brokers to acquire RNG supply or the environmental attributes associated with RNG in bilateral transactions VGSrsquo initial RNG supply contract in 2018 was with BP Canada Energy Group ULC and sourced from the EBI Inc13 biogas production facility located in Ste Genevieve Quebec In 2019 VGSrsquo purchased RNG supply from a waste water treatment facility in Dubuque Iowa
In 2020 VGS plans to begin receiving RNG supply from a Vermont farm digester and a Canadian digester facility The Vermont farm digester located in Salisbury Vermont is slated for completion in late 2020 producing 180000 MMbtursquos per year The Canadian digester project is located in London Ontario VGS has agreed to purchased 100 of the supply from this facility up to 120000 MMbtursquosyear for 15 years VGS sought and received PUC approval for this Ontario supply in 2018 and received approval for an amendment in 2019 To meet anticipated demand for RNG until these two resources come on line the Company purchased short-term supply of RNG from the Iowa facility in 2019 We anticipate that these supply sources will satisfy the VGS Renewable Natural Gas Program supply needs for the first few years of the Program If we are unsuccessful
13 EBIrsquos Facility was recognized in 2016 (httpswwwdesjardinscomcavideossinglejspdocName=vid-ebi-e)
VGS Renewable Natural Gas Program Manual
Page 10
in procuring supply from these sources or if demand exceeds these planned supplies VGS will seek additional RNG supply in the marketplace
32 VGS RENEWABLE NATURAL GAS SUPPLY CONTRACTS VGS will utilize standard industry or comparable contract vehicles to procure RNG supply with site-specific terms and conditions Given the unique nature of the in-state RNG project the gas supply contract is a 3 way agreement between the producer VGS and an end user Accordingly the form of the contract does not resemble industry standard supply agreements but contains all appropriate business terms The first two contracts signed by VGS utilize a gas utility standard base contract with signed transaction confirmation documents that specify the specific details of each deal These contracts will require the RNG supplier to certify the renewable attributes and that VGS has full and sole ownership of those attributes As required by the PUC Order RNG Suppliers will also be required to allow VGS independent verification of the production and transactions related to VGS supply volumes The specific PUC requirements are found in finding 21 page 7 of Exhibit 21 - VT PUC Approval Order
33 VGS RENEWABLE NATURAL GAS ACCOUNTING Like accounting practices in the renewable electric industry Vermont Gas will have the obligation to match RNG supply volumes with customer RNG purchase volumes over time As discussed in Section 22 the premium for RNG above the cost of conventional natural gas establishes the value of the renewable attribute purchased by the customer These attributes are tracked in a separate inventory account and then matched with actual retail VGS Renewable Natural Gas sales Once these renewable attributes are matched with VGS Renewable Natural Gas sales they are ldquoretiredrdquo and cannot be resold in any manner or used to satisfy another obligation by VGS As provided in the PUC order ldquoVGS will use a ldquotrue-uprdquo period of up to 12 months to balance the difference between RNG attributes sold to customers (demand) and RNG attributes purchased by VGS from suppliers (supply)rdquo This true-up period allows RNG attribute ldquooversupplyrdquo and ldquoundersupplyrdquo to be balanced as described below
In an ldquooversupplyrdquo situation where forecasted RNG attribute purchases exceed the number of RNG attributes that VGS forecasts selling to its customers through the RNG Program VGS will first seek to market the excess RNG and the environmental attributes back through the wholesale supply channels If this oversupply extends beyond the 12-month true-up window VGS may seek PUC permission to flow any remaining RNG attribute inventory amounts through the Purchase Gas Adjustment (ldquoPGArdquo) or through its cost of service if the PGA is no longer in effect at that time
An ldquoundersupplyrdquo situation would occur if customer purchases of RNG attributes exceeded the amount available under VGSrsquo RNG supply contracts in the forward looking 12-month true-up window If the RNG supply purchases are lagging the RNG sales VGS
VGS Renewable Natural Gas Program Manual
Page 11
will true-up or balance this undersupply over the upcoming 12-month period through existing or additional RNG supply purchases
If VGS is unable to eliminate an undersupply imbalance after the 12-month true-up period VGS would need to purchase carbon offsets in the dollar amount equal to VGS Renewable Natural Gas revenues collected associated with the undersupply (See Exhibit 21 Order Finding 13 and 15) Carbon offsets are listed on one of several Carbon Registries such as the American Carbon Registry If carbon offsets are not available VGS has the option to contribute these RNG revenues to the statersquos Clean Energy Development Fund or issue prorated credits to affected customers It should be noted that while purchasing offsets is a tool for VGS it is not the intent of the VGS Renewable Natural Gas Program and if an undersupply situation persisted VGS would likely petition the PUC to modify or suspend the VGS Renewable Natural Gas Program prospectively
VGS will manage the RNG Program to closely match supply and demand and utilizing our RNG wholesale cost mitigation tools to avoid RNG supply challenges
As renewable programs evolve in the energy and natural gas industry Vermont Gas will adjust its accounting procedures to reflect industry standards and revise this manual to reflect any modifications or changes
34 RENEWABLE VERIFICATION VGS is committed to transparency and the integrity of this innovative program is essential to success Toward that end no step is more essential than the verification of the renewability claims of our VGS Renewable Natural Gas supply The PUC reinforced this commitment in the RNG approval order as follows
ldquoVGS will annually verify that the RNG was produced by a renewable gas production facility that VGS is the exclusive owner of any environmental attributes associated with RNG it sells under the program that it acquired the RNG from its transferor and sold it at retail and that the RNG has not been sold twice at any point between RNG production and sale to VGS whether by sales into carbon offset markets or otherwise This verification will be based on certifications of VGSrsquos suppliers and of an independent third party retained by VGS for this purposerdquo
VGS will use an independent third-party to verify the renewable claims for the VGS Renewable Natural Gas supply including the following
bull Confirm the renewable fuel feedstock identificationbull Confirm the product renewable fuel identificationbull Review and confirm the renewable fuel production processbull Review of fuel flow measurement and quality monitoring process and equipment
VGS Renewable Natural Gas Program Manual
Page 12
bull Review of contracts and affidavits governing the transfer of the RNG from theoriginal source to the end user(s)
bull Review of evidence confirming the existence of a physical path (common carrierpipeline) for RNG transfer and distribution to end users
SECTION 3 EXHIBITS
bull Exhibit 31-Accounting Proceduresbull Exhibit 32-Verification from Suppliersbull Exhibit 33-Third Party Verification
VGS Renewable Natural Gas Program Manual
Page 13
Section 4 Marketing
KEY MARKETING STEPS Item Description Owner VGS Renewable Natural Gas Branding
Maintain product and brand integrity Communications
Product Definition Ensuring proper VGS Renewable Natural Gas description in all materials
Communications
External Review Verification of Marketing claims Communications
41 MARKETING PLAN Exhibit 41 is the 2018 version of the Marketing Plan filed with the PUC This document may be updated from time to time as we adjust our marketing strategy
42 MARKETING CLAIMS VGS is committed to making clear and accurate claims about the environmental benefits of VGS Renewable Natural Gas We have enlisted the assistance of a law firm specializing in marketing renewable products to review VGSrsquo marketing materials and claims In addition VGSrsquo annual third-party review of our program will focus on the integrity of our administration of the VGS Renewable Natural Gas program (see Section 54)
43 VGS RENEWABLE NATURAL GAS ldquoPRODUCT CONTENT LABELrdquo The Product Content Label is intended to be prominently displayed on the VGS web site and in correspondence to customers when they enroll in this program
Product Content Label
By participating in the VGS Renewable Natural Gas program you are purchasing the renewable attributes associated with the production of renewable natural gas (ldquoRNGrdquo) which may also be referred to as biogas or bio-methane A unit of VGS Renewable Natural Gas measured in hundred cubic feet (CCF) represents the environmental attribute of 1 CCF of biogas VGS reserves the right to purchase carbon offsets if RNG supply is not available VGS will notify customers if this occurs The Product Content Label is available at httpswwwvermontgascomrenewablenaturalgas
SECTION 4 EXHIBITS
bull Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)bull Exhibit 42 VGS Renewable Natural Gas Trademark
VGS Renewable Natural Gas Program Manual
Page 14
Section 5 Customer Information and Billing
KEY BILLING AND REVENUE STEPS Item Description Owner Billing Enrollment of VGS Renewable Natural Gas
Customers Contact Center
Notice Customer Notice of VGS Renewable Natural Gas Rates
Contact CenterBilling Group
Program Assurance Verification of VGS Renewable Natural Gas program procedures
Billing and Finance
51 CUSTOMER ENROLLMENT AND BILLING PROCESS The VGS Customer Care team will enroll customers and establish the VGS Renewable Natural Gas Adder on customer accounts Customers will be able to order VGS Renewable Natural Gas via VGSrsquo website (preferred method) calling VGS contact center or through the VGS Energy Services team An RNG calculator is available on VGSrsquo website httpswwwvermontgascomrenewablenaturalgasadder-calculator that can assist customers in estimating the costs of VGS Renewable Natural Gas at the various percentage levels based on the customerrsquos gas consumption VGS will inform customers of the current RNG Adder premium when they enroll Customers have two options when enrolling in the RNG program Customers may select their desired percentage of VGS Renewable Natural Gas ( 10 25 50 or 100) or they may allocate a fixed amount of RNG attributes (ldquoS-RNGrdquo) for each month that they are enrolled in Customer Care will then set up the billing on their account VGS will send an order confirmation via email or as a separate mailing (see Exhibit 51) thanking the customer for subscribing to VGS Renewable Natural Gas and informing the customer of the estimated impact on their bill As shown on Exhibit 51 the order confirmation letter will also include the RNG program guidelines These guidelines are discussed in section 53 below
52 VGS RENEWABLE NATURAL GAS WEBSITE AND FREQUENTLY ASKED QUESTIONS The VGS Renewable Natural Gas web page contains general VGS Renewable Natural Gas information an FAQ a VGS Renewable Natural Gas calculator current VGS Renewable Natural Gas Adder and an easy-to-use sign up form
For the most recent Frequently Answered Questions visit httpwwwvermontgascomVGS Renewable Natural Gas
VGS Renewable Natural Gas Program Manual
Page 15
53 VGS RENEWABLE NATURAL GAS PROGRAM GUIDELINES VGS Renewable Natural Gas customers will fall under VGSrsquo General Terms and Conditions outlined in VGSrsquo tariffs and PUC rules (ex Disconnection practices late fees taxes) VGS tariffs can be found at httpwwwvermontgascomaccountrates
VGS will notify VGS Renewable Natural Gas customers of rate changes in advance of implementation on both their individual bills and the Companyrsquos website RNG customers have the ability to cancel or modify their RNG account profile consistent with the tariff
VGSrsquo RNG customers can subscribe to VGS Renewable Natural Gas service with no term commitment and can cancel with three daysrsquo notice The RNG Adder will apply at either the percentage or fixed quantity allocated by the customer to the usage shown on the monthly bill regardless of enrollment or termination date The RNG Adder will not be pro-rated for partial-month usage
VGS customers receiving the low-income rate discount can subscribe to VGS Renewable Natural Gas however the 20 low income discount will not apply to the RNG Adder
Customers currently on a budget program will be encouraged to request a recalculation of their budget plan to adjust for the RNG Adder costs but it is not required
54 VGS RENEWABLE NATURAL GAS PROGRAM ASSURANCE
On an annual basis VGS will conduct a program review to ensure the VGS Renewable Natural Gas program is managed consistent with this manual The VGS Renewable Natural Gas program is a new product for the US natural gas utility industry and as such no industry specific standards exist VGS is working with on a national effort to develop a ldquoGreen-Erdquo certification process for Renewable Natural Gas programs that process is targeted for completion in 2020
SECTION 5 EXHIBITS
bull Exhibit 51 ECIS Customer Confirmation
VGS Renewable Natural Gas Program Manual
Page 16
EXHIBITS
Exhibit 21 VT PUC Approval Order
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Docket No 8667
Petition of Vermont Gas Systems Inc for aRenewable Natural Gas Program andOptional Tariff
)))
Hearing atMontpelier Vermont
September 22016
order entered q leacute I aon
PRBsBNI Andrea C McHugh Hearing Officer
AppeeReNcBs Peter H Zamore Esq
Owen J McClain EsqSheehey Furlong amp Behrn PCfor Vermont Gas Systems Inc
Louise C Porter EsqTimotthorn M Duggan Esq
for the Vermont Department of Public Service
Sandra Levine Esqfor Conservation Law Foundation
Gerald R Tarrant EsqTarcant Gillies amp Richardsonfor Lincoln Renewable Natural Gas LLC
I INrnooucrroN
This case involves a petition filed by Vermont Gas Systems Inc (VGS) with the
Vermont Public Utility Commission (oCommission) I for approval of a Renewable Natural Gas
(RNG) program and optional RNG tariff service for its customers The proposed RNG
progriquestigravem establishes a framework for VGS to offer its customers the option to purchase RNG for
I Pursuant to Section 9 of Act 53 of the 2017 legislafive session the Vermont Public Service Boards name waschanged to the Vermont Public Utility Commission effective July l 2017 For claity activities of the VermontPublic Service Board that occurred before the name change will be referred to in Commission documents as
activities of the Commission unless that would be conntildersing in the specific context
Docket No 8667 Page2
program establishes a framework for VGS to offer its customers the option to purchase RNG for
as a portion of their usage RNG is produced from materials such as agricultural waste manure
municipal waste plant material or compost and is also referred to as bio-methane In this
proposal for decision I recommend that the Commission approve the proposed RNG program
and require VGS to make compliance filings as set forth herein
il PnocnrunnlHrsroRY
On October 232015 VGS figraveled a petition for approval for its RNG program including
prefiled testimony and exhibits of Thomas Murray
On January 192016I held a prehearing conference and on January 252016I issued
an Order establishing a schedule
On February 122016 VGS filed a revised RNG Plan
On March 102016I held a workshop to discuss the proposed program
On March 152016I issued an Order revising the schedule
On March 222016 Conservation Law Foundation (CLF) and Lincoln Renewable
Natural Gas LLC (Lincoln) filed motions to intervene in this proceeding
On April 12016 VGS filed supplemental testimony and exhibits
On April 82016I issued an Order granting CLFs and Lincolns intervention requests
On July 72016 the Vermont Department of Public Service (Department) CLF and
Lincoln filed testimony
On August 82016 Lincoln filed supplemental testimony
A technical hearing was hthornld on September 22016
On September 30 20|6VGS filed a draft proposal for decision supported by the
Department In addition CLF filed a brief on the same date Reply briefs were filed by VGS
and CLF on October 142016
III Posnroxs oF THE PlRrlns
VGS
VGS requests approval of its proposed RNG program for the sale of RNG to customers
on a voluntary basis VGS claims that its proposal contains reasonable provisions to align its
RNG purchases with the amounts sold to its customers appropriate mechanisms to address over-
Docket No 8667 Page 3
or under-supply of RNG and verification requirements to ensure that sales in fact consist of
RNG VGS maintains that the RNG program is an appropriate first step in stimulating RNG
producer supply and customer demand and is oamply supported by Vermonts experience of
measured implementation of electric renewable pricing programs2 VGS argues that the
program is responsive to the Commissions condition in its Order in Docket 79701o develop a
proposal to promote bio-methane project development3
Department of Public Service
Although the Department did not file a brief or reply brief it did present witness
testimony and indicated its support for the draft proposal for decision filed by VGS The
Department recommends that VGS review all proposed RNG supply arrangements with the
Department (in addition to seeking 30 VSA $ 248 approval where required) and suggests that
in the event of an undersupply of RNG VGS obtain carbon offsets in an amount equivalent to
the unused customer contributions The Department recommends that the RNG program be
reviewed at the end of three years at which time the protocol regarding the purchase of offsets
would be revisited
C ons ervation Law Foundation
CLF urges that the Commission reject the RNG program and instead adopt an RNG
content standard similar to the electric renewable portfolio standarda CLF maintains that the
expected annual sales volume is not apace that is consistent with Vermonts legislative and
planning targets for meeting energy needs with renewable energy or for reducing greenhouse gas
emissionss CLF claims that the proposed voluntary tariff falls short of being a program or
strategy that promotes the increased use of RNG resources or supply or fosters bio-methane
projects in Addison county6
2 VGS reply brief aI23 In Docket 7970the Commission considered the petition of VGS for a certificate of public good (CPG) pursuant
to 30 VSA $ 248 authorizing the construction of the Addison Natural Gas Pipeline In an Order issued on
December 232013 the Commission granted the CPG As a condition of approval the Commission required VGSin consultation with the Department to file a petition with the [Commission] proposing a program to promote bio-methane project development Docket 7970 Order of l2l23ll3 at 147
a CLF brief at 12s CLF brief at 36 CLF brief at 4
Docket No 8667 Page 4
Lincoln
Lincoln maintains that itis essential to promote development of agricultural-based bio-
methane supply in VermontT Lincoln states that the Commission is not in a position to
adequately address VGSs proposed RNG program until negotiations for sale of itsoutput
involving VGS and Middlebury College are completes
IV Punrrc CounnnNrs
The Commission received three letters of support for VGSs RNG program On March 10
2016 the Chittenden County Transportation Authority filed comments indicating that it intends to
explore the possibility of utilizing RNG to cover a portion of the energy needs for its fleet of 70
buses On March 182016 Champlain College filed comments noting that it is interested in using
RNG for a portion of its energy needs that are currently met with conventional natural gas On
March 282016 Casella Waste Systems made a filing with the Commission stating its intention
to explore using RNG to meet some of its energy needs for its fleet of vehicles
V trrutrxcs
Based on the evidence of record I hereby report the following findings and
recommendations to the Commission in accordance with 30 VSA $ 8(c)
1 RNG is produced from raw materials such as agricultural waste manure municipal
waste plant material or food waste Decomposition or digestion of these materials produces
raw methane which is then cleaned or upgraded to bio-methane in order to meet the receiving
pipelines gas quality specifications prior to injection into an existing pipeline system Thomas
Murray VGS (Murray) supp pf at3
2 VGS is exploring options to purchase RNG supply from Lincoln and from landfill gas
projects located outside Vermont that would be received through the Trans-CanadaPipeline
(TCPL) system Murray supp pf at 8-9
7 Daniel Smith Lincoln Renewable Natural Gas LLC (Smith) supp pf at L8 On August 152016 Lincoln filed a motion to continue this proceeding for a period of not less than 60 days statingthat the continuance would allow [it] VGS and Middlebury College to complete discussions as to VGSsinvolvement in the RNG supply in Vermont and allow the record in this case to be properly developed VGS and
the Department opposed the request for continuance On August 222016I issued an Order denying Lincolnsrequest and determined that Lincoln did not demonstrate good cause to postpone the technical hearing
Docket No 8667 Page 5
3 Under the program retail customers would voluntarily purchase RNG in amounts equal to
l0oo25yo50o or 100 of their total monthly requirements at specified prices per Ccf as an
adder to other retail charges Customers could terminate RNG purchases upon providing three
days of advance notice to VGS Murray supp pf at l-2 exhs Pet-VGS-l and Pet-VGS-3
4 Intemrptible customers will have the opportunity to participate in the RNG program
through VGSs existing Lock Price Program which currently provides for up to a two-year
commitment Murray supp pf at 5
5 VGS will develop and file for Commission approval a separate tariff for use of RNG as a
transportation fuel This tariff will allow VGS to take advantage of the sale of the associated
Renewable Identification Numbers (ooRINs) When RNG is used as a transportation fuel it is
eligible to receive RINs under the Federal Renewable Fuel Standard RINs can be resold on the
wholesale market and would be used to offset the price of RNG to transportation customers
receiving service under the tariff Joan E White
Department (White) pf at7tr912116 at 62-
63 (White) exh Pet-VGS-5 Response 4
6 VGS will also initiate a review of the RNG program by the Commission Department and
others after three years White pf at9tr912116 (Munay) at24
7 The adder price for each Ccf of RNG will be equal to the average RNG commodity cost to
VGS less the average commodity cost of natural gas VGS will adjust the adder price per Ccf on
a quarterly basis as part of its Purchased Gas Adjustment (PGA) filing Murray supp pf at 4
8 The proposed RNG program will include a tariff that is very similar in concept to the
Green Mountain Power Corporation (GMP) Cow Power tariff However Cow Power is based
on a fixed rate per kWh no matter what the cost of the renewable energy Murray supp pf at llVhite pf at 4
9 VGSs RNG tariff will be calculated quarterly based on actual RNG and natural gas costs
and will provide accurate price signals as to the price differential between natural gas and RNG
White pf at 4
10 Based on a survey conducted by VGS 85 of its customers are willingto pay l0oo
more for a renewable product VGS projects that customers could potentially consume over
500000 Mcf of RNG over the next five years Murray supp pf at 5
DocketNo8667 Page 6
11 VGS will use a true-up period of up to 12 months in order to balance the difference
between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply)
Murray supp pf at 9
12 There is a risk that due to the voluntary nature of the RNG program supply and demand
will be mismatched White pf at41 David G Hill CLF (Hi11) pf at 9
13 If the available RNG supply during the previous 12 months is less than the amount
purchased by VGS customers the RNG program provides that VGS may use funds collected to
purchase carbon offsets from an established carbon registry such as the American Carbon
Registry VGS will purchase an amount of carbon offsets equal to the amount of the revenue
resulting from the undersupply in order to result in a revenue-neutral program At the time of the
three-year implementation review VGS will propose an environmental accounting protocol in
order to quantify the environmental benefits of the program and to evaluate the financial risk of
purchasing carbon offsets in an amount equivalent to the environmental benefits of unsold RNG
due to undersupply Murray supp pf at 6 l0 exh Pet-VGS-s Responses 1
14 The development and standardization of RNG attributes is in its infancy as compared to
the existing markets for the environmental attributes used in the electric industry (renewable
energy credits or (RECs)) Murray supp pf at 12
15 If carbon offsets are not available VGS will contribute the RNG program revenues to the
Clean Energy Development Fund or issue prorated credits to affected customers Exh Pet-
VGS-S Responses 3
16 If RNG supply exceeds customer demand VGS would seek to sell the excess RNG at
wholesale Murray supp pf at 10
17 VGS will provide proposed RNG supply contracts to the Department prior to execution
It will also consult with the Department before making decisions that could dramatically impact
price or the integrity of the RNG program Exh Pet-VGS-S Responses 2 White pf at 5
18 The estimated cost of RNG supply ranges from $l2lMcf to $25lMcf The cost of natural
gas is less than $3Mcf Murray supp pf at 8-9
19 VGS will implement an RNG Quality Assurance Plan establishing a testing and
monitoring process to ensure that RNG injected (via in-state RNG producers) into the VGS
system is pipeline quality and meets the specifications of the TCPL transportation tariff for bio-
methane gas quality Murray supp pf at 14 exh Pet-VGS-4
Docket No 8667 PageT
20 VGS will file an annual report on the RNG program with the Commission and the
Department containing the following information
1 Number of subscribers by customer class
2 Sales volume by customer class
3 Sales revenues
4 Any sales or purchases of carbon offsets
5 Supplyconsumption matching portfolio including any shortfall or excess
supply of RNG
6 True-up schedule for any imbalances
7 RNG supply verification
8 Quantification of the impact of any excess RNG costs flowing through the
PGA if VGS remains under altemative regulation
9 Accounting of any carbon ofszligets or other incentives
10 Status of any contracts for RNG including plans to acquire new supply
contracts
I 1 Revenue from Renewable Identification Number (RlN) sales and impact
on the transport tariff as well as any projections about the RIN market that are
available to VGS and
12 Complete reports and environmental verifications by an independent
verifier
Murray supp pf at 11 exh Pet-VGS-3 White pf at 8-9 tr912116 at23-24 (Munay)
21 Except as described below concerning RlN-eligible RNG VGS will annually verify that
the RNG was produced by a renewable gas production facility that VGS is the exclusive oryner
of any environmental attributes associated with RNG it sells under the program that it acquired
the RNG from its transferor and sold itatretail and that neither the RNG nor any renewable
attribute associated with the RNG has been sold twice at any point between RNG production and
sale to VGS whether by sales into carbon offset markets or otherwise This verification will be
based on certifications by VGSs suppliers and by an independent third party retained by VGS
for this purpose Exh Pet-VGS-3 exh Pet-VGS-s Response 5 White pf at 8
Docket No 8667 Page I
22 For RlN-eligible RNG used as vehicle fuel verification will be addressed in detail in the
future as part of VGSs proposed Renewable Vehicle Fuel Tariff Exh Pet VGS-5 Response 4
rr912116 at 65 (White)
23 There are few natural gas utilities currently offering RNG at retail VGS modeled its
RNG program after the program designed by FortisBC a local distribution company in British
Columbia Canada VGS also had discussions with SoCalGas in Southern California Both of
these companies are leaders in developing RNG offerings and fostering RNG supply resources
Murray supp pf at 7
24 VGS will file with the Commission and Department a marketing plan containing the
following elements
l An evaluation element that includes concrete metrics such as sales
volume targets and enrollment targets
2 Identification of target market segment(s)
3 Development of materials and language for customer-marketing efforts
that explain the RNG program in plain language easily understandable to the
average customer
4 An online bill calculator
5 An implementation plan that identifies specific activities and a timetable
and
6 Abudget
Exh Pet-VGS-5 White pf at 10 Tr912116 at22-23 (Munay)
25 VGS and the Department represent that the RNG progriquestun is responsive to the
Commissions condition in its Order in Docket 7970 rcquiring VGS to develop a proposal to
promote bio-methane project development Murray supp pf al 13-14tr912116 at 63 (Vhite)
26 VGS asserts that the RNG program represents appropriate progress toward the Vermont
Comprehensive Energy Plan (CEP) goal to meet90o of Vermonts energy needs through
renewable sources by 2050 Murray supp pf at 12-13
VI DlscussroN iexclxu Coxclustox
Vith this proposal for decision I recommend that the Commission approve the RNG
program in accordance with the findings described above and based upon the evidence in the
Docket No 8667 Page 9
record In Docket 7970 the Commission required VGS in consultation with the Department to
file a petition with the [Commission] proposing a program to promote bio-methane project
development It is reasonable to expectthat aprogram meant to stimulate development of a
specific energy source would look to stimulate demand for that resource by offering an
opportunity for customers to purchase supply from RNG producers
The RNG program proposed by VGS and supported by the Department seeks to offer
ratepayers the option to purchase renewable energy as part of their individual energy-use
portfolio Furthermore the program includes a provision requiring that VGS develop a detailed
marketing plan that will serve to educate customers on the availability costs and benefits of
such resources which could lead to increased demand for the product
VGS intends to take advantage of the existing market for RINs associated with RNG used
as transportation fuel by proposing a Renewable Vehicle Fuel Tariff As described above in the
Public Comments section the Chittenden County Transportation Authority and Casella Vaste
Systems are interested in exploring the use of RNG to fuel their vehicle fleets which
demonstrates that there is existing customer demand for this product
Unlike the markets relating to RNG supply used for transportation fuel or renewable
electric generation and the associated trading and verification of RECs the RNG market is in its
infancy At this time it would not be appropriate to expect VGS to implement an RNG program
utilizing an RNG content standard similar to the electric renewable portfolio standard as
recommended by CLF because the equivalent standards and processes do not exist However
the RNG program represents a meaningful first step in encouraging customer interest in
purchasing RNG at retail thereby stimulating supply of RNG into the market and is consistent
with the Commissions condition requiring VGS to develop a proposal to promote bio-methane
project development
VGSs RNG program includes appropriate mechanisms for periodic reporting and
verification of program activities as well as an opportunity to comprehensively review the
program after three years of implementation Furthermore determinations regarding recovery of
costs associated with the RNG program will be made in the context of future proceedings
regarding VGSs rates The RNG program should evolve with the RNG markets in the near-term
and over the course of the next several years which will allow progress towards achievement of
Vermonts 2050 CEP renewable energy goals
Docket No 8667 Page 10
Because not all parties to this proceeding have waived their rights under 3 VSA $ 811
to file written comments or present oral argument with respect to this proposal for decision I am
circulating the proposal for decision to the parties for their review and comment
Dated at Montpelier Vermont this rrtl day of QrIltt 2017a0AndreaHearing Officer
Docket No 8667 Page 11
VII Corumrssron Drscussrox
On August 22017 the Department filed a letter stating that it supports the issuance of an
Order by the Commission that adopts the proposal for decision in full
Also on August 22017 VGS filed comments on the proposal for decision requesting
that Finding 16 be modified as follows (additional text in italics) If RNG supply exceeds
customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary
flow any remaining RNG attribute inventory amounts through the PGA or through a rate case ifVGS was under traditional cost of service regulation (subject to [Commission] approval)
VGS asserts that [a]bsent such specific language it is possible that VGS would be unable [to]
defer such costs for future recovery and that removal of that component introduces uncertainty
about the potential procedural mechanisms available for cost recovery in the last resort VGS
states that with the Commissions consideraacutetion of this request it does not request oral argument
No other comments were filed on the proposal for decision
The Hearing Officer recommended that the Commission find that determinations
regarding recovery of costs associated with the RNG program will be made in the context of
future proceedings regarding VGSs rates We agree with this recommendation VGS should
have an opportunity to request rate recovery for excess RNG supply However this proceeding
is not the proper time for such a determination Accordingly Finding 16 is hereby modified as
follows If RNG supply exceeds customer demand VGS would first seek to sell the excess
RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any
remaining RNG attribute inventory amounts through the PGA or through arate case as part of
its cost of service if the PGA is no longer in effect atthat timeWe emphasize the importance of the successful implementation of the RNG program in
helping to meet the States renewable energy policy objectives The annual report on the
implementation of the RNG program will serve as a valuable tool to assess that progress In this
proceeding CLF has raised policy considerations that should serve to guide these future reviews
of the RNG program For example CLF has raised concerns regarding the effectiveness of the
voluntary nature of the program In assessing its program we expect VGS to revisit and report
on the feasibility of incorporating RNG as a portion of its supply mix in the future It is
important for VGSs RNG program to be sustainable and continue to evolve ensuring significant
DocketNo8667 Page 12
contributions toward meeting the States renewable energy goals and reducing the consumption
of fossil fuel Accordingly it is critical that the annual report and the three-year comprehensive
review address not only the effectiveness of the program but also its affordability and the
feasibility of other policy options to advance the production and use of RNG in Vermont
Docket No 8667 Page 13
VIII Onunn
Ir rs Hennsy oRDERED ADJUDGED AND DECRnnn by the Public Utility Commission of the
State of Vermont that
1 The findings conclusions and recommendations of the Hearing Officer are
adopted and the Renewable Natural Gas (RNG) program to be implemented by Vermont Gas
SystemsInc (VGS) is approved
2 When VGS has procured RNG supply in amounts reasonably estimated to be
sufficient for estimated customer demand it shall file a formal tariff including proposed rates for
sale of RNG The tariff shall be reviewedpursuantto the procedures of 30 VSA ccedilccedil225226
and227 and sales under the program shall begin after Commission approval of the tariff
3 VGS shall develop and file for Commission approval a separate Renewable
Vehicle Fuel Tariff to serve customers using RNG as a transportation fuel
4 VGS shall file a marketing plan for the RNG program consistent with the
requirements set forth above within one month of the issuance of this Order
5 VGS shall file an annual report consistent with the requirements set forth above
upon implementation of the RNG program
6 VGS shall file a comprehensive review of the performance of the program with
the Commission and the Department after three years of implementation This review will
include an environmental accounting protocol to quantiff the environmental benefits of the
progrfim
7 VGS shall review proposed RNG supply arrangements with the Department
Docket No 8667
Orprcp oF THE Crnm
Dated at Montpelier Vermont this day of+hb
Z Roisman
Cheney
Page 14
20t7
Puslrc Urrlnv
CovtriquestIssIoN
OP VERMONT
(
)))
)))
Fired otildeeglcL ( JotTAttest c
of the Commission
NorIcE To READERS This decision is subject to revision oftechnical errors Reqders are requested tonotify the Clerk of the Commission (by e-mail telephone or inwriting) or any appqrent errors in order that anynecessary corrections may be made (E-mail address pucclerkvermontgov)
Appeal of this decision to the Supreme Court of Vermont must befiledwith the Clerk of the Comnissionwithin thirty days Appeal will not stay the efect of thszlig Order absentfurther order by this Commission orappropriate actiacuteon by the Supreme Court of Vermont Motions for reconsideration or stay if any must be filed withthe Clerk of the Commissionwithin ten days of the date of this deciacutesion and Order
Exhibit 22 VGS RNG Tariff Rate Filing
Exhibit 23 PUC Approval of VGS RNG Rates
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Case No l8-03 13-TF
Petition of Vermont Gas Systems Inc fotapproval of a new tariff implementing theRenewable Natural Gas program
Order entered
OnonRAppnovINc Tiquestrurn
On January 302018 Vermont Gas Systems Inc (VGS) filed a petition for approval of
a new tariff implementing the Renewable Natural Gas (RNG) program approved by the
Vermont Public Utility Commission (Commission) in Docket No 8667 In that Docket the
Commission required VGS to file a tariff implementing the RNG program when it has procured
RNG supply in amounts reasonably estimated to be sufficient to meet customer demandl In
this Order the Commission approves the new tariff marketed under the name EcoGas with an
effective date of bills rendered on and after March 15 2018
VGS states that it has executed an RNG supply contract with deliveries scheduled for
2018 and that two additional contracts are being negotiated for deliveries beginningin2019
VGS is proposing to set its initial RNG adder at$ll749lCcf which represents a five-year
blended rate based on the three RNG supply arrangements VGS intends to account for the
difference between the cost of RNG supply and the RNG adder as a regulatory asset within gas
costs As additional lower-cost supply is added to the portfolio the regulatory asset balance will
be recovered from EcoGas participants with the goal of fully reducing the balance by the end of
five years Accordingly VGS states that the RNG program will be rate-neutral to VGS and its
non-RNG customers
On February 272018 the Vermont Department of Public Service (Department) filed a
letter recommending that the Commission approve the tariff without a hearing or further
investigation The Department states that the tariff filing and proposed accounting treatment
comply with Vermont rate-setting practices policies precedents and statutes
lslaotx
I Docket 8667 Order of 96117 at 13
Page2Case No 18-0313-TF
Based on the foregoing we hereby approve VGSs proposed RNG tariff to be effective
on a bills-rendered basis beginning on March 15 2018 Recovery of any regulatory asset
balance at the end of the fifth year would need to be approved by the Commission in a future
proceeding
So Omnnnn
Case No l8-0313-TF
8r- day of lruacuterLiquestiquest
Page 3
Dated at Montpelier Vermont this 2018
Roisman PueIrc Urlrrv
CoiriexcllriquestlssloN
Cheney
OF VERMONT
Sarah Hofmann
Onncp oF THE CLBRr
Filed huacuteveuroAacute- icirc dollAttest I
Clerk of the Commission
Notice to Readers This decision is subiect to revision oftechnical errors Readers are requested to notify
the Clerk of the Commission (by e-mail telephone or in writing) or qny qpparent errors in order that any
necessary corrections may be made (E-mail address pucclerkvermontgov)Appeal of this decisiacuteon to the Supreme Court of Yermont must be filed with the Clerk of the Commission
within 30 days Appeal will not stay the efect of this Order oslashbsent further order by this Commission or appropriate
action by the Supreme Court of Vermont Motionsthornr reconsideration or stay if any must befiledwith the Clerk ofthe Commissionwithin 28 doslashys of the date of this decision and Order
)))
))))
PUC Case No 18-0313-TF
Eileen SimollardesLauren HammerVermont Gas
85 Swift StreetSouth Burlington VT 05403
June E Tiemey CommissionerVermont Department of Public Service1 12 State StreetMontpelier VT 05620 -2601
Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
Exhibit 31 Accounting Procedures
Exhibit 31 Accounting for VGS Renewable Natural Gas (Ver-9202019)
1 Purchase of RNG Supply
RNG supply purchases are separated into the cost of the commodity and the cost of the renewable attribute The commodity portion is expensed to gas costs in the delivery month while the renewable attribute is booked to an inventory account referenced herein as the ldquoRenewable Inventory Accountrdquo Like VGSrsquo existing storage inventory accounting the Renewable Inventory Account will track both the dollar value of the renewable attribute and the renewable attribute Mcfs Renewable attribute dollar values are record to ldquo16410050 Inventory RNG Storagerdquo while Mcf values are recorded in the gas cost model maintained by accounting In the month VGS purchases the renewable attribute it is accrued in a book model and goes in to 16410150 Inventory RNG Accrued then moves to the 16410050 in a final model the following month for final
RNG may be purchased at different locations and using varying pricing structures While the accounting for RNG does not vary with the purchase location or price the determination of the value of the renewable attribute will vary depending on whether or not the supply pricing expressly values the renewable attribute as an adder or it is embedded in a fixed price Examples of each are shown below The accounting of RNG supply is intended to separate the cost of the renewable attribute from the cost of the commodity The examples below are not all inclusive of what may occur but intended to show the accounting procedures used to separate the renewable attribute from the commodity and specify ownership of each aspect
In all cases the commodity cost portion - which is the total cost of the RNG purchased excluding the renewable attribute - will be expensed in the delivery month as a cost of gas
Example 1 ndash The fixed price of RNG includes both the commodity and the renewable attribute
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The total cost of the RNG supply purchased during the month is calculated by Accounting within the gas cost model as follows
MMBtu Purchased (as validated in step 2) $ MMBtu purchase price (as provided in a supply confirmation provided by gas supply)
4 For purposes of booking the renewable attribute to inventory it is necessary to calculate the RNG cost per Mcf The RNG cost Mcf is calculated using the total cost of RNG supply as calculated in step 3 divided by the Mcf in step 1
5 The renewable attribute price per Mcf is calculated as follows
RNG cost per Mcf as determined in step 4 ndashplus ldquoother componentsrdquo as calculated pursuant to Attachment A ndash minus ldquoAverage Commodity Costrdquo as calculated pursuant to Attachment A The ldquoother componentsrdquo added to the RNG cost per Mcf will vary depending on where the RNG supply was delivered but in each case will be identified in the calculation shown on Attachment A
6 The renewable attribute price per Mcf the total RNG Mcf delivered is recorded in the Inventory RNG Storage account
7 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
Example 2 - RNG purchased at a renewable attribute price plus a daily or monthly index
Where the pricing of RNG specifically separates the commodity from the renewable attribute the renewable attribute price will be what is recorded in the Renewable Inventory Account
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The renewable attribute price per Mcf the total RNG Mcf delivered as determined in step 1 is recorded in the Renewable Inventory Account
4 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
2 Recalculating the RNG Adder
The RNG Adder paid by customers will be recalculated anytime the Natural Gas charge portion of rates changes The Manager of Gas SupplyGas control is responsible for recalculating the RNG Adder The calculation will be verified and approved by the Vice President ndash Regulatory Affairs The determination of the RNG Adder will be pursuant to the methodology shown in Attachment A The Regulatory Department will prepare the amended RNG Adder tariff for filing with the PUC Upon PUC approval of the RNG Adder the Regulatory Department will prepare a memorandum advising Accounting and Gas Supply of the new RNG Adder as approved
3 Customer purchases VGS Renewable Natural Gas
The RNG Adder at the percent selected by the customer will be applied to the entire monthrsquos usage on the customersrsquo next bill For customers utilizing the S-RNG adder the entire volume elected with be on the customersrsquo next bill The S-RNG Adder nor the RNG Adder and percentage selected will not be prorated based on enrollment or termination date
Customers may terminate or modify their RNG selection upon 3 dayrsquos notice to VGS The termination or modification will be effective on the customerrsquos next monthly bill
The customerrsquos usage for the month will be multiplied by the percentage and the approved RNG Adder For customers utilizing the S-RNG adder the volume elected will be multiplied by the approved RNG adder This amount will then be recorded to SAP accounts 4010015-40010021 depending on which rate class the customer is in The RNG Adder is the same regardless of which rate class a customer is in At the end of the month a report is run by billing from the customer information system that shows total usage and which percentage of RNG the customer has signed up for to calculate the number of MCFrsquos of renewable attribute sold during the billing period Billing also provides a report of the volumes sold through the S-RNG Tarriff The Inventory RNG Storage account maintained within the gas cost model by Accounting is reduced by these Mcf The MCFrsquos are then multiplied by the RNG Adder in effect for the billing month and an entry is made to remove that dollar amount from the Inventory RNG Storage account and into the monthly cost of gas The intent of this transaction is to ensure that cost of the renewable attribute is reflected in the cost of gas in the month it is purchased by the customer This results in a matching of the renewable attribute revenue and expense
The RNG Adder revenue and renewable attributes removed from storage will be included in the gas cost deferral calculation However because there is a matching of the renewable attribute revenue and expense the impact on the deferral calculation will be zero
The calculation of unbilled revenues will exclude RNG as a customer can cancel their participation prior to their next bill
In the event Vermont Gas issues a credit to a customer related to the RNG program the value of the renewable attribute credited and the associated Mcf will not be applied to the Renewable Inventory Account
4 Controls
A spreadsheet is maintained by accounting that shows the MCFrsquos and dollar values of the Renewable Inventory Account This is reconciled monthly by the accounting team and will be reviewed by the Manager Gas SupplyGas Control
Accounting will validate that the amount removed from the Renewable Inventory Account matches the RNG Adder revenue Any discrepancies will be reviewed and corrected
A report will be run for each bill cycle that shows any changes to the RNG percentages selected this will include customers opting to withdraw from the RNG program The customer care team will validate any changes against customer confirmation paperwork
5 Renewable Inventory Account Reconciliation and Forecast
The PUC Order approving the RNG program contains provisions describing how RNG supply and demand imbalances will be addressed These provisions and how VGS will track and comply with them are as discussed in this section The PUC Order approving the RNG Program provides that if the available RNG supply during the previous 12 months is less than the amount purchased by customers VGS may use the funds collected to purchase carbon offsets (Finding 13) If carbon offset are not available VGS will contribute the RNG program revenues to the Clean Energy Development Fund or issue prorated credits to affected customers (Finding 15) The Order also provides that in the event RNG supply exceeds customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any remaining RNG attribute inventory amounts through the PGA or through a rate case as part of its cost of service if the s PGA is no longer in effect at that time (Finding 16 as modified) Finding 11 provides that VGS will use a ldquotrue-uprdquo period of up to 12 months in order to balance the difference between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply) Taken together these provisions require VGS to evaluate the imbalance after 12-months and then true-up the imbalance over the next twelve months To provide a forecast of the supplydemand imbalance quarterly the billing area will run a report showing the expected RNG volumes based on current customer commitments by month for the next 12-months Current customers commitments will be calculated based on the previous 12 months of usage multiplied by the RNG percentage currently signed up for The marketing department will provide their forecast of new RNG sales for the next 12-months Both will be provided to the Manager Gas SupplyGas Control The Manager Gas SupplyGas Control will compare the forecasted RNG sales known and expected to RNG supply commitments and provide a 24-month forecast of the supplydemand balance The supplydemand balance will be reviewed at the risk management meeting The strategy for addressing the imbalance consistent with the PUC order will be determined by the risk management committee
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
VGS Renewable Natural Gas Program Manual
Page 10
in procuring supply from these sources or if demand exceeds these planned supplies VGS will seek additional RNG supply in the marketplace
32 VGS RENEWABLE NATURAL GAS SUPPLY CONTRACTS VGS will utilize standard industry or comparable contract vehicles to procure RNG supply with site-specific terms and conditions Given the unique nature of the in-state RNG project the gas supply contract is a 3 way agreement between the producer VGS and an end user Accordingly the form of the contract does not resemble industry standard supply agreements but contains all appropriate business terms The first two contracts signed by VGS utilize a gas utility standard base contract with signed transaction confirmation documents that specify the specific details of each deal These contracts will require the RNG supplier to certify the renewable attributes and that VGS has full and sole ownership of those attributes As required by the PUC Order RNG Suppliers will also be required to allow VGS independent verification of the production and transactions related to VGS supply volumes The specific PUC requirements are found in finding 21 page 7 of Exhibit 21 - VT PUC Approval Order
33 VGS RENEWABLE NATURAL GAS ACCOUNTING Like accounting practices in the renewable electric industry Vermont Gas will have the obligation to match RNG supply volumes with customer RNG purchase volumes over time As discussed in Section 22 the premium for RNG above the cost of conventional natural gas establishes the value of the renewable attribute purchased by the customer These attributes are tracked in a separate inventory account and then matched with actual retail VGS Renewable Natural Gas sales Once these renewable attributes are matched with VGS Renewable Natural Gas sales they are ldquoretiredrdquo and cannot be resold in any manner or used to satisfy another obligation by VGS As provided in the PUC order ldquoVGS will use a ldquotrue-uprdquo period of up to 12 months to balance the difference between RNG attributes sold to customers (demand) and RNG attributes purchased by VGS from suppliers (supply)rdquo This true-up period allows RNG attribute ldquooversupplyrdquo and ldquoundersupplyrdquo to be balanced as described below
In an ldquooversupplyrdquo situation where forecasted RNG attribute purchases exceed the number of RNG attributes that VGS forecasts selling to its customers through the RNG Program VGS will first seek to market the excess RNG and the environmental attributes back through the wholesale supply channels If this oversupply extends beyond the 12-month true-up window VGS may seek PUC permission to flow any remaining RNG attribute inventory amounts through the Purchase Gas Adjustment (ldquoPGArdquo) or through its cost of service if the PGA is no longer in effect at that time
An ldquoundersupplyrdquo situation would occur if customer purchases of RNG attributes exceeded the amount available under VGSrsquo RNG supply contracts in the forward looking 12-month true-up window If the RNG supply purchases are lagging the RNG sales VGS
VGS Renewable Natural Gas Program Manual
Page 11
will true-up or balance this undersupply over the upcoming 12-month period through existing or additional RNG supply purchases
If VGS is unable to eliminate an undersupply imbalance after the 12-month true-up period VGS would need to purchase carbon offsets in the dollar amount equal to VGS Renewable Natural Gas revenues collected associated with the undersupply (See Exhibit 21 Order Finding 13 and 15) Carbon offsets are listed on one of several Carbon Registries such as the American Carbon Registry If carbon offsets are not available VGS has the option to contribute these RNG revenues to the statersquos Clean Energy Development Fund or issue prorated credits to affected customers It should be noted that while purchasing offsets is a tool for VGS it is not the intent of the VGS Renewable Natural Gas Program and if an undersupply situation persisted VGS would likely petition the PUC to modify or suspend the VGS Renewable Natural Gas Program prospectively
VGS will manage the RNG Program to closely match supply and demand and utilizing our RNG wholesale cost mitigation tools to avoid RNG supply challenges
As renewable programs evolve in the energy and natural gas industry Vermont Gas will adjust its accounting procedures to reflect industry standards and revise this manual to reflect any modifications or changes
34 RENEWABLE VERIFICATION VGS is committed to transparency and the integrity of this innovative program is essential to success Toward that end no step is more essential than the verification of the renewability claims of our VGS Renewable Natural Gas supply The PUC reinforced this commitment in the RNG approval order as follows
ldquoVGS will annually verify that the RNG was produced by a renewable gas production facility that VGS is the exclusive owner of any environmental attributes associated with RNG it sells under the program that it acquired the RNG from its transferor and sold it at retail and that the RNG has not been sold twice at any point between RNG production and sale to VGS whether by sales into carbon offset markets or otherwise This verification will be based on certifications of VGSrsquos suppliers and of an independent third party retained by VGS for this purposerdquo
VGS will use an independent third-party to verify the renewable claims for the VGS Renewable Natural Gas supply including the following
bull Confirm the renewable fuel feedstock identificationbull Confirm the product renewable fuel identificationbull Review and confirm the renewable fuel production processbull Review of fuel flow measurement and quality monitoring process and equipment
VGS Renewable Natural Gas Program Manual
Page 12
bull Review of contracts and affidavits governing the transfer of the RNG from theoriginal source to the end user(s)
bull Review of evidence confirming the existence of a physical path (common carrierpipeline) for RNG transfer and distribution to end users
SECTION 3 EXHIBITS
bull Exhibit 31-Accounting Proceduresbull Exhibit 32-Verification from Suppliersbull Exhibit 33-Third Party Verification
VGS Renewable Natural Gas Program Manual
Page 13
Section 4 Marketing
KEY MARKETING STEPS Item Description Owner VGS Renewable Natural Gas Branding
Maintain product and brand integrity Communications
Product Definition Ensuring proper VGS Renewable Natural Gas description in all materials
Communications
External Review Verification of Marketing claims Communications
41 MARKETING PLAN Exhibit 41 is the 2018 version of the Marketing Plan filed with the PUC This document may be updated from time to time as we adjust our marketing strategy
42 MARKETING CLAIMS VGS is committed to making clear and accurate claims about the environmental benefits of VGS Renewable Natural Gas We have enlisted the assistance of a law firm specializing in marketing renewable products to review VGSrsquo marketing materials and claims In addition VGSrsquo annual third-party review of our program will focus on the integrity of our administration of the VGS Renewable Natural Gas program (see Section 54)
43 VGS RENEWABLE NATURAL GAS ldquoPRODUCT CONTENT LABELrdquo The Product Content Label is intended to be prominently displayed on the VGS web site and in correspondence to customers when they enroll in this program
Product Content Label
By participating in the VGS Renewable Natural Gas program you are purchasing the renewable attributes associated with the production of renewable natural gas (ldquoRNGrdquo) which may also be referred to as biogas or bio-methane A unit of VGS Renewable Natural Gas measured in hundred cubic feet (CCF) represents the environmental attribute of 1 CCF of biogas VGS reserves the right to purchase carbon offsets if RNG supply is not available VGS will notify customers if this occurs The Product Content Label is available at httpswwwvermontgascomrenewablenaturalgas
SECTION 4 EXHIBITS
bull Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)bull Exhibit 42 VGS Renewable Natural Gas Trademark
VGS Renewable Natural Gas Program Manual
Page 14
Section 5 Customer Information and Billing
KEY BILLING AND REVENUE STEPS Item Description Owner Billing Enrollment of VGS Renewable Natural Gas
Customers Contact Center
Notice Customer Notice of VGS Renewable Natural Gas Rates
Contact CenterBilling Group
Program Assurance Verification of VGS Renewable Natural Gas program procedures
Billing and Finance
51 CUSTOMER ENROLLMENT AND BILLING PROCESS The VGS Customer Care team will enroll customers and establish the VGS Renewable Natural Gas Adder on customer accounts Customers will be able to order VGS Renewable Natural Gas via VGSrsquo website (preferred method) calling VGS contact center or through the VGS Energy Services team An RNG calculator is available on VGSrsquo website httpswwwvermontgascomrenewablenaturalgasadder-calculator that can assist customers in estimating the costs of VGS Renewable Natural Gas at the various percentage levels based on the customerrsquos gas consumption VGS will inform customers of the current RNG Adder premium when they enroll Customers have two options when enrolling in the RNG program Customers may select their desired percentage of VGS Renewable Natural Gas ( 10 25 50 or 100) or they may allocate a fixed amount of RNG attributes (ldquoS-RNGrdquo) for each month that they are enrolled in Customer Care will then set up the billing on their account VGS will send an order confirmation via email or as a separate mailing (see Exhibit 51) thanking the customer for subscribing to VGS Renewable Natural Gas and informing the customer of the estimated impact on their bill As shown on Exhibit 51 the order confirmation letter will also include the RNG program guidelines These guidelines are discussed in section 53 below
52 VGS RENEWABLE NATURAL GAS WEBSITE AND FREQUENTLY ASKED QUESTIONS The VGS Renewable Natural Gas web page contains general VGS Renewable Natural Gas information an FAQ a VGS Renewable Natural Gas calculator current VGS Renewable Natural Gas Adder and an easy-to-use sign up form
For the most recent Frequently Answered Questions visit httpwwwvermontgascomVGS Renewable Natural Gas
VGS Renewable Natural Gas Program Manual
Page 15
53 VGS RENEWABLE NATURAL GAS PROGRAM GUIDELINES VGS Renewable Natural Gas customers will fall under VGSrsquo General Terms and Conditions outlined in VGSrsquo tariffs and PUC rules (ex Disconnection practices late fees taxes) VGS tariffs can be found at httpwwwvermontgascomaccountrates
VGS will notify VGS Renewable Natural Gas customers of rate changes in advance of implementation on both their individual bills and the Companyrsquos website RNG customers have the ability to cancel or modify their RNG account profile consistent with the tariff
VGSrsquo RNG customers can subscribe to VGS Renewable Natural Gas service with no term commitment and can cancel with three daysrsquo notice The RNG Adder will apply at either the percentage or fixed quantity allocated by the customer to the usage shown on the monthly bill regardless of enrollment or termination date The RNG Adder will not be pro-rated for partial-month usage
VGS customers receiving the low-income rate discount can subscribe to VGS Renewable Natural Gas however the 20 low income discount will not apply to the RNG Adder
Customers currently on a budget program will be encouraged to request a recalculation of their budget plan to adjust for the RNG Adder costs but it is not required
54 VGS RENEWABLE NATURAL GAS PROGRAM ASSURANCE
On an annual basis VGS will conduct a program review to ensure the VGS Renewable Natural Gas program is managed consistent with this manual The VGS Renewable Natural Gas program is a new product for the US natural gas utility industry and as such no industry specific standards exist VGS is working with on a national effort to develop a ldquoGreen-Erdquo certification process for Renewable Natural Gas programs that process is targeted for completion in 2020
SECTION 5 EXHIBITS
bull Exhibit 51 ECIS Customer Confirmation
VGS Renewable Natural Gas Program Manual
Page 16
EXHIBITS
Exhibit 21 VT PUC Approval Order
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Docket No 8667
Petition of Vermont Gas Systems Inc for aRenewable Natural Gas Program andOptional Tariff
)))
Hearing atMontpelier Vermont
September 22016
order entered q leacute I aon
PRBsBNI Andrea C McHugh Hearing Officer
AppeeReNcBs Peter H Zamore Esq
Owen J McClain EsqSheehey Furlong amp Behrn PCfor Vermont Gas Systems Inc
Louise C Porter EsqTimotthorn M Duggan Esq
for the Vermont Department of Public Service
Sandra Levine Esqfor Conservation Law Foundation
Gerald R Tarrant EsqTarcant Gillies amp Richardsonfor Lincoln Renewable Natural Gas LLC
I INrnooucrroN
This case involves a petition filed by Vermont Gas Systems Inc (VGS) with the
Vermont Public Utility Commission (oCommission) I for approval of a Renewable Natural Gas
(RNG) program and optional RNG tariff service for its customers The proposed RNG
progriquestigravem establishes a framework for VGS to offer its customers the option to purchase RNG for
I Pursuant to Section 9 of Act 53 of the 2017 legislafive session the Vermont Public Service Boards name waschanged to the Vermont Public Utility Commission effective July l 2017 For claity activities of the VermontPublic Service Board that occurred before the name change will be referred to in Commission documents as
activities of the Commission unless that would be conntildersing in the specific context
Docket No 8667 Page2
program establishes a framework for VGS to offer its customers the option to purchase RNG for
as a portion of their usage RNG is produced from materials such as agricultural waste manure
municipal waste plant material or compost and is also referred to as bio-methane In this
proposal for decision I recommend that the Commission approve the proposed RNG program
and require VGS to make compliance filings as set forth herein
il PnocnrunnlHrsroRY
On October 232015 VGS figraveled a petition for approval for its RNG program including
prefiled testimony and exhibits of Thomas Murray
On January 192016I held a prehearing conference and on January 252016I issued
an Order establishing a schedule
On February 122016 VGS filed a revised RNG Plan
On March 102016I held a workshop to discuss the proposed program
On March 152016I issued an Order revising the schedule
On March 222016 Conservation Law Foundation (CLF) and Lincoln Renewable
Natural Gas LLC (Lincoln) filed motions to intervene in this proceeding
On April 12016 VGS filed supplemental testimony and exhibits
On April 82016I issued an Order granting CLFs and Lincolns intervention requests
On July 72016 the Vermont Department of Public Service (Department) CLF and
Lincoln filed testimony
On August 82016 Lincoln filed supplemental testimony
A technical hearing was hthornld on September 22016
On September 30 20|6VGS filed a draft proposal for decision supported by the
Department In addition CLF filed a brief on the same date Reply briefs were filed by VGS
and CLF on October 142016
III Posnroxs oF THE PlRrlns
VGS
VGS requests approval of its proposed RNG program for the sale of RNG to customers
on a voluntary basis VGS claims that its proposal contains reasonable provisions to align its
RNG purchases with the amounts sold to its customers appropriate mechanisms to address over-
Docket No 8667 Page 3
or under-supply of RNG and verification requirements to ensure that sales in fact consist of
RNG VGS maintains that the RNG program is an appropriate first step in stimulating RNG
producer supply and customer demand and is oamply supported by Vermonts experience of
measured implementation of electric renewable pricing programs2 VGS argues that the
program is responsive to the Commissions condition in its Order in Docket 79701o develop a
proposal to promote bio-methane project development3
Department of Public Service
Although the Department did not file a brief or reply brief it did present witness
testimony and indicated its support for the draft proposal for decision filed by VGS The
Department recommends that VGS review all proposed RNG supply arrangements with the
Department (in addition to seeking 30 VSA $ 248 approval where required) and suggests that
in the event of an undersupply of RNG VGS obtain carbon offsets in an amount equivalent to
the unused customer contributions The Department recommends that the RNG program be
reviewed at the end of three years at which time the protocol regarding the purchase of offsets
would be revisited
C ons ervation Law Foundation
CLF urges that the Commission reject the RNG program and instead adopt an RNG
content standard similar to the electric renewable portfolio standarda CLF maintains that the
expected annual sales volume is not apace that is consistent with Vermonts legislative and
planning targets for meeting energy needs with renewable energy or for reducing greenhouse gas
emissionss CLF claims that the proposed voluntary tariff falls short of being a program or
strategy that promotes the increased use of RNG resources or supply or fosters bio-methane
projects in Addison county6
2 VGS reply brief aI23 In Docket 7970the Commission considered the petition of VGS for a certificate of public good (CPG) pursuant
to 30 VSA $ 248 authorizing the construction of the Addison Natural Gas Pipeline In an Order issued on
December 232013 the Commission granted the CPG As a condition of approval the Commission required VGSin consultation with the Department to file a petition with the [Commission] proposing a program to promote bio-methane project development Docket 7970 Order of l2l23ll3 at 147
a CLF brief at 12s CLF brief at 36 CLF brief at 4
Docket No 8667 Page 4
Lincoln
Lincoln maintains that itis essential to promote development of agricultural-based bio-
methane supply in VermontT Lincoln states that the Commission is not in a position to
adequately address VGSs proposed RNG program until negotiations for sale of itsoutput
involving VGS and Middlebury College are completes
IV Punrrc CounnnNrs
The Commission received three letters of support for VGSs RNG program On March 10
2016 the Chittenden County Transportation Authority filed comments indicating that it intends to
explore the possibility of utilizing RNG to cover a portion of the energy needs for its fleet of 70
buses On March 182016 Champlain College filed comments noting that it is interested in using
RNG for a portion of its energy needs that are currently met with conventional natural gas On
March 282016 Casella Waste Systems made a filing with the Commission stating its intention
to explore using RNG to meet some of its energy needs for its fleet of vehicles
V trrutrxcs
Based on the evidence of record I hereby report the following findings and
recommendations to the Commission in accordance with 30 VSA $ 8(c)
1 RNG is produced from raw materials such as agricultural waste manure municipal
waste plant material or food waste Decomposition or digestion of these materials produces
raw methane which is then cleaned or upgraded to bio-methane in order to meet the receiving
pipelines gas quality specifications prior to injection into an existing pipeline system Thomas
Murray VGS (Murray) supp pf at3
2 VGS is exploring options to purchase RNG supply from Lincoln and from landfill gas
projects located outside Vermont that would be received through the Trans-CanadaPipeline
(TCPL) system Murray supp pf at 8-9
7 Daniel Smith Lincoln Renewable Natural Gas LLC (Smith) supp pf at L8 On August 152016 Lincoln filed a motion to continue this proceeding for a period of not less than 60 days statingthat the continuance would allow [it] VGS and Middlebury College to complete discussions as to VGSsinvolvement in the RNG supply in Vermont and allow the record in this case to be properly developed VGS and
the Department opposed the request for continuance On August 222016I issued an Order denying Lincolnsrequest and determined that Lincoln did not demonstrate good cause to postpone the technical hearing
Docket No 8667 Page 5
3 Under the program retail customers would voluntarily purchase RNG in amounts equal to
l0oo25yo50o or 100 of their total monthly requirements at specified prices per Ccf as an
adder to other retail charges Customers could terminate RNG purchases upon providing three
days of advance notice to VGS Murray supp pf at l-2 exhs Pet-VGS-l and Pet-VGS-3
4 Intemrptible customers will have the opportunity to participate in the RNG program
through VGSs existing Lock Price Program which currently provides for up to a two-year
commitment Murray supp pf at 5
5 VGS will develop and file for Commission approval a separate tariff for use of RNG as a
transportation fuel This tariff will allow VGS to take advantage of the sale of the associated
Renewable Identification Numbers (ooRINs) When RNG is used as a transportation fuel it is
eligible to receive RINs under the Federal Renewable Fuel Standard RINs can be resold on the
wholesale market and would be used to offset the price of RNG to transportation customers
receiving service under the tariff Joan E White
Department (White) pf at7tr912116 at 62-
63 (White) exh Pet-VGS-5 Response 4
6 VGS will also initiate a review of the RNG program by the Commission Department and
others after three years White pf at9tr912116 (Munay) at24
7 The adder price for each Ccf of RNG will be equal to the average RNG commodity cost to
VGS less the average commodity cost of natural gas VGS will adjust the adder price per Ccf on
a quarterly basis as part of its Purchased Gas Adjustment (PGA) filing Murray supp pf at 4
8 The proposed RNG program will include a tariff that is very similar in concept to the
Green Mountain Power Corporation (GMP) Cow Power tariff However Cow Power is based
on a fixed rate per kWh no matter what the cost of the renewable energy Murray supp pf at llVhite pf at 4
9 VGSs RNG tariff will be calculated quarterly based on actual RNG and natural gas costs
and will provide accurate price signals as to the price differential between natural gas and RNG
White pf at 4
10 Based on a survey conducted by VGS 85 of its customers are willingto pay l0oo
more for a renewable product VGS projects that customers could potentially consume over
500000 Mcf of RNG over the next five years Murray supp pf at 5
DocketNo8667 Page 6
11 VGS will use a true-up period of up to 12 months in order to balance the difference
between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply)
Murray supp pf at 9
12 There is a risk that due to the voluntary nature of the RNG program supply and demand
will be mismatched White pf at41 David G Hill CLF (Hi11) pf at 9
13 If the available RNG supply during the previous 12 months is less than the amount
purchased by VGS customers the RNG program provides that VGS may use funds collected to
purchase carbon offsets from an established carbon registry such as the American Carbon
Registry VGS will purchase an amount of carbon offsets equal to the amount of the revenue
resulting from the undersupply in order to result in a revenue-neutral program At the time of the
three-year implementation review VGS will propose an environmental accounting protocol in
order to quantify the environmental benefits of the program and to evaluate the financial risk of
purchasing carbon offsets in an amount equivalent to the environmental benefits of unsold RNG
due to undersupply Murray supp pf at 6 l0 exh Pet-VGS-s Responses 1
14 The development and standardization of RNG attributes is in its infancy as compared to
the existing markets for the environmental attributes used in the electric industry (renewable
energy credits or (RECs)) Murray supp pf at 12
15 If carbon offsets are not available VGS will contribute the RNG program revenues to the
Clean Energy Development Fund or issue prorated credits to affected customers Exh Pet-
VGS-S Responses 3
16 If RNG supply exceeds customer demand VGS would seek to sell the excess RNG at
wholesale Murray supp pf at 10
17 VGS will provide proposed RNG supply contracts to the Department prior to execution
It will also consult with the Department before making decisions that could dramatically impact
price or the integrity of the RNG program Exh Pet-VGS-S Responses 2 White pf at 5
18 The estimated cost of RNG supply ranges from $l2lMcf to $25lMcf The cost of natural
gas is less than $3Mcf Murray supp pf at 8-9
19 VGS will implement an RNG Quality Assurance Plan establishing a testing and
monitoring process to ensure that RNG injected (via in-state RNG producers) into the VGS
system is pipeline quality and meets the specifications of the TCPL transportation tariff for bio-
methane gas quality Murray supp pf at 14 exh Pet-VGS-4
Docket No 8667 PageT
20 VGS will file an annual report on the RNG program with the Commission and the
Department containing the following information
1 Number of subscribers by customer class
2 Sales volume by customer class
3 Sales revenues
4 Any sales or purchases of carbon offsets
5 Supplyconsumption matching portfolio including any shortfall or excess
supply of RNG
6 True-up schedule for any imbalances
7 RNG supply verification
8 Quantification of the impact of any excess RNG costs flowing through the
PGA if VGS remains under altemative regulation
9 Accounting of any carbon ofszligets or other incentives
10 Status of any contracts for RNG including plans to acquire new supply
contracts
I 1 Revenue from Renewable Identification Number (RlN) sales and impact
on the transport tariff as well as any projections about the RIN market that are
available to VGS and
12 Complete reports and environmental verifications by an independent
verifier
Murray supp pf at 11 exh Pet-VGS-3 White pf at 8-9 tr912116 at23-24 (Munay)
21 Except as described below concerning RlN-eligible RNG VGS will annually verify that
the RNG was produced by a renewable gas production facility that VGS is the exclusive oryner
of any environmental attributes associated with RNG it sells under the program that it acquired
the RNG from its transferor and sold itatretail and that neither the RNG nor any renewable
attribute associated with the RNG has been sold twice at any point between RNG production and
sale to VGS whether by sales into carbon offset markets or otherwise This verification will be
based on certifications by VGSs suppliers and by an independent third party retained by VGS
for this purpose Exh Pet-VGS-3 exh Pet-VGS-s Response 5 White pf at 8
Docket No 8667 Page I
22 For RlN-eligible RNG used as vehicle fuel verification will be addressed in detail in the
future as part of VGSs proposed Renewable Vehicle Fuel Tariff Exh Pet VGS-5 Response 4
rr912116 at 65 (White)
23 There are few natural gas utilities currently offering RNG at retail VGS modeled its
RNG program after the program designed by FortisBC a local distribution company in British
Columbia Canada VGS also had discussions with SoCalGas in Southern California Both of
these companies are leaders in developing RNG offerings and fostering RNG supply resources
Murray supp pf at 7
24 VGS will file with the Commission and Department a marketing plan containing the
following elements
l An evaluation element that includes concrete metrics such as sales
volume targets and enrollment targets
2 Identification of target market segment(s)
3 Development of materials and language for customer-marketing efforts
that explain the RNG program in plain language easily understandable to the
average customer
4 An online bill calculator
5 An implementation plan that identifies specific activities and a timetable
and
6 Abudget
Exh Pet-VGS-5 White pf at 10 Tr912116 at22-23 (Munay)
25 VGS and the Department represent that the RNG progriquestun is responsive to the
Commissions condition in its Order in Docket 7970 rcquiring VGS to develop a proposal to
promote bio-methane project development Murray supp pf al 13-14tr912116 at 63 (Vhite)
26 VGS asserts that the RNG program represents appropriate progress toward the Vermont
Comprehensive Energy Plan (CEP) goal to meet90o of Vermonts energy needs through
renewable sources by 2050 Murray supp pf at 12-13
VI DlscussroN iexclxu Coxclustox
Vith this proposal for decision I recommend that the Commission approve the RNG
program in accordance with the findings described above and based upon the evidence in the
Docket No 8667 Page 9
record In Docket 7970 the Commission required VGS in consultation with the Department to
file a petition with the [Commission] proposing a program to promote bio-methane project
development It is reasonable to expectthat aprogram meant to stimulate development of a
specific energy source would look to stimulate demand for that resource by offering an
opportunity for customers to purchase supply from RNG producers
The RNG program proposed by VGS and supported by the Department seeks to offer
ratepayers the option to purchase renewable energy as part of their individual energy-use
portfolio Furthermore the program includes a provision requiring that VGS develop a detailed
marketing plan that will serve to educate customers on the availability costs and benefits of
such resources which could lead to increased demand for the product
VGS intends to take advantage of the existing market for RINs associated with RNG used
as transportation fuel by proposing a Renewable Vehicle Fuel Tariff As described above in the
Public Comments section the Chittenden County Transportation Authority and Casella Vaste
Systems are interested in exploring the use of RNG to fuel their vehicle fleets which
demonstrates that there is existing customer demand for this product
Unlike the markets relating to RNG supply used for transportation fuel or renewable
electric generation and the associated trading and verification of RECs the RNG market is in its
infancy At this time it would not be appropriate to expect VGS to implement an RNG program
utilizing an RNG content standard similar to the electric renewable portfolio standard as
recommended by CLF because the equivalent standards and processes do not exist However
the RNG program represents a meaningful first step in encouraging customer interest in
purchasing RNG at retail thereby stimulating supply of RNG into the market and is consistent
with the Commissions condition requiring VGS to develop a proposal to promote bio-methane
project development
VGSs RNG program includes appropriate mechanisms for periodic reporting and
verification of program activities as well as an opportunity to comprehensively review the
program after three years of implementation Furthermore determinations regarding recovery of
costs associated with the RNG program will be made in the context of future proceedings
regarding VGSs rates The RNG program should evolve with the RNG markets in the near-term
and over the course of the next several years which will allow progress towards achievement of
Vermonts 2050 CEP renewable energy goals
Docket No 8667 Page 10
Because not all parties to this proceeding have waived their rights under 3 VSA $ 811
to file written comments or present oral argument with respect to this proposal for decision I am
circulating the proposal for decision to the parties for their review and comment
Dated at Montpelier Vermont this rrtl day of QrIltt 2017a0AndreaHearing Officer
Docket No 8667 Page 11
VII Corumrssron Drscussrox
On August 22017 the Department filed a letter stating that it supports the issuance of an
Order by the Commission that adopts the proposal for decision in full
Also on August 22017 VGS filed comments on the proposal for decision requesting
that Finding 16 be modified as follows (additional text in italics) If RNG supply exceeds
customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary
flow any remaining RNG attribute inventory amounts through the PGA or through a rate case ifVGS was under traditional cost of service regulation (subject to [Commission] approval)
VGS asserts that [a]bsent such specific language it is possible that VGS would be unable [to]
defer such costs for future recovery and that removal of that component introduces uncertainty
about the potential procedural mechanisms available for cost recovery in the last resort VGS
states that with the Commissions consideraacutetion of this request it does not request oral argument
No other comments were filed on the proposal for decision
The Hearing Officer recommended that the Commission find that determinations
regarding recovery of costs associated with the RNG program will be made in the context of
future proceedings regarding VGSs rates We agree with this recommendation VGS should
have an opportunity to request rate recovery for excess RNG supply However this proceeding
is not the proper time for such a determination Accordingly Finding 16 is hereby modified as
follows If RNG supply exceeds customer demand VGS would first seek to sell the excess
RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any
remaining RNG attribute inventory amounts through the PGA or through arate case as part of
its cost of service if the PGA is no longer in effect atthat timeWe emphasize the importance of the successful implementation of the RNG program in
helping to meet the States renewable energy policy objectives The annual report on the
implementation of the RNG program will serve as a valuable tool to assess that progress In this
proceeding CLF has raised policy considerations that should serve to guide these future reviews
of the RNG program For example CLF has raised concerns regarding the effectiveness of the
voluntary nature of the program In assessing its program we expect VGS to revisit and report
on the feasibility of incorporating RNG as a portion of its supply mix in the future It is
important for VGSs RNG program to be sustainable and continue to evolve ensuring significant
DocketNo8667 Page 12
contributions toward meeting the States renewable energy goals and reducing the consumption
of fossil fuel Accordingly it is critical that the annual report and the three-year comprehensive
review address not only the effectiveness of the program but also its affordability and the
feasibility of other policy options to advance the production and use of RNG in Vermont
Docket No 8667 Page 13
VIII Onunn
Ir rs Hennsy oRDERED ADJUDGED AND DECRnnn by the Public Utility Commission of the
State of Vermont that
1 The findings conclusions and recommendations of the Hearing Officer are
adopted and the Renewable Natural Gas (RNG) program to be implemented by Vermont Gas
SystemsInc (VGS) is approved
2 When VGS has procured RNG supply in amounts reasonably estimated to be
sufficient for estimated customer demand it shall file a formal tariff including proposed rates for
sale of RNG The tariff shall be reviewedpursuantto the procedures of 30 VSA ccedilccedil225226
and227 and sales under the program shall begin after Commission approval of the tariff
3 VGS shall develop and file for Commission approval a separate Renewable
Vehicle Fuel Tariff to serve customers using RNG as a transportation fuel
4 VGS shall file a marketing plan for the RNG program consistent with the
requirements set forth above within one month of the issuance of this Order
5 VGS shall file an annual report consistent with the requirements set forth above
upon implementation of the RNG program
6 VGS shall file a comprehensive review of the performance of the program with
the Commission and the Department after three years of implementation This review will
include an environmental accounting protocol to quantiff the environmental benefits of the
progrfim
7 VGS shall review proposed RNG supply arrangements with the Department
Docket No 8667
Orprcp oF THE Crnm
Dated at Montpelier Vermont this day of+hb
Z Roisman
Cheney
Page 14
20t7
Puslrc Urrlnv
CovtriquestIssIoN
OP VERMONT
(
)))
)))
Fired otildeeglcL ( JotTAttest c
of the Commission
NorIcE To READERS This decision is subject to revision oftechnical errors Reqders are requested tonotify the Clerk of the Commission (by e-mail telephone or inwriting) or any appqrent errors in order that anynecessary corrections may be made (E-mail address pucclerkvermontgov)
Appeal of this decision to the Supreme Court of Vermont must befiledwith the Clerk of the Comnissionwithin thirty days Appeal will not stay the efect of thszlig Order absentfurther order by this Commission orappropriate actiacuteon by the Supreme Court of Vermont Motions for reconsideration or stay if any must be filed withthe Clerk of the Commissionwithin ten days of the date of this deciacutesion and Order
Exhibit 22 VGS RNG Tariff Rate Filing
Exhibit 23 PUC Approval of VGS RNG Rates
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Case No l8-03 13-TF
Petition of Vermont Gas Systems Inc fotapproval of a new tariff implementing theRenewable Natural Gas program
Order entered
OnonRAppnovINc Tiquestrurn
On January 302018 Vermont Gas Systems Inc (VGS) filed a petition for approval of
a new tariff implementing the Renewable Natural Gas (RNG) program approved by the
Vermont Public Utility Commission (Commission) in Docket No 8667 In that Docket the
Commission required VGS to file a tariff implementing the RNG program when it has procured
RNG supply in amounts reasonably estimated to be sufficient to meet customer demandl In
this Order the Commission approves the new tariff marketed under the name EcoGas with an
effective date of bills rendered on and after March 15 2018
VGS states that it has executed an RNG supply contract with deliveries scheduled for
2018 and that two additional contracts are being negotiated for deliveries beginningin2019
VGS is proposing to set its initial RNG adder at$ll749lCcf which represents a five-year
blended rate based on the three RNG supply arrangements VGS intends to account for the
difference between the cost of RNG supply and the RNG adder as a regulatory asset within gas
costs As additional lower-cost supply is added to the portfolio the regulatory asset balance will
be recovered from EcoGas participants with the goal of fully reducing the balance by the end of
five years Accordingly VGS states that the RNG program will be rate-neutral to VGS and its
non-RNG customers
On February 272018 the Vermont Department of Public Service (Department) filed a
letter recommending that the Commission approve the tariff without a hearing or further
investigation The Department states that the tariff filing and proposed accounting treatment
comply with Vermont rate-setting practices policies precedents and statutes
lslaotx
I Docket 8667 Order of 96117 at 13
Page2Case No 18-0313-TF
Based on the foregoing we hereby approve VGSs proposed RNG tariff to be effective
on a bills-rendered basis beginning on March 15 2018 Recovery of any regulatory asset
balance at the end of the fifth year would need to be approved by the Commission in a future
proceeding
So Omnnnn
Case No l8-0313-TF
8r- day of lruacuterLiquestiquest
Page 3
Dated at Montpelier Vermont this 2018
Roisman PueIrc Urlrrv
CoiriexcllriquestlssloN
Cheney
OF VERMONT
Sarah Hofmann
Onncp oF THE CLBRr
Filed huacuteveuroAacute- icirc dollAttest I
Clerk of the Commission
Notice to Readers This decision is subiect to revision oftechnical errors Readers are requested to notify
the Clerk of the Commission (by e-mail telephone or in writing) or qny qpparent errors in order that any
necessary corrections may be made (E-mail address pucclerkvermontgov)Appeal of this decisiacuteon to the Supreme Court of Yermont must be filed with the Clerk of the Commission
within 30 days Appeal will not stay the efect of this Order oslashbsent further order by this Commission or appropriate
action by the Supreme Court of Vermont Motionsthornr reconsideration or stay if any must befiledwith the Clerk ofthe Commissionwithin 28 doslashys of the date of this decision and Order
)))
))))
PUC Case No 18-0313-TF
Eileen SimollardesLauren HammerVermont Gas
85 Swift StreetSouth Burlington VT 05403
June E Tiemey CommissionerVermont Department of Public Service1 12 State StreetMontpelier VT 05620 -2601
Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
Exhibit 31 Accounting Procedures
Exhibit 31 Accounting for VGS Renewable Natural Gas (Ver-9202019)
1 Purchase of RNG Supply
RNG supply purchases are separated into the cost of the commodity and the cost of the renewable attribute The commodity portion is expensed to gas costs in the delivery month while the renewable attribute is booked to an inventory account referenced herein as the ldquoRenewable Inventory Accountrdquo Like VGSrsquo existing storage inventory accounting the Renewable Inventory Account will track both the dollar value of the renewable attribute and the renewable attribute Mcfs Renewable attribute dollar values are record to ldquo16410050 Inventory RNG Storagerdquo while Mcf values are recorded in the gas cost model maintained by accounting In the month VGS purchases the renewable attribute it is accrued in a book model and goes in to 16410150 Inventory RNG Accrued then moves to the 16410050 in a final model the following month for final
RNG may be purchased at different locations and using varying pricing structures While the accounting for RNG does not vary with the purchase location or price the determination of the value of the renewable attribute will vary depending on whether or not the supply pricing expressly values the renewable attribute as an adder or it is embedded in a fixed price Examples of each are shown below The accounting of RNG supply is intended to separate the cost of the renewable attribute from the cost of the commodity The examples below are not all inclusive of what may occur but intended to show the accounting procedures used to separate the renewable attribute from the commodity and specify ownership of each aspect
In all cases the commodity cost portion - which is the total cost of the RNG purchased excluding the renewable attribute - will be expensed in the delivery month as a cost of gas
Example 1 ndash The fixed price of RNG includes both the commodity and the renewable attribute
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The total cost of the RNG supply purchased during the month is calculated by Accounting within the gas cost model as follows
MMBtu Purchased (as validated in step 2) $ MMBtu purchase price (as provided in a supply confirmation provided by gas supply)
4 For purposes of booking the renewable attribute to inventory it is necessary to calculate the RNG cost per Mcf The RNG cost Mcf is calculated using the total cost of RNG supply as calculated in step 3 divided by the Mcf in step 1
5 The renewable attribute price per Mcf is calculated as follows
RNG cost per Mcf as determined in step 4 ndashplus ldquoother componentsrdquo as calculated pursuant to Attachment A ndash minus ldquoAverage Commodity Costrdquo as calculated pursuant to Attachment A The ldquoother componentsrdquo added to the RNG cost per Mcf will vary depending on where the RNG supply was delivered but in each case will be identified in the calculation shown on Attachment A
6 The renewable attribute price per Mcf the total RNG Mcf delivered is recorded in the Inventory RNG Storage account
7 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
Example 2 - RNG purchased at a renewable attribute price plus a daily or monthly index
Where the pricing of RNG specifically separates the commodity from the renewable attribute the renewable attribute price will be what is recorded in the Renewable Inventory Account
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The renewable attribute price per Mcf the total RNG Mcf delivered as determined in step 1 is recorded in the Renewable Inventory Account
4 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
2 Recalculating the RNG Adder
The RNG Adder paid by customers will be recalculated anytime the Natural Gas charge portion of rates changes The Manager of Gas SupplyGas control is responsible for recalculating the RNG Adder The calculation will be verified and approved by the Vice President ndash Regulatory Affairs The determination of the RNG Adder will be pursuant to the methodology shown in Attachment A The Regulatory Department will prepare the amended RNG Adder tariff for filing with the PUC Upon PUC approval of the RNG Adder the Regulatory Department will prepare a memorandum advising Accounting and Gas Supply of the new RNG Adder as approved
3 Customer purchases VGS Renewable Natural Gas
The RNG Adder at the percent selected by the customer will be applied to the entire monthrsquos usage on the customersrsquo next bill For customers utilizing the S-RNG adder the entire volume elected with be on the customersrsquo next bill The S-RNG Adder nor the RNG Adder and percentage selected will not be prorated based on enrollment or termination date
Customers may terminate or modify their RNG selection upon 3 dayrsquos notice to VGS The termination or modification will be effective on the customerrsquos next monthly bill
The customerrsquos usage for the month will be multiplied by the percentage and the approved RNG Adder For customers utilizing the S-RNG adder the volume elected will be multiplied by the approved RNG adder This amount will then be recorded to SAP accounts 4010015-40010021 depending on which rate class the customer is in The RNG Adder is the same regardless of which rate class a customer is in At the end of the month a report is run by billing from the customer information system that shows total usage and which percentage of RNG the customer has signed up for to calculate the number of MCFrsquos of renewable attribute sold during the billing period Billing also provides a report of the volumes sold through the S-RNG Tarriff The Inventory RNG Storage account maintained within the gas cost model by Accounting is reduced by these Mcf The MCFrsquos are then multiplied by the RNG Adder in effect for the billing month and an entry is made to remove that dollar amount from the Inventory RNG Storage account and into the monthly cost of gas The intent of this transaction is to ensure that cost of the renewable attribute is reflected in the cost of gas in the month it is purchased by the customer This results in a matching of the renewable attribute revenue and expense
The RNG Adder revenue and renewable attributes removed from storage will be included in the gas cost deferral calculation However because there is a matching of the renewable attribute revenue and expense the impact on the deferral calculation will be zero
The calculation of unbilled revenues will exclude RNG as a customer can cancel their participation prior to their next bill
In the event Vermont Gas issues a credit to a customer related to the RNG program the value of the renewable attribute credited and the associated Mcf will not be applied to the Renewable Inventory Account
4 Controls
A spreadsheet is maintained by accounting that shows the MCFrsquos and dollar values of the Renewable Inventory Account This is reconciled monthly by the accounting team and will be reviewed by the Manager Gas SupplyGas Control
Accounting will validate that the amount removed from the Renewable Inventory Account matches the RNG Adder revenue Any discrepancies will be reviewed and corrected
A report will be run for each bill cycle that shows any changes to the RNG percentages selected this will include customers opting to withdraw from the RNG program The customer care team will validate any changes against customer confirmation paperwork
5 Renewable Inventory Account Reconciliation and Forecast
The PUC Order approving the RNG program contains provisions describing how RNG supply and demand imbalances will be addressed These provisions and how VGS will track and comply with them are as discussed in this section The PUC Order approving the RNG Program provides that if the available RNG supply during the previous 12 months is less than the amount purchased by customers VGS may use the funds collected to purchase carbon offsets (Finding 13) If carbon offset are not available VGS will contribute the RNG program revenues to the Clean Energy Development Fund or issue prorated credits to affected customers (Finding 15) The Order also provides that in the event RNG supply exceeds customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any remaining RNG attribute inventory amounts through the PGA or through a rate case as part of its cost of service if the s PGA is no longer in effect at that time (Finding 16 as modified) Finding 11 provides that VGS will use a ldquotrue-uprdquo period of up to 12 months in order to balance the difference between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply) Taken together these provisions require VGS to evaluate the imbalance after 12-months and then true-up the imbalance over the next twelve months To provide a forecast of the supplydemand imbalance quarterly the billing area will run a report showing the expected RNG volumes based on current customer commitments by month for the next 12-months Current customers commitments will be calculated based on the previous 12 months of usage multiplied by the RNG percentage currently signed up for The marketing department will provide their forecast of new RNG sales for the next 12-months Both will be provided to the Manager Gas SupplyGas Control The Manager Gas SupplyGas Control will compare the forecasted RNG sales known and expected to RNG supply commitments and provide a 24-month forecast of the supplydemand balance The supplydemand balance will be reviewed at the risk management meeting The strategy for addressing the imbalance consistent with the PUC order will be determined by the risk management committee
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
VGS Renewable Natural Gas Program Manual
Page 11
will true-up or balance this undersupply over the upcoming 12-month period through existing or additional RNG supply purchases
If VGS is unable to eliminate an undersupply imbalance after the 12-month true-up period VGS would need to purchase carbon offsets in the dollar amount equal to VGS Renewable Natural Gas revenues collected associated with the undersupply (See Exhibit 21 Order Finding 13 and 15) Carbon offsets are listed on one of several Carbon Registries such as the American Carbon Registry If carbon offsets are not available VGS has the option to contribute these RNG revenues to the statersquos Clean Energy Development Fund or issue prorated credits to affected customers It should be noted that while purchasing offsets is a tool for VGS it is not the intent of the VGS Renewable Natural Gas Program and if an undersupply situation persisted VGS would likely petition the PUC to modify or suspend the VGS Renewable Natural Gas Program prospectively
VGS will manage the RNG Program to closely match supply and demand and utilizing our RNG wholesale cost mitigation tools to avoid RNG supply challenges
As renewable programs evolve in the energy and natural gas industry Vermont Gas will adjust its accounting procedures to reflect industry standards and revise this manual to reflect any modifications or changes
34 RENEWABLE VERIFICATION VGS is committed to transparency and the integrity of this innovative program is essential to success Toward that end no step is more essential than the verification of the renewability claims of our VGS Renewable Natural Gas supply The PUC reinforced this commitment in the RNG approval order as follows
ldquoVGS will annually verify that the RNG was produced by a renewable gas production facility that VGS is the exclusive owner of any environmental attributes associated with RNG it sells under the program that it acquired the RNG from its transferor and sold it at retail and that the RNG has not been sold twice at any point between RNG production and sale to VGS whether by sales into carbon offset markets or otherwise This verification will be based on certifications of VGSrsquos suppliers and of an independent third party retained by VGS for this purposerdquo
VGS will use an independent third-party to verify the renewable claims for the VGS Renewable Natural Gas supply including the following
bull Confirm the renewable fuel feedstock identificationbull Confirm the product renewable fuel identificationbull Review and confirm the renewable fuel production processbull Review of fuel flow measurement and quality monitoring process and equipment
VGS Renewable Natural Gas Program Manual
Page 12
bull Review of contracts and affidavits governing the transfer of the RNG from theoriginal source to the end user(s)
bull Review of evidence confirming the existence of a physical path (common carrierpipeline) for RNG transfer and distribution to end users
SECTION 3 EXHIBITS
bull Exhibit 31-Accounting Proceduresbull Exhibit 32-Verification from Suppliersbull Exhibit 33-Third Party Verification
VGS Renewable Natural Gas Program Manual
Page 13
Section 4 Marketing
KEY MARKETING STEPS Item Description Owner VGS Renewable Natural Gas Branding
Maintain product and brand integrity Communications
Product Definition Ensuring proper VGS Renewable Natural Gas description in all materials
Communications
External Review Verification of Marketing claims Communications
41 MARKETING PLAN Exhibit 41 is the 2018 version of the Marketing Plan filed with the PUC This document may be updated from time to time as we adjust our marketing strategy
42 MARKETING CLAIMS VGS is committed to making clear and accurate claims about the environmental benefits of VGS Renewable Natural Gas We have enlisted the assistance of a law firm specializing in marketing renewable products to review VGSrsquo marketing materials and claims In addition VGSrsquo annual third-party review of our program will focus on the integrity of our administration of the VGS Renewable Natural Gas program (see Section 54)
43 VGS RENEWABLE NATURAL GAS ldquoPRODUCT CONTENT LABELrdquo The Product Content Label is intended to be prominently displayed on the VGS web site and in correspondence to customers when they enroll in this program
Product Content Label
By participating in the VGS Renewable Natural Gas program you are purchasing the renewable attributes associated with the production of renewable natural gas (ldquoRNGrdquo) which may also be referred to as biogas or bio-methane A unit of VGS Renewable Natural Gas measured in hundred cubic feet (CCF) represents the environmental attribute of 1 CCF of biogas VGS reserves the right to purchase carbon offsets if RNG supply is not available VGS will notify customers if this occurs The Product Content Label is available at httpswwwvermontgascomrenewablenaturalgas
SECTION 4 EXHIBITS
bull Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)bull Exhibit 42 VGS Renewable Natural Gas Trademark
VGS Renewable Natural Gas Program Manual
Page 14
Section 5 Customer Information and Billing
KEY BILLING AND REVENUE STEPS Item Description Owner Billing Enrollment of VGS Renewable Natural Gas
Customers Contact Center
Notice Customer Notice of VGS Renewable Natural Gas Rates
Contact CenterBilling Group
Program Assurance Verification of VGS Renewable Natural Gas program procedures
Billing and Finance
51 CUSTOMER ENROLLMENT AND BILLING PROCESS The VGS Customer Care team will enroll customers and establish the VGS Renewable Natural Gas Adder on customer accounts Customers will be able to order VGS Renewable Natural Gas via VGSrsquo website (preferred method) calling VGS contact center or through the VGS Energy Services team An RNG calculator is available on VGSrsquo website httpswwwvermontgascomrenewablenaturalgasadder-calculator that can assist customers in estimating the costs of VGS Renewable Natural Gas at the various percentage levels based on the customerrsquos gas consumption VGS will inform customers of the current RNG Adder premium when they enroll Customers have two options when enrolling in the RNG program Customers may select their desired percentage of VGS Renewable Natural Gas ( 10 25 50 or 100) or they may allocate a fixed amount of RNG attributes (ldquoS-RNGrdquo) for each month that they are enrolled in Customer Care will then set up the billing on their account VGS will send an order confirmation via email or as a separate mailing (see Exhibit 51) thanking the customer for subscribing to VGS Renewable Natural Gas and informing the customer of the estimated impact on their bill As shown on Exhibit 51 the order confirmation letter will also include the RNG program guidelines These guidelines are discussed in section 53 below
52 VGS RENEWABLE NATURAL GAS WEBSITE AND FREQUENTLY ASKED QUESTIONS The VGS Renewable Natural Gas web page contains general VGS Renewable Natural Gas information an FAQ a VGS Renewable Natural Gas calculator current VGS Renewable Natural Gas Adder and an easy-to-use sign up form
For the most recent Frequently Answered Questions visit httpwwwvermontgascomVGS Renewable Natural Gas
VGS Renewable Natural Gas Program Manual
Page 15
53 VGS RENEWABLE NATURAL GAS PROGRAM GUIDELINES VGS Renewable Natural Gas customers will fall under VGSrsquo General Terms and Conditions outlined in VGSrsquo tariffs and PUC rules (ex Disconnection practices late fees taxes) VGS tariffs can be found at httpwwwvermontgascomaccountrates
VGS will notify VGS Renewable Natural Gas customers of rate changes in advance of implementation on both their individual bills and the Companyrsquos website RNG customers have the ability to cancel or modify their RNG account profile consistent with the tariff
VGSrsquo RNG customers can subscribe to VGS Renewable Natural Gas service with no term commitment and can cancel with three daysrsquo notice The RNG Adder will apply at either the percentage or fixed quantity allocated by the customer to the usage shown on the monthly bill regardless of enrollment or termination date The RNG Adder will not be pro-rated for partial-month usage
VGS customers receiving the low-income rate discount can subscribe to VGS Renewable Natural Gas however the 20 low income discount will not apply to the RNG Adder
Customers currently on a budget program will be encouraged to request a recalculation of their budget plan to adjust for the RNG Adder costs but it is not required
54 VGS RENEWABLE NATURAL GAS PROGRAM ASSURANCE
On an annual basis VGS will conduct a program review to ensure the VGS Renewable Natural Gas program is managed consistent with this manual The VGS Renewable Natural Gas program is a new product for the US natural gas utility industry and as such no industry specific standards exist VGS is working with on a national effort to develop a ldquoGreen-Erdquo certification process for Renewable Natural Gas programs that process is targeted for completion in 2020
SECTION 5 EXHIBITS
bull Exhibit 51 ECIS Customer Confirmation
VGS Renewable Natural Gas Program Manual
Page 16
EXHIBITS
Exhibit 21 VT PUC Approval Order
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Docket No 8667
Petition of Vermont Gas Systems Inc for aRenewable Natural Gas Program andOptional Tariff
)))
Hearing atMontpelier Vermont
September 22016
order entered q leacute I aon
PRBsBNI Andrea C McHugh Hearing Officer
AppeeReNcBs Peter H Zamore Esq
Owen J McClain EsqSheehey Furlong amp Behrn PCfor Vermont Gas Systems Inc
Louise C Porter EsqTimotthorn M Duggan Esq
for the Vermont Department of Public Service
Sandra Levine Esqfor Conservation Law Foundation
Gerald R Tarrant EsqTarcant Gillies amp Richardsonfor Lincoln Renewable Natural Gas LLC
I INrnooucrroN
This case involves a petition filed by Vermont Gas Systems Inc (VGS) with the
Vermont Public Utility Commission (oCommission) I for approval of a Renewable Natural Gas
(RNG) program and optional RNG tariff service for its customers The proposed RNG
progriquestigravem establishes a framework for VGS to offer its customers the option to purchase RNG for
I Pursuant to Section 9 of Act 53 of the 2017 legislafive session the Vermont Public Service Boards name waschanged to the Vermont Public Utility Commission effective July l 2017 For claity activities of the VermontPublic Service Board that occurred before the name change will be referred to in Commission documents as
activities of the Commission unless that would be conntildersing in the specific context
Docket No 8667 Page2
program establishes a framework for VGS to offer its customers the option to purchase RNG for
as a portion of their usage RNG is produced from materials such as agricultural waste manure
municipal waste plant material or compost and is also referred to as bio-methane In this
proposal for decision I recommend that the Commission approve the proposed RNG program
and require VGS to make compliance filings as set forth herein
il PnocnrunnlHrsroRY
On October 232015 VGS figraveled a petition for approval for its RNG program including
prefiled testimony and exhibits of Thomas Murray
On January 192016I held a prehearing conference and on January 252016I issued
an Order establishing a schedule
On February 122016 VGS filed a revised RNG Plan
On March 102016I held a workshop to discuss the proposed program
On March 152016I issued an Order revising the schedule
On March 222016 Conservation Law Foundation (CLF) and Lincoln Renewable
Natural Gas LLC (Lincoln) filed motions to intervene in this proceeding
On April 12016 VGS filed supplemental testimony and exhibits
On April 82016I issued an Order granting CLFs and Lincolns intervention requests
On July 72016 the Vermont Department of Public Service (Department) CLF and
Lincoln filed testimony
On August 82016 Lincoln filed supplemental testimony
A technical hearing was hthornld on September 22016
On September 30 20|6VGS filed a draft proposal for decision supported by the
Department In addition CLF filed a brief on the same date Reply briefs were filed by VGS
and CLF on October 142016
III Posnroxs oF THE PlRrlns
VGS
VGS requests approval of its proposed RNG program for the sale of RNG to customers
on a voluntary basis VGS claims that its proposal contains reasonable provisions to align its
RNG purchases with the amounts sold to its customers appropriate mechanisms to address over-
Docket No 8667 Page 3
or under-supply of RNG and verification requirements to ensure that sales in fact consist of
RNG VGS maintains that the RNG program is an appropriate first step in stimulating RNG
producer supply and customer demand and is oamply supported by Vermonts experience of
measured implementation of electric renewable pricing programs2 VGS argues that the
program is responsive to the Commissions condition in its Order in Docket 79701o develop a
proposal to promote bio-methane project development3
Department of Public Service
Although the Department did not file a brief or reply brief it did present witness
testimony and indicated its support for the draft proposal for decision filed by VGS The
Department recommends that VGS review all proposed RNG supply arrangements with the
Department (in addition to seeking 30 VSA $ 248 approval where required) and suggests that
in the event of an undersupply of RNG VGS obtain carbon offsets in an amount equivalent to
the unused customer contributions The Department recommends that the RNG program be
reviewed at the end of three years at which time the protocol regarding the purchase of offsets
would be revisited
C ons ervation Law Foundation
CLF urges that the Commission reject the RNG program and instead adopt an RNG
content standard similar to the electric renewable portfolio standarda CLF maintains that the
expected annual sales volume is not apace that is consistent with Vermonts legislative and
planning targets for meeting energy needs with renewable energy or for reducing greenhouse gas
emissionss CLF claims that the proposed voluntary tariff falls short of being a program or
strategy that promotes the increased use of RNG resources or supply or fosters bio-methane
projects in Addison county6
2 VGS reply brief aI23 In Docket 7970the Commission considered the petition of VGS for a certificate of public good (CPG) pursuant
to 30 VSA $ 248 authorizing the construction of the Addison Natural Gas Pipeline In an Order issued on
December 232013 the Commission granted the CPG As a condition of approval the Commission required VGSin consultation with the Department to file a petition with the [Commission] proposing a program to promote bio-methane project development Docket 7970 Order of l2l23ll3 at 147
a CLF brief at 12s CLF brief at 36 CLF brief at 4
Docket No 8667 Page 4
Lincoln
Lincoln maintains that itis essential to promote development of agricultural-based bio-
methane supply in VermontT Lincoln states that the Commission is not in a position to
adequately address VGSs proposed RNG program until negotiations for sale of itsoutput
involving VGS and Middlebury College are completes
IV Punrrc CounnnNrs
The Commission received three letters of support for VGSs RNG program On March 10
2016 the Chittenden County Transportation Authority filed comments indicating that it intends to
explore the possibility of utilizing RNG to cover a portion of the energy needs for its fleet of 70
buses On March 182016 Champlain College filed comments noting that it is interested in using
RNG for a portion of its energy needs that are currently met with conventional natural gas On
March 282016 Casella Waste Systems made a filing with the Commission stating its intention
to explore using RNG to meet some of its energy needs for its fleet of vehicles
V trrutrxcs
Based on the evidence of record I hereby report the following findings and
recommendations to the Commission in accordance with 30 VSA $ 8(c)
1 RNG is produced from raw materials such as agricultural waste manure municipal
waste plant material or food waste Decomposition or digestion of these materials produces
raw methane which is then cleaned or upgraded to bio-methane in order to meet the receiving
pipelines gas quality specifications prior to injection into an existing pipeline system Thomas
Murray VGS (Murray) supp pf at3
2 VGS is exploring options to purchase RNG supply from Lincoln and from landfill gas
projects located outside Vermont that would be received through the Trans-CanadaPipeline
(TCPL) system Murray supp pf at 8-9
7 Daniel Smith Lincoln Renewable Natural Gas LLC (Smith) supp pf at L8 On August 152016 Lincoln filed a motion to continue this proceeding for a period of not less than 60 days statingthat the continuance would allow [it] VGS and Middlebury College to complete discussions as to VGSsinvolvement in the RNG supply in Vermont and allow the record in this case to be properly developed VGS and
the Department opposed the request for continuance On August 222016I issued an Order denying Lincolnsrequest and determined that Lincoln did not demonstrate good cause to postpone the technical hearing
Docket No 8667 Page 5
3 Under the program retail customers would voluntarily purchase RNG in amounts equal to
l0oo25yo50o or 100 of their total monthly requirements at specified prices per Ccf as an
adder to other retail charges Customers could terminate RNG purchases upon providing three
days of advance notice to VGS Murray supp pf at l-2 exhs Pet-VGS-l and Pet-VGS-3
4 Intemrptible customers will have the opportunity to participate in the RNG program
through VGSs existing Lock Price Program which currently provides for up to a two-year
commitment Murray supp pf at 5
5 VGS will develop and file for Commission approval a separate tariff for use of RNG as a
transportation fuel This tariff will allow VGS to take advantage of the sale of the associated
Renewable Identification Numbers (ooRINs) When RNG is used as a transportation fuel it is
eligible to receive RINs under the Federal Renewable Fuel Standard RINs can be resold on the
wholesale market and would be used to offset the price of RNG to transportation customers
receiving service under the tariff Joan E White
Department (White) pf at7tr912116 at 62-
63 (White) exh Pet-VGS-5 Response 4
6 VGS will also initiate a review of the RNG program by the Commission Department and
others after three years White pf at9tr912116 (Munay) at24
7 The adder price for each Ccf of RNG will be equal to the average RNG commodity cost to
VGS less the average commodity cost of natural gas VGS will adjust the adder price per Ccf on
a quarterly basis as part of its Purchased Gas Adjustment (PGA) filing Murray supp pf at 4
8 The proposed RNG program will include a tariff that is very similar in concept to the
Green Mountain Power Corporation (GMP) Cow Power tariff However Cow Power is based
on a fixed rate per kWh no matter what the cost of the renewable energy Murray supp pf at llVhite pf at 4
9 VGSs RNG tariff will be calculated quarterly based on actual RNG and natural gas costs
and will provide accurate price signals as to the price differential between natural gas and RNG
White pf at 4
10 Based on a survey conducted by VGS 85 of its customers are willingto pay l0oo
more for a renewable product VGS projects that customers could potentially consume over
500000 Mcf of RNG over the next five years Murray supp pf at 5
DocketNo8667 Page 6
11 VGS will use a true-up period of up to 12 months in order to balance the difference
between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply)
Murray supp pf at 9
12 There is a risk that due to the voluntary nature of the RNG program supply and demand
will be mismatched White pf at41 David G Hill CLF (Hi11) pf at 9
13 If the available RNG supply during the previous 12 months is less than the amount
purchased by VGS customers the RNG program provides that VGS may use funds collected to
purchase carbon offsets from an established carbon registry such as the American Carbon
Registry VGS will purchase an amount of carbon offsets equal to the amount of the revenue
resulting from the undersupply in order to result in a revenue-neutral program At the time of the
three-year implementation review VGS will propose an environmental accounting protocol in
order to quantify the environmental benefits of the program and to evaluate the financial risk of
purchasing carbon offsets in an amount equivalent to the environmental benefits of unsold RNG
due to undersupply Murray supp pf at 6 l0 exh Pet-VGS-s Responses 1
14 The development and standardization of RNG attributes is in its infancy as compared to
the existing markets for the environmental attributes used in the electric industry (renewable
energy credits or (RECs)) Murray supp pf at 12
15 If carbon offsets are not available VGS will contribute the RNG program revenues to the
Clean Energy Development Fund or issue prorated credits to affected customers Exh Pet-
VGS-S Responses 3
16 If RNG supply exceeds customer demand VGS would seek to sell the excess RNG at
wholesale Murray supp pf at 10
17 VGS will provide proposed RNG supply contracts to the Department prior to execution
It will also consult with the Department before making decisions that could dramatically impact
price or the integrity of the RNG program Exh Pet-VGS-S Responses 2 White pf at 5
18 The estimated cost of RNG supply ranges from $l2lMcf to $25lMcf The cost of natural
gas is less than $3Mcf Murray supp pf at 8-9
19 VGS will implement an RNG Quality Assurance Plan establishing a testing and
monitoring process to ensure that RNG injected (via in-state RNG producers) into the VGS
system is pipeline quality and meets the specifications of the TCPL transportation tariff for bio-
methane gas quality Murray supp pf at 14 exh Pet-VGS-4
Docket No 8667 PageT
20 VGS will file an annual report on the RNG program with the Commission and the
Department containing the following information
1 Number of subscribers by customer class
2 Sales volume by customer class
3 Sales revenues
4 Any sales or purchases of carbon offsets
5 Supplyconsumption matching portfolio including any shortfall or excess
supply of RNG
6 True-up schedule for any imbalances
7 RNG supply verification
8 Quantification of the impact of any excess RNG costs flowing through the
PGA if VGS remains under altemative regulation
9 Accounting of any carbon ofszligets or other incentives
10 Status of any contracts for RNG including plans to acquire new supply
contracts
I 1 Revenue from Renewable Identification Number (RlN) sales and impact
on the transport tariff as well as any projections about the RIN market that are
available to VGS and
12 Complete reports and environmental verifications by an independent
verifier
Murray supp pf at 11 exh Pet-VGS-3 White pf at 8-9 tr912116 at23-24 (Munay)
21 Except as described below concerning RlN-eligible RNG VGS will annually verify that
the RNG was produced by a renewable gas production facility that VGS is the exclusive oryner
of any environmental attributes associated with RNG it sells under the program that it acquired
the RNG from its transferor and sold itatretail and that neither the RNG nor any renewable
attribute associated with the RNG has been sold twice at any point between RNG production and
sale to VGS whether by sales into carbon offset markets or otherwise This verification will be
based on certifications by VGSs suppliers and by an independent third party retained by VGS
for this purpose Exh Pet-VGS-3 exh Pet-VGS-s Response 5 White pf at 8
Docket No 8667 Page I
22 For RlN-eligible RNG used as vehicle fuel verification will be addressed in detail in the
future as part of VGSs proposed Renewable Vehicle Fuel Tariff Exh Pet VGS-5 Response 4
rr912116 at 65 (White)
23 There are few natural gas utilities currently offering RNG at retail VGS modeled its
RNG program after the program designed by FortisBC a local distribution company in British
Columbia Canada VGS also had discussions with SoCalGas in Southern California Both of
these companies are leaders in developing RNG offerings and fostering RNG supply resources
Murray supp pf at 7
24 VGS will file with the Commission and Department a marketing plan containing the
following elements
l An evaluation element that includes concrete metrics such as sales
volume targets and enrollment targets
2 Identification of target market segment(s)
3 Development of materials and language for customer-marketing efforts
that explain the RNG program in plain language easily understandable to the
average customer
4 An online bill calculator
5 An implementation plan that identifies specific activities and a timetable
and
6 Abudget
Exh Pet-VGS-5 White pf at 10 Tr912116 at22-23 (Munay)
25 VGS and the Department represent that the RNG progriquestun is responsive to the
Commissions condition in its Order in Docket 7970 rcquiring VGS to develop a proposal to
promote bio-methane project development Murray supp pf al 13-14tr912116 at 63 (Vhite)
26 VGS asserts that the RNG program represents appropriate progress toward the Vermont
Comprehensive Energy Plan (CEP) goal to meet90o of Vermonts energy needs through
renewable sources by 2050 Murray supp pf at 12-13
VI DlscussroN iexclxu Coxclustox
Vith this proposal for decision I recommend that the Commission approve the RNG
program in accordance with the findings described above and based upon the evidence in the
Docket No 8667 Page 9
record In Docket 7970 the Commission required VGS in consultation with the Department to
file a petition with the [Commission] proposing a program to promote bio-methane project
development It is reasonable to expectthat aprogram meant to stimulate development of a
specific energy source would look to stimulate demand for that resource by offering an
opportunity for customers to purchase supply from RNG producers
The RNG program proposed by VGS and supported by the Department seeks to offer
ratepayers the option to purchase renewable energy as part of their individual energy-use
portfolio Furthermore the program includes a provision requiring that VGS develop a detailed
marketing plan that will serve to educate customers on the availability costs and benefits of
such resources which could lead to increased demand for the product
VGS intends to take advantage of the existing market for RINs associated with RNG used
as transportation fuel by proposing a Renewable Vehicle Fuel Tariff As described above in the
Public Comments section the Chittenden County Transportation Authority and Casella Vaste
Systems are interested in exploring the use of RNG to fuel their vehicle fleets which
demonstrates that there is existing customer demand for this product
Unlike the markets relating to RNG supply used for transportation fuel or renewable
electric generation and the associated trading and verification of RECs the RNG market is in its
infancy At this time it would not be appropriate to expect VGS to implement an RNG program
utilizing an RNG content standard similar to the electric renewable portfolio standard as
recommended by CLF because the equivalent standards and processes do not exist However
the RNG program represents a meaningful first step in encouraging customer interest in
purchasing RNG at retail thereby stimulating supply of RNG into the market and is consistent
with the Commissions condition requiring VGS to develop a proposal to promote bio-methane
project development
VGSs RNG program includes appropriate mechanisms for periodic reporting and
verification of program activities as well as an opportunity to comprehensively review the
program after three years of implementation Furthermore determinations regarding recovery of
costs associated with the RNG program will be made in the context of future proceedings
regarding VGSs rates The RNG program should evolve with the RNG markets in the near-term
and over the course of the next several years which will allow progress towards achievement of
Vermonts 2050 CEP renewable energy goals
Docket No 8667 Page 10
Because not all parties to this proceeding have waived their rights under 3 VSA $ 811
to file written comments or present oral argument with respect to this proposal for decision I am
circulating the proposal for decision to the parties for their review and comment
Dated at Montpelier Vermont this rrtl day of QrIltt 2017a0AndreaHearing Officer
Docket No 8667 Page 11
VII Corumrssron Drscussrox
On August 22017 the Department filed a letter stating that it supports the issuance of an
Order by the Commission that adopts the proposal for decision in full
Also on August 22017 VGS filed comments on the proposal for decision requesting
that Finding 16 be modified as follows (additional text in italics) If RNG supply exceeds
customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary
flow any remaining RNG attribute inventory amounts through the PGA or through a rate case ifVGS was under traditional cost of service regulation (subject to [Commission] approval)
VGS asserts that [a]bsent such specific language it is possible that VGS would be unable [to]
defer such costs for future recovery and that removal of that component introduces uncertainty
about the potential procedural mechanisms available for cost recovery in the last resort VGS
states that with the Commissions consideraacutetion of this request it does not request oral argument
No other comments were filed on the proposal for decision
The Hearing Officer recommended that the Commission find that determinations
regarding recovery of costs associated with the RNG program will be made in the context of
future proceedings regarding VGSs rates We agree with this recommendation VGS should
have an opportunity to request rate recovery for excess RNG supply However this proceeding
is not the proper time for such a determination Accordingly Finding 16 is hereby modified as
follows If RNG supply exceeds customer demand VGS would first seek to sell the excess
RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any
remaining RNG attribute inventory amounts through the PGA or through arate case as part of
its cost of service if the PGA is no longer in effect atthat timeWe emphasize the importance of the successful implementation of the RNG program in
helping to meet the States renewable energy policy objectives The annual report on the
implementation of the RNG program will serve as a valuable tool to assess that progress In this
proceeding CLF has raised policy considerations that should serve to guide these future reviews
of the RNG program For example CLF has raised concerns regarding the effectiveness of the
voluntary nature of the program In assessing its program we expect VGS to revisit and report
on the feasibility of incorporating RNG as a portion of its supply mix in the future It is
important for VGSs RNG program to be sustainable and continue to evolve ensuring significant
DocketNo8667 Page 12
contributions toward meeting the States renewable energy goals and reducing the consumption
of fossil fuel Accordingly it is critical that the annual report and the three-year comprehensive
review address not only the effectiveness of the program but also its affordability and the
feasibility of other policy options to advance the production and use of RNG in Vermont
Docket No 8667 Page 13
VIII Onunn
Ir rs Hennsy oRDERED ADJUDGED AND DECRnnn by the Public Utility Commission of the
State of Vermont that
1 The findings conclusions and recommendations of the Hearing Officer are
adopted and the Renewable Natural Gas (RNG) program to be implemented by Vermont Gas
SystemsInc (VGS) is approved
2 When VGS has procured RNG supply in amounts reasonably estimated to be
sufficient for estimated customer demand it shall file a formal tariff including proposed rates for
sale of RNG The tariff shall be reviewedpursuantto the procedures of 30 VSA ccedilccedil225226
and227 and sales under the program shall begin after Commission approval of the tariff
3 VGS shall develop and file for Commission approval a separate Renewable
Vehicle Fuel Tariff to serve customers using RNG as a transportation fuel
4 VGS shall file a marketing plan for the RNG program consistent with the
requirements set forth above within one month of the issuance of this Order
5 VGS shall file an annual report consistent with the requirements set forth above
upon implementation of the RNG program
6 VGS shall file a comprehensive review of the performance of the program with
the Commission and the Department after three years of implementation This review will
include an environmental accounting protocol to quantiff the environmental benefits of the
progrfim
7 VGS shall review proposed RNG supply arrangements with the Department
Docket No 8667
Orprcp oF THE Crnm
Dated at Montpelier Vermont this day of+hb
Z Roisman
Cheney
Page 14
20t7
Puslrc Urrlnv
CovtriquestIssIoN
OP VERMONT
(
)))
)))
Fired otildeeglcL ( JotTAttest c
of the Commission
NorIcE To READERS This decision is subject to revision oftechnical errors Reqders are requested tonotify the Clerk of the Commission (by e-mail telephone or inwriting) or any appqrent errors in order that anynecessary corrections may be made (E-mail address pucclerkvermontgov)
Appeal of this decision to the Supreme Court of Vermont must befiledwith the Clerk of the Comnissionwithin thirty days Appeal will not stay the efect of thszlig Order absentfurther order by this Commission orappropriate actiacuteon by the Supreme Court of Vermont Motions for reconsideration or stay if any must be filed withthe Clerk of the Commissionwithin ten days of the date of this deciacutesion and Order
Exhibit 22 VGS RNG Tariff Rate Filing
Exhibit 23 PUC Approval of VGS RNG Rates
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Case No l8-03 13-TF
Petition of Vermont Gas Systems Inc fotapproval of a new tariff implementing theRenewable Natural Gas program
Order entered
OnonRAppnovINc Tiquestrurn
On January 302018 Vermont Gas Systems Inc (VGS) filed a petition for approval of
a new tariff implementing the Renewable Natural Gas (RNG) program approved by the
Vermont Public Utility Commission (Commission) in Docket No 8667 In that Docket the
Commission required VGS to file a tariff implementing the RNG program when it has procured
RNG supply in amounts reasonably estimated to be sufficient to meet customer demandl In
this Order the Commission approves the new tariff marketed under the name EcoGas with an
effective date of bills rendered on and after March 15 2018
VGS states that it has executed an RNG supply contract with deliveries scheduled for
2018 and that two additional contracts are being negotiated for deliveries beginningin2019
VGS is proposing to set its initial RNG adder at$ll749lCcf which represents a five-year
blended rate based on the three RNG supply arrangements VGS intends to account for the
difference between the cost of RNG supply and the RNG adder as a regulatory asset within gas
costs As additional lower-cost supply is added to the portfolio the regulatory asset balance will
be recovered from EcoGas participants with the goal of fully reducing the balance by the end of
five years Accordingly VGS states that the RNG program will be rate-neutral to VGS and its
non-RNG customers
On February 272018 the Vermont Department of Public Service (Department) filed a
letter recommending that the Commission approve the tariff without a hearing or further
investigation The Department states that the tariff filing and proposed accounting treatment
comply with Vermont rate-setting practices policies precedents and statutes
lslaotx
I Docket 8667 Order of 96117 at 13
Page2Case No 18-0313-TF
Based on the foregoing we hereby approve VGSs proposed RNG tariff to be effective
on a bills-rendered basis beginning on March 15 2018 Recovery of any regulatory asset
balance at the end of the fifth year would need to be approved by the Commission in a future
proceeding
So Omnnnn
Case No l8-0313-TF
8r- day of lruacuterLiquestiquest
Page 3
Dated at Montpelier Vermont this 2018
Roisman PueIrc Urlrrv
CoiriexcllriquestlssloN
Cheney
OF VERMONT
Sarah Hofmann
Onncp oF THE CLBRr
Filed huacuteveuroAacute- icirc dollAttest I
Clerk of the Commission
Notice to Readers This decision is subiect to revision oftechnical errors Readers are requested to notify
the Clerk of the Commission (by e-mail telephone or in writing) or qny qpparent errors in order that any
necessary corrections may be made (E-mail address pucclerkvermontgov)Appeal of this decisiacuteon to the Supreme Court of Yermont must be filed with the Clerk of the Commission
within 30 days Appeal will not stay the efect of this Order oslashbsent further order by this Commission or appropriate
action by the Supreme Court of Vermont Motionsthornr reconsideration or stay if any must befiledwith the Clerk ofthe Commissionwithin 28 doslashys of the date of this decision and Order
)))
))))
PUC Case No 18-0313-TF
Eileen SimollardesLauren HammerVermont Gas
85 Swift StreetSouth Burlington VT 05403
June E Tiemey CommissionerVermont Department of Public Service1 12 State StreetMontpelier VT 05620 -2601
Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
Exhibit 31 Accounting Procedures
Exhibit 31 Accounting for VGS Renewable Natural Gas (Ver-9202019)
1 Purchase of RNG Supply
RNG supply purchases are separated into the cost of the commodity and the cost of the renewable attribute The commodity portion is expensed to gas costs in the delivery month while the renewable attribute is booked to an inventory account referenced herein as the ldquoRenewable Inventory Accountrdquo Like VGSrsquo existing storage inventory accounting the Renewable Inventory Account will track both the dollar value of the renewable attribute and the renewable attribute Mcfs Renewable attribute dollar values are record to ldquo16410050 Inventory RNG Storagerdquo while Mcf values are recorded in the gas cost model maintained by accounting In the month VGS purchases the renewable attribute it is accrued in a book model and goes in to 16410150 Inventory RNG Accrued then moves to the 16410050 in a final model the following month for final
RNG may be purchased at different locations and using varying pricing structures While the accounting for RNG does not vary with the purchase location or price the determination of the value of the renewable attribute will vary depending on whether or not the supply pricing expressly values the renewable attribute as an adder or it is embedded in a fixed price Examples of each are shown below The accounting of RNG supply is intended to separate the cost of the renewable attribute from the cost of the commodity The examples below are not all inclusive of what may occur but intended to show the accounting procedures used to separate the renewable attribute from the commodity and specify ownership of each aspect
In all cases the commodity cost portion - which is the total cost of the RNG purchased excluding the renewable attribute - will be expensed in the delivery month as a cost of gas
Example 1 ndash The fixed price of RNG includes both the commodity and the renewable attribute
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The total cost of the RNG supply purchased during the month is calculated by Accounting within the gas cost model as follows
MMBtu Purchased (as validated in step 2) $ MMBtu purchase price (as provided in a supply confirmation provided by gas supply)
4 For purposes of booking the renewable attribute to inventory it is necessary to calculate the RNG cost per Mcf The RNG cost Mcf is calculated using the total cost of RNG supply as calculated in step 3 divided by the Mcf in step 1
5 The renewable attribute price per Mcf is calculated as follows
RNG cost per Mcf as determined in step 4 ndashplus ldquoother componentsrdquo as calculated pursuant to Attachment A ndash minus ldquoAverage Commodity Costrdquo as calculated pursuant to Attachment A The ldquoother componentsrdquo added to the RNG cost per Mcf will vary depending on where the RNG supply was delivered but in each case will be identified in the calculation shown on Attachment A
6 The renewable attribute price per Mcf the total RNG Mcf delivered is recorded in the Inventory RNG Storage account
7 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
Example 2 - RNG purchased at a renewable attribute price plus a daily or monthly index
Where the pricing of RNG specifically separates the commodity from the renewable attribute the renewable attribute price will be what is recorded in the Renewable Inventory Account
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The renewable attribute price per Mcf the total RNG Mcf delivered as determined in step 1 is recorded in the Renewable Inventory Account
4 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
2 Recalculating the RNG Adder
The RNG Adder paid by customers will be recalculated anytime the Natural Gas charge portion of rates changes The Manager of Gas SupplyGas control is responsible for recalculating the RNG Adder The calculation will be verified and approved by the Vice President ndash Regulatory Affairs The determination of the RNG Adder will be pursuant to the methodology shown in Attachment A The Regulatory Department will prepare the amended RNG Adder tariff for filing with the PUC Upon PUC approval of the RNG Adder the Regulatory Department will prepare a memorandum advising Accounting and Gas Supply of the new RNG Adder as approved
3 Customer purchases VGS Renewable Natural Gas
The RNG Adder at the percent selected by the customer will be applied to the entire monthrsquos usage on the customersrsquo next bill For customers utilizing the S-RNG adder the entire volume elected with be on the customersrsquo next bill The S-RNG Adder nor the RNG Adder and percentage selected will not be prorated based on enrollment or termination date
Customers may terminate or modify their RNG selection upon 3 dayrsquos notice to VGS The termination or modification will be effective on the customerrsquos next monthly bill
The customerrsquos usage for the month will be multiplied by the percentage and the approved RNG Adder For customers utilizing the S-RNG adder the volume elected will be multiplied by the approved RNG adder This amount will then be recorded to SAP accounts 4010015-40010021 depending on which rate class the customer is in The RNG Adder is the same regardless of which rate class a customer is in At the end of the month a report is run by billing from the customer information system that shows total usage and which percentage of RNG the customer has signed up for to calculate the number of MCFrsquos of renewable attribute sold during the billing period Billing also provides a report of the volumes sold through the S-RNG Tarriff The Inventory RNG Storage account maintained within the gas cost model by Accounting is reduced by these Mcf The MCFrsquos are then multiplied by the RNG Adder in effect for the billing month and an entry is made to remove that dollar amount from the Inventory RNG Storage account and into the monthly cost of gas The intent of this transaction is to ensure that cost of the renewable attribute is reflected in the cost of gas in the month it is purchased by the customer This results in a matching of the renewable attribute revenue and expense
The RNG Adder revenue and renewable attributes removed from storage will be included in the gas cost deferral calculation However because there is a matching of the renewable attribute revenue and expense the impact on the deferral calculation will be zero
The calculation of unbilled revenues will exclude RNG as a customer can cancel their participation prior to their next bill
In the event Vermont Gas issues a credit to a customer related to the RNG program the value of the renewable attribute credited and the associated Mcf will not be applied to the Renewable Inventory Account
4 Controls
A spreadsheet is maintained by accounting that shows the MCFrsquos and dollar values of the Renewable Inventory Account This is reconciled monthly by the accounting team and will be reviewed by the Manager Gas SupplyGas Control
Accounting will validate that the amount removed from the Renewable Inventory Account matches the RNG Adder revenue Any discrepancies will be reviewed and corrected
A report will be run for each bill cycle that shows any changes to the RNG percentages selected this will include customers opting to withdraw from the RNG program The customer care team will validate any changes against customer confirmation paperwork
5 Renewable Inventory Account Reconciliation and Forecast
The PUC Order approving the RNG program contains provisions describing how RNG supply and demand imbalances will be addressed These provisions and how VGS will track and comply with them are as discussed in this section The PUC Order approving the RNG Program provides that if the available RNG supply during the previous 12 months is less than the amount purchased by customers VGS may use the funds collected to purchase carbon offsets (Finding 13) If carbon offset are not available VGS will contribute the RNG program revenues to the Clean Energy Development Fund or issue prorated credits to affected customers (Finding 15) The Order also provides that in the event RNG supply exceeds customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any remaining RNG attribute inventory amounts through the PGA or through a rate case as part of its cost of service if the s PGA is no longer in effect at that time (Finding 16 as modified) Finding 11 provides that VGS will use a ldquotrue-uprdquo period of up to 12 months in order to balance the difference between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply) Taken together these provisions require VGS to evaluate the imbalance after 12-months and then true-up the imbalance over the next twelve months To provide a forecast of the supplydemand imbalance quarterly the billing area will run a report showing the expected RNG volumes based on current customer commitments by month for the next 12-months Current customers commitments will be calculated based on the previous 12 months of usage multiplied by the RNG percentage currently signed up for The marketing department will provide their forecast of new RNG sales for the next 12-months Both will be provided to the Manager Gas SupplyGas Control The Manager Gas SupplyGas Control will compare the forecasted RNG sales known and expected to RNG supply commitments and provide a 24-month forecast of the supplydemand balance The supplydemand balance will be reviewed at the risk management meeting The strategy for addressing the imbalance consistent with the PUC order will be determined by the risk management committee
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
VGS Renewable Natural Gas Program Manual
Page 12
bull Review of contracts and affidavits governing the transfer of the RNG from theoriginal source to the end user(s)
bull Review of evidence confirming the existence of a physical path (common carrierpipeline) for RNG transfer and distribution to end users
SECTION 3 EXHIBITS
bull Exhibit 31-Accounting Proceduresbull Exhibit 32-Verification from Suppliersbull Exhibit 33-Third Party Verification
VGS Renewable Natural Gas Program Manual
Page 13
Section 4 Marketing
KEY MARKETING STEPS Item Description Owner VGS Renewable Natural Gas Branding
Maintain product and brand integrity Communications
Product Definition Ensuring proper VGS Renewable Natural Gas description in all materials
Communications
External Review Verification of Marketing claims Communications
41 MARKETING PLAN Exhibit 41 is the 2018 version of the Marketing Plan filed with the PUC This document may be updated from time to time as we adjust our marketing strategy
42 MARKETING CLAIMS VGS is committed to making clear and accurate claims about the environmental benefits of VGS Renewable Natural Gas We have enlisted the assistance of a law firm specializing in marketing renewable products to review VGSrsquo marketing materials and claims In addition VGSrsquo annual third-party review of our program will focus on the integrity of our administration of the VGS Renewable Natural Gas program (see Section 54)
43 VGS RENEWABLE NATURAL GAS ldquoPRODUCT CONTENT LABELrdquo The Product Content Label is intended to be prominently displayed on the VGS web site and in correspondence to customers when they enroll in this program
Product Content Label
By participating in the VGS Renewable Natural Gas program you are purchasing the renewable attributes associated with the production of renewable natural gas (ldquoRNGrdquo) which may also be referred to as biogas or bio-methane A unit of VGS Renewable Natural Gas measured in hundred cubic feet (CCF) represents the environmental attribute of 1 CCF of biogas VGS reserves the right to purchase carbon offsets if RNG supply is not available VGS will notify customers if this occurs The Product Content Label is available at httpswwwvermontgascomrenewablenaturalgas
SECTION 4 EXHIBITS
bull Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)bull Exhibit 42 VGS Renewable Natural Gas Trademark
VGS Renewable Natural Gas Program Manual
Page 14
Section 5 Customer Information and Billing
KEY BILLING AND REVENUE STEPS Item Description Owner Billing Enrollment of VGS Renewable Natural Gas
Customers Contact Center
Notice Customer Notice of VGS Renewable Natural Gas Rates
Contact CenterBilling Group
Program Assurance Verification of VGS Renewable Natural Gas program procedures
Billing and Finance
51 CUSTOMER ENROLLMENT AND BILLING PROCESS The VGS Customer Care team will enroll customers and establish the VGS Renewable Natural Gas Adder on customer accounts Customers will be able to order VGS Renewable Natural Gas via VGSrsquo website (preferred method) calling VGS contact center or through the VGS Energy Services team An RNG calculator is available on VGSrsquo website httpswwwvermontgascomrenewablenaturalgasadder-calculator that can assist customers in estimating the costs of VGS Renewable Natural Gas at the various percentage levels based on the customerrsquos gas consumption VGS will inform customers of the current RNG Adder premium when they enroll Customers have two options when enrolling in the RNG program Customers may select their desired percentage of VGS Renewable Natural Gas ( 10 25 50 or 100) or they may allocate a fixed amount of RNG attributes (ldquoS-RNGrdquo) for each month that they are enrolled in Customer Care will then set up the billing on their account VGS will send an order confirmation via email or as a separate mailing (see Exhibit 51) thanking the customer for subscribing to VGS Renewable Natural Gas and informing the customer of the estimated impact on their bill As shown on Exhibit 51 the order confirmation letter will also include the RNG program guidelines These guidelines are discussed in section 53 below
52 VGS RENEWABLE NATURAL GAS WEBSITE AND FREQUENTLY ASKED QUESTIONS The VGS Renewable Natural Gas web page contains general VGS Renewable Natural Gas information an FAQ a VGS Renewable Natural Gas calculator current VGS Renewable Natural Gas Adder and an easy-to-use sign up form
For the most recent Frequently Answered Questions visit httpwwwvermontgascomVGS Renewable Natural Gas
VGS Renewable Natural Gas Program Manual
Page 15
53 VGS RENEWABLE NATURAL GAS PROGRAM GUIDELINES VGS Renewable Natural Gas customers will fall under VGSrsquo General Terms and Conditions outlined in VGSrsquo tariffs and PUC rules (ex Disconnection practices late fees taxes) VGS tariffs can be found at httpwwwvermontgascomaccountrates
VGS will notify VGS Renewable Natural Gas customers of rate changes in advance of implementation on both their individual bills and the Companyrsquos website RNG customers have the ability to cancel or modify their RNG account profile consistent with the tariff
VGSrsquo RNG customers can subscribe to VGS Renewable Natural Gas service with no term commitment and can cancel with three daysrsquo notice The RNG Adder will apply at either the percentage or fixed quantity allocated by the customer to the usage shown on the monthly bill regardless of enrollment or termination date The RNG Adder will not be pro-rated for partial-month usage
VGS customers receiving the low-income rate discount can subscribe to VGS Renewable Natural Gas however the 20 low income discount will not apply to the RNG Adder
Customers currently on a budget program will be encouraged to request a recalculation of their budget plan to adjust for the RNG Adder costs but it is not required
54 VGS RENEWABLE NATURAL GAS PROGRAM ASSURANCE
On an annual basis VGS will conduct a program review to ensure the VGS Renewable Natural Gas program is managed consistent with this manual The VGS Renewable Natural Gas program is a new product for the US natural gas utility industry and as such no industry specific standards exist VGS is working with on a national effort to develop a ldquoGreen-Erdquo certification process for Renewable Natural Gas programs that process is targeted for completion in 2020
SECTION 5 EXHIBITS
bull Exhibit 51 ECIS Customer Confirmation
VGS Renewable Natural Gas Program Manual
Page 16
EXHIBITS
Exhibit 21 VT PUC Approval Order
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Docket No 8667
Petition of Vermont Gas Systems Inc for aRenewable Natural Gas Program andOptional Tariff
)))
Hearing atMontpelier Vermont
September 22016
order entered q leacute I aon
PRBsBNI Andrea C McHugh Hearing Officer
AppeeReNcBs Peter H Zamore Esq
Owen J McClain EsqSheehey Furlong amp Behrn PCfor Vermont Gas Systems Inc
Louise C Porter EsqTimotthorn M Duggan Esq
for the Vermont Department of Public Service
Sandra Levine Esqfor Conservation Law Foundation
Gerald R Tarrant EsqTarcant Gillies amp Richardsonfor Lincoln Renewable Natural Gas LLC
I INrnooucrroN
This case involves a petition filed by Vermont Gas Systems Inc (VGS) with the
Vermont Public Utility Commission (oCommission) I for approval of a Renewable Natural Gas
(RNG) program and optional RNG tariff service for its customers The proposed RNG
progriquestigravem establishes a framework for VGS to offer its customers the option to purchase RNG for
I Pursuant to Section 9 of Act 53 of the 2017 legislafive session the Vermont Public Service Boards name waschanged to the Vermont Public Utility Commission effective July l 2017 For claity activities of the VermontPublic Service Board that occurred before the name change will be referred to in Commission documents as
activities of the Commission unless that would be conntildersing in the specific context
Docket No 8667 Page2
program establishes a framework for VGS to offer its customers the option to purchase RNG for
as a portion of their usage RNG is produced from materials such as agricultural waste manure
municipal waste plant material or compost and is also referred to as bio-methane In this
proposal for decision I recommend that the Commission approve the proposed RNG program
and require VGS to make compliance filings as set forth herein
il PnocnrunnlHrsroRY
On October 232015 VGS figraveled a petition for approval for its RNG program including
prefiled testimony and exhibits of Thomas Murray
On January 192016I held a prehearing conference and on January 252016I issued
an Order establishing a schedule
On February 122016 VGS filed a revised RNG Plan
On March 102016I held a workshop to discuss the proposed program
On March 152016I issued an Order revising the schedule
On March 222016 Conservation Law Foundation (CLF) and Lincoln Renewable
Natural Gas LLC (Lincoln) filed motions to intervene in this proceeding
On April 12016 VGS filed supplemental testimony and exhibits
On April 82016I issued an Order granting CLFs and Lincolns intervention requests
On July 72016 the Vermont Department of Public Service (Department) CLF and
Lincoln filed testimony
On August 82016 Lincoln filed supplemental testimony
A technical hearing was hthornld on September 22016
On September 30 20|6VGS filed a draft proposal for decision supported by the
Department In addition CLF filed a brief on the same date Reply briefs were filed by VGS
and CLF on October 142016
III Posnroxs oF THE PlRrlns
VGS
VGS requests approval of its proposed RNG program for the sale of RNG to customers
on a voluntary basis VGS claims that its proposal contains reasonable provisions to align its
RNG purchases with the amounts sold to its customers appropriate mechanisms to address over-
Docket No 8667 Page 3
or under-supply of RNG and verification requirements to ensure that sales in fact consist of
RNG VGS maintains that the RNG program is an appropriate first step in stimulating RNG
producer supply and customer demand and is oamply supported by Vermonts experience of
measured implementation of electric renewable pricing programs2 VGS argues that the
program is responsive to the Commissions condition in its Order in Docket 79701o develop a
proposal to promote bio-methane project development3
Department of Public Service
Although the Department did not file a brief or reply brief it did present witness
testimony and indicated its support for the draft proposal for decision filed by VGS The
Department recommends that VGS review all proposed RNG supply arrangements with the
Department (in addition to seeking 30 VSA $ 248 approval where required) and suggests that
in the event of an undersupply of RNG VGS obtain carbon offsets in an amount equivalent to
the unused customer contributions The Department recommends that the RNG program be
reviewed at the end of three years at which time the protocol regarding the purchase of offsets
would be revisited
C ons ervation Law Foundation
CLF urges that the Commission reject the RNG program and instead adopt an RNG
content standard similar to the electric renewable portfolio standarda CLF maintains that the
expected annual sales volume is not apace that is consistent with Vermonts legislative and
planning targets for meeting energy needs with renewable energy or for reducing greenhouse gas
emissionss CLF claims that the proposed voluntary tariff falls short of being a program or
strategy that promotes the increased use of RNG resources or supply or fosters bio-methane
projects in Addison county6
2 VGS reply brief aI23 In Docket 7970the Commission considered the petition of VGS for a certificate of public good (CPG) pursuant
to 30 VSA $ 248 authorizing the construction of the Addison Natural Gas Pipeline In an Order issued on
December 232013 the Commission granted the CPG As a condition of approval the Commission required VGSin consultation with the Department to file a petition with the [Commission] proposing a program to promote bio-methane project development Docket 7970 Order of l2l23ll3 at 147
a CLF brief at 12s CLF brief at 36 CLF brief at 4
Docket No 8667 Page 4
Lincoln
Lincoln maintains that itis essential to promote development of agricultural-based bio-
methane supply in VermontT Lincoln states that the Commission is not in a position to
adequately address VGSs proposed RNG program until negotiations for sale of itsoutput
involving VGS and Middlebury College are completes
IV Punrrc CounnnNrs
The Commission received three letters of support for VGSs RNG program On March 10
2016 the Chittenden County Transportation Authority filed comments indicating that it intends to
explore the possibility of utilizing RNG to cover a portion of the energy needs for its fleet of 70
buses On March 182016 Champlain College filed comments noting that it is interested in using
RNG for a portion of its energy needs that are currently met with conventional natural gas On
March 282016 Casella Waste Systems made a filing with the Commission stating its intention
to explore using RNG to meet some of its energy needs for its fleet of vehicles
V trrutrxcs
Based on the evidence of record I hereby report the following findings and
recommendations to the Commission in accordance with 30 VSA $ 8(c)
1 RNG is produced from raw materials such as agricultural waste manure municipal
waste plant material or food waste Decomposition or digestion of these materials produces
raw methane which is then cleaned or upgraded to bio-methane in order to meet the receiving
pipelines gas quality specifications prior to injection into an existing pipeline system Thomas
Murray VGS (Murray) supp pf at3
2 VGS is exploring options to purchase RNG supply from Lincoln and from landfill gas
projects located outside Vermont that would be received through the Trans-CanadaPipeline
(TCPL) system Murray supp pf at 8-9
7 Daniel Smith Lincoln Renewable Natural Gas LLC (Smith) supp pf at L8 On August 152016 Lincoln filed a motion to continue this proceeding for a period of not less than 60 days statingthat the continuance would allow [it] VGS and Middlebury College to complete discussions as to VGSsinvolvement in the RNG supply in Vermont and allow the record in this case to be properly developed VGS and
the Department opposed the request for continuance On August 222016I issued an Order denying Lincolnsrequest and determined that Lincoln did not demonstrate good cause to postpone the technical hearing
Docket No 8667 Page 5
3 Under the program retail customers would voluntarily purchase RNG in amounts equal to
l0oo25yo50o or 100 of their total monthly requirements at specified prices per Ccf as an
adder to other retail charges Customers could terminate RNG purchases upon providing three
days of advance notice to VGS Murray supp pf at l-2 exhs Pet-VGS-l and Pet-VGS-3
4 Intemrptible customers will have the opportunity to participate in the RNG program
through VGSs existing Lock Price Program which currently provides for up to a two-year
commitment Murray supp pf at 5
5 VGS will develop and file for Commission approval a separate tariff for use of RNG as a
transportation fuel This tariff will allow VGS to take advantage of the sale of the associated
Renewable Identification Numbers (ooRINs) When RNG is used as a transportation fuel it is
eligible to receive RINs under the Federal Renewable Fuel Standard RINs can be resold on the
wholesale market and would be used to offset the price of RNG to transportation customers
receiving service under the tariff Joan E White
Department (White) pf at7tr912116 at 62-
63 (White) exh Pet-VGS-5 Response 4
6 VGS will also initiate a review of the RNG program by the Commission Department and
others after three years White pf at9tr912116 (Munay) at24
7 The adder price for each Ccf of RNG will be equal to the average RNG commodity cost to
VGS less the average commodity cost of natural gas VGS will adjust the adder price per Ccf on
a quarterly basis as part of its Purchased Gas Adjustment (PGA) filing Murray supp pf at 4
8 The proposed RNG program will include a tariff that is very similar in concept to the
Green Mountain Power Corporation (GMP) Cow Power tariff However Cow Power is based
on a fixed rate per kWh no matter what the cost of the renewable energy Murray supp pf at llVhite pf at 4
9 VGSs RNG tariff will be calculated quarterly based on actual RNG and natural gas costs
and will provide accurate price signals as to the price differential between natural gas and RNG
White pf at 4
10 Based on a survey conducted by VGS 85 of its customers are willingto pay l0oo
more for a renewable product VGS projects that customers could potentially consume over
500000 Mcf of RNG over the next five years Murray supp pf at 5
DocketNo8667 Page 6
11 VGS will use a true-up period of up to 12 months in order to balance the difference
between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply)
Murray supp pf at 9
12 There is a risk that due to the voluntary nature of the RNG program supply and demand
will be mismatched White pf at41 David G Hill CLF (Hi11) pf at 9
13 If the available RNG supply during the previous 12 months is less than the amount
purchased by VGS customers the RNG program provides that VGS may use funds collected to
purchase carbon offsets from an established carbon registry such as the American Carbon
Registry VGS will purchase an amount of carbon offsets equal to the amount of the revenue
resulting from the undersupply in order to result in a revenue-neutral program At the time of the
three-year implementation review VGS will propose an environmental accounting protocol in
order to quantify the environmental benefits of the program and to evaluate the financial risk of
purchasing carbon offsets in an amount equivalent to the environmental benefits of unsold RNG
due to undersupply Murray supp pf at 6 l0 exh Pet-VGS-s Responses 1
14 The development and standardization of RNG attributes is in its infancy as compared to
the existing markets for the environmental attributes used in the electric industry (renewable
energy credits or (RECs)) Murray supp pf at 12
15 If carbon offsets are not available VGS will contribute the RNG program revenues to the
Clean Energy Development Fund or issue prorated credits to affected customers Exh Pet-
VGS-S Responses 3
16 If RNG supply exceeds customer demand VGS would seek to sell the excess RNG at
wholesale Murray supp pf at 10
17 VGS will provide proposed RNG supply contracts to the Department prior to execution
It will also consult with the Department before making decisions that could dramatically impact
price or the integrity of the RNG program Exh Pet-VGS-S Responses 2 White pf at 5
18 The estimated cost of RNG supply ranges from $l2lMcf to $25lMcf The cost of natural
gas is less than $3Mcf Murray supp pf at 8-9
19 VGS will implement an RNG Quality Assurance Plan establishing a testing and
monitoring process to ensure that RNG injected (via in-state RNG producers) into the VGS
system is pipeline quality and meets the specifications of the TCPL transportation tariff for bio-
methane gas quality Murray supp pf at 14 exh Pet-VGS-4
Docket No 8667 PageT
20 VGS will file an annual report on the RNG program with the Commission and the
Department containing the following information
1 Number of subscribers by customer class
2 Sales volume by customer class
3 Sales revenues
4 Any sales or purchases of carbon offsets
5 Supplyconsumption matching portfolio including any shortfall or excess
supply of RNG
6 True-up schedule for any imbalances
7 RNG supply verification
8 Quantification of the impact of any excess RNG costs flowing through the
PGA if VGS remains under altemative regulation
9 Accounting of any carbon ofszligets or other incentives
10 Status of any contracts for RNG including plans to acquire new supply
contracts
I 1 Revenue from Renewable Identification Number (RlN) sales and impact
on the transport tariff as well as any projections about the RIN market that are
available to VGS and
12 Complete reports and environmental verifications by an independent
verifier
Murray supp pf at 11 exh Pet-VGS-3 White pf at 8-9 tr912116 at23-24 (Munay)
21 Except as described below concerning RlN-eligible RNG VGS will annually verify that
the RNG was produced by a renewable gas production facility that VGS is the exclusive oryner
of any environmental attributes associated with RNG it sells under the program that it acquired
the RNG from its transferor and sold itatretail and that neither the RNG nor any renewable
attribute associated with the RNG has been sold twice at any point between RNG production and
sale to VGS whether by sales into carbon offset markets or otherwise This verification will be
based on certifications by VGSs suppliers and by an independent third party retained by VGS
for this purpose Exh Pet-VGS-3 exh Pet-VGS-s Response 5 White pf at 8
Docket No 8667 Page I
22 For RlN-eligible RNG used as vehicle fuel verification will be addressed in detail in the
future as part of VGSs proposed Renewable Vehicle Fuel Tariff Exh Pet VGS-5 Response 4
rr912116 at 65 (White)
23 There are few natural gas utilities currently offering RNG at retail VGS modeled its
RNG program after the program designed by FortisBC a local distribution company in British
Columbia Canada VGS also had discussions with SoCalGas in Southern California Both of
these companies are leaders in developing RNG offerings and fostering RNG supply resources
Murray supp pf at 7
24 VGS will file with the Commission and Department a marketing plan containing the
following elements
l An evaluation element that includes concrete metrics such as sales
volume targets and enrollment targets
2 Identification of target market segment(s)
3 Development of materials and language for customer-marketing efforts
that explain the RNG program in plain language easily understandable to the
average customer
4 An online bill calculator
5 An implementation plan that identifies specific activities and a timetable
and
6 Abudget
Exh Pet-VGS-5 White pf at 10 Tr912116 at22-23 (Munay)
25 VGS and the Department represent that the RNG progriquestun is responsive to the
Commissions condition in its Order in Docket 7970 rcquiring VGS to develop a proposal to
promote bio-methane project development Murray supp pf al 13-14tr912116 at 63 (Vhite)
26 VGS asserts that the RNG program represents appropriate progress toward the Vermont
Comprehensive Energy Plan (CEP) goal to meet90o of Vermonts energy needs through
renewable sources by 2050 Murray supp pf at 12-13
VI DlscussroN iexclxu Coxclustox
Vith this proposal for decision I recommend that the Commission approve the RNG
program in accordance with the findings described above and based upon the evidence in the
Docket No 8667 Page 9
record In Docket 7970 the Commission required VGS in consultation with the Department to
file a petition with the [Commission] proposing a program to promote bio-methane project
development It is reasonable to expectthat aprogram meant to stimulate development of a
specific energy source would look to stimulate demand for that resource by offering an
opportunity for customers to purchase supply from RNG producers
The RNG program proposed by VGS and supported by the Department seeks to offer
ratepayers the option to purchase renewable energy as part of their individual energy-use
portfolio Furthermore the program includes a provision requiring that VGS develop a detailed
marketing plan that will serve to educate customers on the availability costs and benefits of
such resources which could lead to increased demand for the product
VGS intends to take advantage of the existing market for RINs associated with RNG used
as transportation fuel by proposing a Renewable Vehicle Fuel Tariff As described above in the
Public Comments section the Chittenden County Transportation Authority and Casella Vaste
Systems are interested in exploring the use of RNG to fuel their vehicle fleets which
demonstrates that there is existing customer demand for this product
Unlike the markets relating to RNG supply used for transportation fuel or renewable
electric generation and the associated trading and verification of RECs the RNG market is in its
infancy At this time it would not be appropriate to expect VGS to implement an RNG program
utilizing an RNG content standard similar to the electric renewable portfolio standard as
recommended by CLF because the equivalent standards and processes do not exist However
the RNG program represents a meaningful first step in encouraging customer interest in
purchasing RNG at retail thereby stimulating supply of RNG into the market and is consistent
with the Commissions condition requiring VGS to develop a proposal to promote bio-methane
project development
VGSs RNG program includes appropriate mechanisms for periodic reporting and
verification of program activities as well as an opportunity to comprehensively review the
program after three years of implementation Furthermore determinations regarding recovery of
costs associated with the RNG program will be made in the context of future proceedings
regarding VGSs rates The RNG program should evolve with the RNG markets in the near-term
and over the course of the next several years which will allow progress towards achievement of
Vermonts 2050 CEP renewable energy goals
Docket No 8667 Page 10
Because not all parties to this proceeding have waived their rights under 3 VSA $ 811
to file written comments or present oral argument with respect to this proposal for decision I am
circulating the proposal for decision to the parties for their review and comment
Dated at Montpelier Vermont this rrtl day of QrIltt 2017a0AndreaHearing Officer
Docket No 8667 Page 11
VII Corumrssron Drscussrox
On August 22017 the Department filed a letter stating that it supports the issuance of an
Order by the Commission that adopts the proposal for decision in full
Also on August 22017 VGS filed comments on the proposal for decision requesting
that Finding 16 be modified as follows (additional text in italics) If RNG supply exceeds
customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary
flow any remaining RNG attribute inventory amounts through the PGA or through a rate case ifVGS was under traditional cost of service regulation (subject to [Commission] approval)
VGS asserts that [a]bsent such specific language it is possible that VGS would be unable [to]
defer such costs for future recovery and that removal of that component introduces uncertainty
about the potential procedural mechanisms available for cost recovery in the last resort VGS
states that with the Commissions consideraacutetion of this request it does not request oral argument
No other comments were filed on the proposal for decision
The Hearing Officer recommended that the Commission find that determinations
regarding recovery of costs associated with the RNG program will be made in the context of
future proceedings regarding VGSs rates We agree with this recommendation VGS should
have an opportunity to request rate recovery for excess RNG supply However this proceeding
is not the proper time for such a determination Accordingly Finding 16 is hereby modified as
follows If RNG supply exceeds customer demand VGS would first seek to sell the excess
RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any
remaining RNG attribute inventory amounts through the PGA or through arate case as part of
its cost of service if the PGA is no longer in effect atthat timeWe emphasize the importance of the successful implementation of the RNG program in
helping to meet the States renewable energy policy objectives The annual report on the
implementation of the RNG program will serve as a valuable tool to assess that progress In this
proceeding CLF has raised policy considerations that should serve to guide these future reviews
of the RNG program For example CLF has raised concerns regarding the effectiveness of the
voluntary nature of the program In assessing its program we expect VGS to revisit and report
on the feasibility of incorporating RNG as a portion of its supply mix in the future It is
important for VGSs RNG program to be sustainable and continue to evolve ensuring significant
DocketNo8667 Page 12
contributions toward meeting the States renewable energy goals and reducing the consumption
of fossil fuel Accordingly it is critical that the annual report and the three-year comprehensive
review address not only the effectiveness of the program but also its affordability and the
feasibility of other policy options to advance the production and use of RNG in Vermont
Docket No 8667 Page 13
VIII Onunn
Ir rs Hennsy oRDERED ADJUDGED AND DECRnnn by the Public Utility Commission of the
State of Vermont that
1 The findings conclusions and recommendations of the Hearing Officer are
adopted and the Renewable Natural Gas (RNG) program to be implemented by Vermont Gas
SystemsInc (VGS) is approved
2 When VGS has procured RNG supply in amounts reasonably estimated to be
sufficient for estimated customer demand it shall file a formal tariff including proposed rates for
sale of RNG The tariff shall be reviewedpursuantto the procedures of 30 VSA ccedilccedil225226
and227 and sales under the program shall begin after Commission approval of the tariff
3 VGS shall develop and file for Commission approval a separate Renewable
Vehicle Fuel Tariff to serve customers using RNG as a transportation fuel
4 VGS shall file a marketing plan for the RNG program consistent with the
requirements set forth above within one month of the issuance of this Order
5 VGS shall file an annual report consistent with the requirements set forth above
upon implementation of the RNG program
6 VGS shall file a comprehensive review of the performance of the program with
the Commission and the Department after three years of implementation This review will
include an environmental accounting protocol to quantiff the environmental benefits of the
progrfim
7 VGS shall review proposed RNG supply arrangements with the Department
Docket No 8667
Orprcp oF THE Crnm
Dated at Montpelier Vermont this day of+hb
Z Roisman
Cheney
Page 14
20t7
Puslrc Urrlnv
CovtriquestIssIoN
OP VERMONT
(
)))
)))
Fired otildeeglcL ( JotTAttest c
of the Commission
NorIcE To READERS This decision is subject to revision oftechnical errors Reqders are requested tonotify the Clerk of the Commission (by e-mail telephone or inwriting) or any appqrent errors in order that anynecessary corrections may be made (E-mail address pucclerkvermontgov)
Appeal of this decision to the Supreme Court of Vermont must befiledwith the Clerk of the Comnissionwithin thirty days Appeal will not stay the efect of thszlig Order absentfurther order by this Commission orappropriate actiacuteon by the Supreme Court of Vermont Motions for reconsideration or stay if any must be filed withthe Clerk of the Commissionwithin ten days of the date of this deciacutesion and Order
Exhibit 22 VGS RNG Tariff Rate Filing
Exhibit 23 PUC Approval of VGS RNG Rates
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Case No l8-03 13-TF
Petition of Vermont Gas Systems Inc fotapproval of a new tariff implementing theRenewable Natural Gas program
Order entered
OnonRAppnovINc Tiquestrurn
On January 302018 Vermont Gas Systems Inc (VGS) filed a petition for approval of
a new tariff implementing the Renewable Natural Gas (RNG) program approved by the
Vermont Public Utility Commission (Commission) in Docket No 8667 In that Docket the
Commission required VGS to file a tariff implementing the RNG program when it has procured
RNG supply in amounts reasonably estimated to be sufficient to meet customer demandl In
this Order the Commission approves the new tariff marketed under the name EcoGas with an
effective date of bills rendered on and after March 15 2018
VGS states that it has executed an RNG supply contract with deliveries scheduled for
2018 and that two additional contracts are being negotiated for deliveries beginningin2019
VGS is proposing to set its initial RNG adder at$ll749lCcf which represents a five-year
blended rate based on the three RNG supply arrangements VGS intends to account for the
difference between the cost of RNG supply and the RNG adder as a regulatory asset within gas
costs As additional lower-cost supply is added to the portfolio the regulatory asset balance will
be recovered from EcoGas participants with the goal of fully reducing the balance by the end of
five years Accordingly VGS states that the RNG program will be rate-neutral to VGS and its
non-RNG customers
On February 272018 the Vermont Department of Public Service (Department) filed a
letter recommending that the Commission approve the tariff without a hearing or further
investigation The Department states that the tariff filing and proposed accounting treatment
comply with Vermont rate-setting practices policies precedents and statutes
lslaotx
I Docket 8667 Order of 96117 at 13
Page2Case No 18-0313-TF
Based on the foregoing we hereby approve VGSs proposed RNG tariff to be effective
on a bills-rendered basis beginning on March 15 2018 Recovery of any regulatory asset
balance at the end of the fifth year would need to be approved by the Commission in a future
proceeding
So Omnnnn
Case No l8-0313-TF
8r- day of lruacuterLiquestiquest
Page 3
Dated at Montpelier Vermont this 2018
Roisman PueIrc Urlrrv
CoiriexcllriquestlssloN
Cheney
OF VERMONT
Sarah Hofmann
Onncp oF THE CLBRr
Filed huacuteveuroAacute- icirc dollAttest I
Clerk of the Commission
Notice to Readers This decision is subiect to revision oftechnical errors Readers are requested to notify
the Clerk of the Commission (by e-mail telephone or in writing) or qny qpparent errors in order that any
necessary corrections may be made (E-mail address pucclerkvermontgov)Appeal of this decisiacuteon to the Supreme Court of Yermont must be filed with the Clerk of the Commission
within 30 days Appeal will not stay the efect of this Order oslashbsent further order by this Commission or appropriate
action by the Supreme Court of Vermont Motionsthornr reconsideration or stay if any must befiledwith the Clerk ofthe Commissionwithin 28 doslashys of the date of this decision and Order
)))
))))
PUC Case No 18-0313-TF
Eileen SimollardesLauren HammerVermont Gas
85 Swift StreetSouth Burlington VT 05403
June E Tiemey CommissionerVermont Department of Public Service1 12 State StreetMontpelier VT 05620 -2601
Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
Exhibit 31 Accounting Procedures
Exhibit 31 Accounting for VGS Renewable Natural Gas (Ver-9202019)
1 Purchase of RNG Supply
RNG supply purchases are separated into the cost of the commodity and the cost of the renewable attribute The commodity portion is expensed to gas costs in the delivery month while the renewable attribute is booked to an inventory account referenced herein as the ldquoRenewable Inventory Accountrdquo Like VGSrsquo existing storage inventory accounting the Renewable Inventory Account will track both the dollar value of the renewable attribute and the renewable attribute Mcfs Renewable attribute dollar values are record to ldquo16410050 Inventory RNG Storagerdquo while Mcf values are recorded in the gas cost model maintained by accounting In the month VGS purchases the renewable attribute it is accrued in a book model and goes in to 16410150 Inventory RNG Accrued then moves to the 16410050 in a final model the following month for final
RNG may be purchased at different locations and using varying pricing structures While the accounting for RNG does not vary with the purchase location or price the determination of the value of the renewable attribute will vary depending on whether or not the supply pricing expressly values the renewable attribute as an adder or it is embedded in a fixed price Examples of each are shown below The accounting of RNG supply is intended to separate the cost of the renewable attribute from the cost of the commodity The examples below are not all inclusive of what may occur but intended to show the accounting procedures used to separate the renewable attribute from the commodity and specify ownership of each aspect
In all cases the commodity cost portion - which is the total cost of the RNG purchased excluding the renewable attribute - will be expensed in the delivery month as a cost of gas
Example 1 ndash The fixed price of RNG includes both the commodity and the renewable attribute
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The total cost of the RNG supply purchased during the month is calculated by Accounting within the gas cost model as follows
MMBtu Purchased (as validated in step 2) $ MMBtu purchase price (as provided in a supply confirmation provided by gas supply)
4 For purposes of booking the renewable attribute to inventory it is necessary to calculate the RNG cost per Mcf The RNG cost Mcf is calculated using the total cost of RNG supply as calculated in step 3 divided by the Mcf in step 1
5 The renewable attribute price per Mcf is calculated as follows
RNG cost per Mcf as determined in step 4 ndashplus ldquoother componentsrdquo as calculated pursuant to Attachment A ndash minus ldquoAverage Commodity Costrdquo as calculated pursuant to Attachment A The ldquoother componentsrdquo added to the RNG cost per Mcf will vary depending on where the RNG supply was delivered but in each case will be identified in the calculation shown on Attachment A
6 The renewable attribute price per Mcf the total RNG Mcf delivered is recorded in the Inventory RNG Storage account
7 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
Example 2 - RNG purchased at a renewable attribute price plus a daily or monthly index
Where the pricing of RNG specifically separates the commodity from the renewable attribute the renewable attribute price will be what is recorded in the Renewable Inventory Account
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The renewable attribute price per Mcf the total RNG Mcf delivered as determined in step 1 is recorded in the Renewable Inventory Account
4 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
2 Recalculating the RNG Adder
The RNG Adder paid by customers will be recalculated anytime the Natural Gas charge portion of rates changes The Manager of Gas SupplyGas control is responsible for recalculating the RNG Adder The calculation will be verified and approved by the Vice President ndash Regulatory Affairs The determination of the RNG Adder will be pursuant to the methodology shown in Attachment A The Regulatory Department will prepare the amended RNG Adder tariff for filing with the PUC Upon PUC approval of the RNG Adder the Regulatory Department will prepare a memorandum advising Accounting and Gas Supply of the new RNG Adder as approved
3 Customer purchases VGS Renewable Natural Gas
The RNG Adder at the percent selected by the customer will be applied to the entire monthrsquos usage on the customersrsquo next bill For customers utilizing the S-RNG adder the entire volume elected with be on the customersrsquo next bill The S-RNG Adder nor the RNG Adder and percentage selected will not be prorated based on enrollment or termination date
Customers may terminate or modify their RNG selection upon 3 dayrsquos notice to VGS The termination or modification will be effective on the customerrsquos next monthly bill
The customerrsquos usage for the month will be multiplied by the percentage and the approved RNG Adder For customers utilizing the S-RNG adder the volume elected will be multiplied by the approved RNG adder This amount will then be recorded to SAP accounts 4010015-40010021 depending on which rate class the customer is in The RNG Adder is the same regardless of which rate class a customer is in At the end of the month a report is run by billing from the customer information system that shows total usage and which percentage of RNG the customer has signed up for to calculate the number of MCFrsquos of renewable attribute sold during the billing period Billing also provides a report of the volumes sold through the S-RNG Tarriff The Inventory RNG Storage account maintained within the gas cost model by Accounting is reduced by these Mcf The MCFrsquos are then multiplied by the RNG Adder in effect for the billing month and an entry is made to remove that dollar amount from the Inventory RNG Storage account and into the monthly cost of gas The intent of this transaction is to ensure that cost of the renewable attribute is reflected in the cost of gas in the month it is purchased by the customer This results in a matching of the renewable attribute revenue and expense
The RNG Adder revenue and renewable attributes removed from storage will be included in the gas cost deferral calculation However because there is a matching of the renewable attribute revenue and expense the impact on the deferral calculation will be zero
The calculation of unbilled revenues will exclude RNG as a customer can cancel their participation prior to their next bill
In the event Vermont Gas issues a credit to a customer related to the RNG program the value of the renewable attribute credited and the associated Mcf will not be applied to the Renewable Inventory Account
4 Controls
A spreadsheet is maintained by accounting that shows the MCFrsquos and dollar values of the Renewable Inventory Account This is reconciled monthly by the accounting team and will be reviewed by the Manager Gas SupplyGas Control
Accounting will validate that the amount removed from the Renewable Inventory Account matches the RNG Adder revenue Any discrepancies will be reviewed and corrected
A report will be run for each bill cycle that shows any changes to the RNG percentages selected this will include customers opting to withdraw from the RNG program The customer care team will validate any changes against customer confirmation paperwork
5 Renewable Inventory Account Reconciliation and Forecast
The PUC Order approving the RNG program contains provisions describing how RNG supply and demand imbalances will be addressed These provisions and how VGS will track and comply with them are as discussed in this section The PUC Order approving the RNG Program provides that if the available RNG supply during the previous 12 months is less than the amount purchased by customers VGS may use the funds collected to purchase carbon offsets (Finding 13) If carbon offset are not available VGS will contribute the RNG program revenues to the Clean Energy Development Fund or issue prorated credits to affected customers (Finding 15) The Order also provides that in the event RNG supply exceeds customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any remaining RNG attribute inventory amounts through the PGA or through a rate case as part of its cost of service if the s PGA is no longer in effect at that time (Finding 16 as modified) Finding 11 provides that VGS will use a ldquotrue-uprdquo period of up to 12 months in order to balance the difference between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply) Taken together these provisions require VGS to evaluate the imbalance after 12-months and then true-up the imbalance over the next twelve months To provide a forecast of the supplydemand imbalance quarterly the billing area will run a report showing the expected RNG volumes based on current customer commitments by month for the next 12-months Current customers commitments will be calculated based on the previous 12 months of usage multiplied by the RNG percentage currently signed up for The marketing department will provide their forecast of new RNG sales for the next 12-months Both will be provided to the Manager Gas SupplyGas Control The Manager Gas SupplyGas Control will compare the forecasted RNG sales known and expected to RNG supply commitments and provide a 24-month forecast of the supplydemand balance The supplydemand balance will be reviewed at the risk management meeting The strategy for addressing the imbalance consistent with the PUC order will be determined by the risk management committee
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
VGS Renewable Natural Gas Program Manual
Page 13
Section 4 Marketing
KEY MARKETING STEPS Item Description Owner VGS Renewable Natural Gas Branding
Maintain product and brand integrity Communications
Product Definition Ensuring proper VGS Renewable Natural Gas description in all materials
Communications
External Review Verification of Marketing claims Communications
41 MARKETING PLAN Exhibit 41 is the 2018 version of the Marketing Plan filed with the PUC This document may be updated from time to time as we adjust our marketing strategy
42 MARKETING CLAIMS VGS is committed to making clear and accurate claims about the environmental benefits of VGS Renewable Natural Gas We have enlisted the assistance of a law firm specializing in marketing renewable products to review VGSrsquo marketing materials and claims In addition VGSrsquo annual third-party review of our program will focus on the integrity of our administration of the VGS Renewable Natural Gas program (see Section 54)
43 VGS RENEWABLE NATURAL GAS ldquoPRODUCT CONTENT LABELrdquo The Product Content Label is intended to be prominently displayed on the VGS web site and in correspondence to customers when they enroll in this program
Product Content Label
By participating in the VGS Renewable Natural Gas program you are purchasing the renewable attributes associated with the production of renewable natural gas (ldquoRNGrdquo) which may also be referred to as biogas or bio-methane A unit of VGS Renewable Natural Gas measured in hundred cubic feet (CCF) represents the environmental attribute of 1 CCF of biogas VGS reserves the right to purchase carbon offsets if RNG supply is not available VGS will notify customers if this occurs The Product Content Label is available at httpswwwvermontgascomrenewablenaturalgas
SECTION 4 EXHIBITS
bull Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)bull Exhibit 42 VGS Renewable Natural Gas Trademark
VGS Renewable Natural Gas Program Manual
Page 14
Section 5 Customer Information and Billing
KEY BILLING AND REVENUE STEPS Item Description Owner Billing Enrollment of VGS Renewable Natural Gas
Customers Contact Center
Notice Customer Notice of VGS Renewable Natural Gas Rates
Contact CenterBilling Group
Program Assurance Verification of VGS Renewable Natural Gas program procedures
Billing and Finance
51 CUSTOMER ENROLLMENT AND BILLING PROCESS The VGS Customer Care team will enroll customers and establish the VGS Renewable Natural Gas Adder on customer accounts Customers will be able to order VGS Renewable Natural Gas via VGSrsquo website (preferred method) calling VGS contact center or through the VGS Energy Services team An RNG calculator is available on VGSrsquo website httpswwwvermontgascomrenewablenaturalgasadder-calculator that can assist customers in estimating the costs of VGS Renewable Natural Gas at the various percentage levels based on the customerrsquos gas consumption VGS will inform customers of the current RNG Adder premium when they enroll Customers have two options when enrolling in the RNG program Customers may select their desired percentage of VGS Renewable Natural Gas ( 10 25 50 or 100) or they may allocate a fixed amount of RNG attributes (ldquoS-RNGrdquo) for each month that they are enrolled in Customer Care will then set up the billing on their account VGS will send an order confirmation via email or as a separate mailing (see Exhibit 51) thanking the customer for subscribing to VGS Renewable Natural Gas and informing the customer of the estimated impact on their bill As shown on Exhibit 51 the order confirmation letter will also include the RNG program guidelines These guidelines are discussed in section 53 below
52 VGS RENEWABLE NATURAL GAS WEBSITE AND FREQUENTLY ASKED QUESTIONS The VGS Renewable Natural Gas web page contains general VGS Renewable Natural Gas information an FAQ a VGS Renewable Natural Gas calculator current VGS Renewable Natural Gas Adder and an easy-to-use sign up form
For the most recent Frequently Answered Questions visit httpwwwvermontgascomVGS Renewable Natural Gas
VGS Renewable Natural Gas Program Manual
Page 15
53 VGS RENEWABLE NATURAL GAS PROGRAM GUIDELINES VGS Renewable Natural Gas customers will fall under VGSrsquo General Terms and Conditions outlined in VGSrsquo tariffs and PUC rules (ex Disconnection practices late fees taxes) VGS tariffs can be found at httpwwwvermontgascomaccountrates
VGS will notify VGS Renewable Natural Gas customers of rate changes in advance of implementation on both their individual bills and the Companyrsquos website RNG customers have the ability to cancel or modify their RNG account profile consistent with the tariff
VGSrsquo RNG customers can subscribe to VGS Renewable Natural Gas service with no term commitment and can cancel with three daysrsquo notice The RNG Adder will apply at either the percentage or fixed quantity allocated by the customer to the usage shown on the monthly bill regardless of enrollment or termination date The RNG Adder will not be pro-rated for partial-month usage
VGS customers receiving the low-income rate discount can subscribe to VGS Renewable Natural Gas however the 20 low income discount will not apply to the RNG Adder
Customers currently on a budget program will be encouraged to request a recalculation of their budget plan to adjust for the RNG Adder costs but it is not required
54 VGS RENEWABLE NATURAL GAS PROGRAM ASSURANCE
On an annual basis VGS will conduct a program review to ensure the VGS Renewable Natural Gas program is managed consistent with this manual The VGS Renewable Natural Gas program is a new product for the US natural gas utility industry and as such no industry specific standards exist VGS is working with on a national effort to develop a ldquoGreen-Erdquo certification process for Renewable Natural Gas programs that process is targeted for completion in 2020
SECTION 5 EXHIBITS
bull Exhibit 51 ECIS Customer Confirmation
VGS Renewable Natural Gas Program Manual
Page 16
EXHIBITS
Exhibit 21 VT PUC Approval Order
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Docket No 8667
Petition of Vermont Gas Systems Inc for aRenewable Natural Gas Program andOptional Tariff
)))
Hearing atMontpelier Vermont
September 22016
order entered q leacute I aon
PRBsBNI Andrea C McHugh Hearing Officer
AppeeReNcBs Peter H Zamore Esq
Owen J McClain EsqSheehey Furlong amp Behrn PCfor Vermont Gas Systems Inc
Louise C Porter EsqTimotthorn M Duggan Esq
for the Vermont Department of Public Service
Sandra Levine Esqfor Conservation Law Foundation
Gerald R Tarrant EsqTarcant Gillies amp Richardsonfor Lincoln Renewable Natural Gas LLC
I INrnooucrroN
This case involves a petition filed by Vermont Gas Systems Inc (VGS) with the
Vermont Public Utility Commission (oCommission) I for approval of a Renewable Natural Gas
(RNG) program and optional RNG tariff service for its customers The proposed RNG
progriquestigravem establishes a framework for VGS to offer its customers the option to purchase RNG for
I Pursuant to Section 9 of Act 53 of the 2017 legislafive session the Vermont Public Service Boards name waschanged to the Vermont Public Utility Commission effective July l 2017 For claity activities of the VermontPublic Service Board that occurred before the name change will be referred to in Commission documents as
activities of the Commission unless that would be conntildersing in the specific context
Docket No 8667 Page2
program establishes a framework for VGS to offer its customers the option to purchase RNG for
as a portion of their usage RNG is produced from materials such as agricultural waste manure
municipal waste plant material or compost and is also referred to as bio-methane In this
proposal for decision I recommend that the Commission approve the proposed RNG program
and require VGS to make compliance filings as set forth herein
il PnocnrunnlHrsroRY
On October 232015 VGS figraveled a petition for approval for its RNG program including
prefiled testimony and exhibits of Thomas Murray
On January 192016I held a prehearing conference and on January 252016I issued
an Order establishing a schedule
On February 122016 VGS filed a revised RNG Plan
On March 102016I held a workshop to discuss the proposed program
On March 152016I issued an Order revising the schedule
On March 222016 Conservation Law Foundation (CLF) and Lincoln Renewable
Natural Gas LLC (Lincoln) filed motions to intervene in this proceeding
On April 12016 VGS filed supplemental testimony and exhibits
On April 82016I issued an Order granting CLFs and Lincolns intervention requests
On July 72016 the Vermont Department of Public Service (Department) CLF and
Lincoln filed testimony
On August 82016 Lincoln filed supplemental testimony
A technical hearing was hthornld on September 22016
On September 30 20|6VGS filed a draft proposal for decision supported by the
Department In addition CLF filed a brief on the same date Reply briefs were filed by VGS
and CLF on October 142016
III Posnroxs oF THE PlRrlns
VGS
VGS requests approval of its proposed RNG program for the sale of RNG to customers
on a voluntary basis VGS claims that its proposal contains reasonable provisions to align its
RNG purchases with the amounts sold to its customers appropriate mechanisms to address over-
Docket No 8667 Page 3
or under-supply of RNG and verification requirements to ensure that sales in fact consist of
RNG VGS maintains that the RNG program is an appropriate first step in stimulating RNG
producer supply and customer demand and is oamply supported by Vermonts experience of
measured implementation of electric renewable pricing programs2 VGS argues that the
program is responsive to the Commissions condition in its Order in Docket 79701o develop a
proposal to promote bio-methane project development3
Department of Public Service
Although the Department did not file a brief or reply brief it did present witness
testimony and indicated its support for the draft proposal for decision filed by VGS The
Department recommends that VGS review all proposed RNG supply arrangements with the
Department (in addition to seeking 30 VSA $ 248 approval where required) and suggests that
in the event of an undersupply of RNG VGS obtain carbon offsets in an amount equivalent to
the unused customer contributions The Department recommends that the RNG program be
reviewed at the end of three years at which time the protocol regarding the purchase of offsets
would be revisited
C ons ervation Law Foundation
CLF urges that the Commission reject the RNG program and instead adopt an RNG
content standard similar to the electric renewable portfolio standarda CLF maintains that the
expected annual sales volume is not apace that is consistent with Vermonts legislative and
planning targets for meeting energy needs with renewable energy or for reducing greenhouse gas
emissionss CLF claims that the proposed voluntary tariff falls short of being a program or
strategy that promotes the increased use of RNG resources or supply or fosters bio-methane
projects in Addison county6
2 VGS reply brief aI23 In Docket 7970the Commission considered the petition of VGS for a certificate of public good (CPG) pursuant
to 30 VSA $ 248 authorizing the construction of the Addison Natural Gas Pipeline In an Order issued on
December 232013 the Commission granted the CPG As a condition of approval the Commission required VGSin consultation with the Department to file a petition with the [Commission] proposing a program to promote bio-methane project development Docket 7970 Order of l2l23ll3 at 147
a CLF brief at 12s CLF brief at 36 CLF brief at 4
Docket No 8667 Page 4
Lincoln
Lincoln maintains that itis essential to promote development of agricultural-based bio-
methane supply in VermontT Lincoln states that the Commission is not in a position to
adequately address VGSs proposed RNG program until negotiations for sale of itsoutput
involving VGS and Middlebury College are completes
IV Punrrc CounnnNrs
The Commission received three letters of support for VGSs RNG program On March 10
2016 the Chittenden County Transportation Authority filed comments indicating that it intends to
explore the possibility of utilizing RNG to cover a portion of the energy needs for its fleet of 70
buses On March 182016 Champlain College filed comments noting that it is interested in using
RNG for a portion of its energy needs that are currently met with conventional natural gas On
March 282016 Casella Waste Systems made a filing with the Commission stating its intention
to explore using RNG to meet some of its energy needs for its fleet of vehicles
V trrutrxcs
Based on the evidence of record I hereby report the following findings and
recommendations to the Commission in accordance with 30 VSA $ 8(c)
1 RNG is produced from raw materials such as agricultural waste manure municipal
waste plant material or food waste Decomposition or digestion of these materials produces
raw methane which is then cleaned or upgraded to bio-methane in order to meet the receiving
pipelines gas quality specifications prior to injection into an existing pipeline system Thomas
Murray VGS (Murray) supp pf at3
2 VGS is exploring options to purchase RNG supply from Lincoln and from landfill gas
projects located outside Vermont that would be received through the Trans-CanadaPipeline
(TCPL) system Murray supp pf at 8-9
7 Daniel Smith Lincoln Renewable Natural Gas LLC (Smith) supp pf at L8 On August 152016 Lincoln filed a motion to continue this proceeding for a period of not less than 60 days statingthat the continuance would allow [it] VGS and Middlebury College to complete discussions as to VGSsinvolvement in the RNG supply in Vermont and allow the record in this case to be properly developed VGS and
the Department opposed the request for continuance On August 222016I issued an Order denying Lincolnsrequest and determined that Lincoln did not demonstrate good cause to postpone the technical hearing
Docket No 8667 Page 5
3 Under the program retail customers would voluntarily purchase RNG in amounts equal to
l0oo25yo50o or 100 of their total monthly requirements at specified prices per Ccf as an
adder to other retail charges Customers could terminate RNG purchases upon providing three
days of advance notice to VGS Murray supp pf at l-2 exhs Pet-VGS-l and Pet-VGS-3
4 Intemrptible customers will have the opportunity to participate in the RNG program
through VGSs existing Lock Price Program which currently provides for up to a two-year
commitment Murray supp pf at 5
5 VGS will develop and file for Commission approval a separate tariff for use of RNG as a
transportation fuel This tariff will allow VGS to take advantage of the sale of the associated
Renewable Identification Numbers (ooRINs) When RNG is used as a transportation fuel it is
eligible to receive RINs under the Federal Renewable Fuel Standard RINs can be resold on the
wholesale market and would be used to offset the price of RNG to transportation customers
receiving service under the tariff Joan E White
Department (White) pf at7tr912116 at 62-
63 (White) exh Pet-VGS-5 Response 4
6 VGS will also initiate a review of the RNG program by the Commission Department and
others after three years White pf at9tr912116 (Munay) at24
7 The adder price for each Ccf of RNG will be equal to the average RNG commodity cost to
VGS less the average commodity cost of natural gas VGS will adjust the adder price per Ccf on
a quarterly basis as part of its Purchased Gas Adjustment (PGA) filing Murray supp pf at 4
8 The proposed RNG program will include a tariff that is very similar in concept to the
Green Mountain Power Corporation (GMP) Cow Power tariff However Cow Power is based
on a fixed rate per kWh no matter what the cost of the renewable energy Murray supp pf at llVhite pf at 4
9 VGSs RNG tariff will be calculated quarterly based on actual RNG and natural gas costs
and will provide accurate price signals as to the price differential between natural gas and RNG
White pf at 4
10 Based on a survey conducted by VGS 85 of its customers are willingto pay l0oo
more for a renewable product VGS projects that customers could potentially consume over
500000 Mcf of RNG over the next five years Murray supp pf at 5
DocketNo8667 Page 6
11 VGS will use a true-up period of up to 12 months in order to balance the difference
between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply)
Murray supp pf at 9
12 There is a risk that due to the voluntary nature of the RNG program supply and demand
will be mismatched White pf at41 David G Hill CLF (Hi11) pf at 9
13 If the available RNG supply during the previous 12 months is less than the amount
purchased by VGS customers the RNG program provides that VGS may use funds collected to
purchase carbon offsets from an established carbon registry such as the American Carbon
Registry VGS will purchase an amount of carbon offsets equal to the amount of the revenue
resulting from the undersupply in order to result in a revenue-neutral program At the time of the
three-year implementation review VGS will propose an environmental accounting protocol in
order to quantify the environmental benefits of the program and to evaluate the financial risk of
purchasing carbon offsets in an amount equivalent to the environmental benefits of unsold RNG
due to undersupply Murray supp pf at 6 l0 exh Pet-VGS-s Responses 1
14 The development and standardization of RNG attributes is in its infancy as compared to
the existing markets for the environmental attributes used in the electric industry (renewable
energy credits or (RECs)) Murray supp pf at 12
15 If carbon offsets are not available VGS will contribute the RNG program revenues to the
Clean Energy Development Fund or issue prorated credits to affected customers Exh Pet-
VGS-S Responses 3
16 If RNG supply exceeds customer demand VGS would seek to sell the excess RNG at
wholesale Murray supp pf at 10
17 VGS will provide proposed RNG supply contracts to the Department prior to execution
It will also consult with the Department before making decisions that could dramatically impact
price or the integrity of the RNG program Exh Pet-VGS-S Responses 2 White pf at 5
18 The estimated cost of RNG supply ranges from $l2lMcf to $25lMcf The cost of natural
gas is less than $3Mcf Murray supp pf at 8-9
19 VGS will implement an RNG Quality Assurance Plan establishing a testing and
monitoring process to ensure that RNG injected (via in-state RNG producers) into the VGS
system is pipeline quality and meets the specifications of the TCPL transportation tariff for bio-
methane gas quality Murray supp pf at 14 exh Pet-VGS-4
Docket No 8667 PageT
20 VGS will file an annual report on the RNG program with the Commission and the
Department containing the following information
1 Number of subscribers by customer class
2 Sales volume by customer class
3 Sales revenues
4 Any sales or purchases of carbon offsets
5 Supplyconsumption matching portfolio including any shortfall or excess
supply of RNG
6 True-up schedule for any imbalances
7 RNG supply verification
8 Quantification of the impact of any excess RNG costs flowing through the
PGA if VGS remains under altemative regulation
9 Accounting of any carbon ofszligets or other incentives
10 Status of any contracts for RNG including plans to acquire new supply
contracts
I 1 Revenue from Renewable Identification Number (RlN) sales and impact
on the transport tariff as well as any projections about the RIN market that are
available to VGS and
12 Complete reports and environmental verifications by an independent
verifier
Murray supp pf at 11 exh Pet-VGS-3 White pf at 8-9 tr912116 at23-24 (Munay)
21 Except as described below concerning RlN-eligible RNG VGS will annually verify that
the RNG was produced by a renewable gas production facility that VGS is the exclusive oryner
of any environmental attributes associated with RNG it sells under the program that it acquired
the RNG from its transferor and sold itatretail and that neither the RNG nor any renewable
attribute associated with the RNG has been sold twice at any point between RNG production and
sale to VGS whether by sales into carbon offset markets or otherwise This verification will be
based on certifications by VGSs suppliers and by an independent third party retained by VGS
for this purpose Exh Pet-VGS-3 exh Pet-VGS-s Response 5 White pf at 8
Docket No 8667 Page I
22 For RlN-eligible RNG used as vehicle fuel verification will be addressed in detail in the
future as part of VGSs proposed Renewable Vehicle Fuel Tariff Exh Pet VGS-5 Response 4
rr912116 at 65 (White)
23 There are few natural gas utilities currently offering RNG at retail VGS modeled its
RNG program after the program designed by FortisBC a local distribution company in British
Columbia Canada VGS also had discussions with SoCalGas in Southern California Both of
these companies are leaders in developing RNG offerings and fostering RNG supply resources
Murray supp pf at 7
24 VGS will file with the Commission and Department a marketing plan containing the
following elements
l An evaluation element that includes concrete metrics such as sales
volume targets and enrollment targets
2 Identification of target market segment(s)
3 Development of materials and language for customer-marketing efforts
that explain the RNG program in plain language easily understandable to the
average customer
4 An online bill calculator
5 An implementation plan that identifies specific activities and a timetable
and
6 Abudget
Exh Pet-VGS-5 White pf at 10 Tr912116 at22-23 (Munay)
25 VGS and the Department represent that the RNG progriquestun is responsive to the
Commissions condition in its Order in Docket 7970 rcquiring VGS to develop a proposal to
promote bio-methane project development Murray supp pf al 13-14tr912116 at 63 (Vhite)
26 VGS asserts that the RNG program represents appropriate progress toward the Vermont
Comprehensive Energy Plan (CEP) goal to meet90o of Vermonts energy needs through
renewable sources by 2050 Murray supp pf at 12-13
VI DlscussroN iexclxu Coxclustox
Vith this proposal for decision I recommend that the Commission approve the RNG
program in accordance with the findings described above and based upon the evidence in the
Docket No 8667 Page 9
record In Docket 7970 the Commission required VGS in consultation with the Department to
file a petition with the [Commission] proposing a program to promote bio-methane project
development It is reasonable to expectthat aprogram meant to stimulate development of a
specific energy source would look to stimulate demand for that resource by offering an
opportunity for customers to purchase supply from RNG producers
The RNG program proposed by VGS and supported by the Department seeks to offer
ratepayers the option to purchase renewable energy as part of their individual energy-use
portfolio Furthermore the program includes a provision requiring that VGS develop a detailed
marketing plan that will serve to educate customers on the availability costs and benefits of
such resources which could lead to increased demand for the product
VGS intends to take advantage of the existing market for RINs associated with RNG used
as transportation fuel by proposing a Renewable Vehicle Fuel Tariff As described above in the
Public Comments section the Chittenden County Transportation Authority and Casella Vaste
Systems are interested in exploring the use of RNG to fuel their vehicle fleets which
demonstrates that there is existing customer demand for this product
Unlike the markets relating to RNG supply used for transportation fuel or renewable
electric generation and the associated trading and verification of RECs the RNG market is in its
infancy At this time it would not be appropriate to expect VGS to implement an RNG program
utilizing an RNG content standard similar to the electric renewable portfolio standard as
recommended by CLF because the equivalent standards and processes do not exist However
the RNG program represents a meaningful first step in encouraging customer interest in
purchasing RNG at retail thereby stimulating supply of RNG into the market and is consistent
with the Commissions condition requiring VGS to develop a proposal to promote bio-methane
project development
VGSs RNG program includes appropriate mechanisms for periodic reporting and
verification of program activities as well as an opportunity to comprehensively review the
program after three years of implementation Furthermore determinations regarding recovery of
costs associated with the RNG program will be made in the context of future proceedings
regarding VGSs rates The RNG program should evolve with the RNG markets in the near-term
and over the course of the next several years which will allow progress towards achievement of
Vermonts 2050 CEP renewable energy goals
Docket No 8667 Page 10
Because not all parties to this proceeding have waived their rights under 3 VSA $ 811
to file written comments or present oral argument with respect to this proposal for decision I am
circulating the proposal for decision to the parties for their review and comment
Dated at Montpelier Vermont this rrtl day of QrIltt 2017a0AndreaHearing Officer
Docket No 8667 Page 11
VII Corumrssron Drscussrox
On August 22017 the Department filed a letter stating that it supports the issuance of an
Order by the Commission that adopts the proposal for decision in full
Also on August 22017 VGS filed comments on the proposal for decision requesting
that Finding 16 be modified as follows (additional text in italics) If RNG supply exceeds
customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary
flow any remaining RNG attribute inventory amounts through the PGA or through a rate case ifVGS was under traditional cost of service regulation (subject to [Commission] approval)
VGS asserts that [a]bsent such specific language it is possible that VGS would be unable [to]
defer such costs for future recovery and that removal of that component introduces uncertainty
about the potential procedural mechanisms available for cost recovery in the last resort VGS
states that with the Commissions consideraacutetion of this request it does not request oral argument
No other comments were filed on the proposal for decision
The Hearing Officer recommended that the Commission find that determinations
regarding recovery of costs associated with the RNG program will be made in the context of
future proceedings regarding VGSs rates We agree with this recommendation VGS should
have an opportunity to request rate recovery for excess RNG supply However this proceeding
is not the proper time for such a determination Accordingly Finding 16 is hereby modified as
follows If RNG supply exceeds customer demand VGS would first seek to sell the excess
RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any
remaining RNG attribute inventory amounts through the PGA or through arate case as part of
its cost of service if the PGA is no longer in effect atthat timeWe emphasize the importance of the successful implementation of the RNG program in
helping to meet the States renewable energy policy objectives The annual report on the
implementation of the RNG program will serve as a valuable tool to assess that progress In this
proceeding CLF has raised policy considerations that should serve to guide these future reviews
of the RNG program For example CLF has raised concerns regarding the effectiveness of the
voluntary nature of the program In assessing its program we expect VGS to revisit and report
on the feasibility of incorporating RNG as a portion of its supply mix in the future It is
important for VGSs RNG program to be sustainable and continue to evolve ensuring significant
DocketNo8667 Page 12
contributions toward meeting the States renewable energy goals and reducing the consumption
of fossil fuel Accordingly it is critical that the annual report and the three-year comprehensive
review address not only the effectiveness of the program but also its affordability and the
feasibility of other policy options to advance the production and use of RNG in Vermont
Docket No 8667 Page 13
VIII Onunn
Ir rs Hennsy oRDERED ADJUDGED AND DECRnnn by the Public Utility Commission of the
State of Vermont that
1 The findings conclusions and recommendations of the Hearing Officer are
adopted and the Renewable Natural Gas (RNG) program to be implemented by Vermont Gas
SystemsInc (VGS) is approved
2 When VGS has procured RNG supply in amounts reasonably estimated to be
sufficient for estimated customer demand it shall file a formal tariff including proposed rates for
sale of RNG The tariff shall be reviewedpursuantto the procedures of 30 VSA ccedilccedil225226
and227 and sales under the program shall begin after Commission approval of the tariff
3 VGS shall develop and file for Commission approval a separate Renewable
Vehicle Fuel Tariff to serve customers using RNG as a transportation fuel
4 VGS shall file a marketing plan for the RNG program consistent with the
requirements set forth above within one month of the issuance of this Order
5 VGS shall file an annual report consistent with the requirements set forth above
upon implementation of the RNG program
6 VGS shall file a comprehensive review of the performance of the program with
the Commission and the Department after three years of implementation This review will
include an environmental accounting protocol to quantiff the environmental benefits of the
progrfim
7 VGS shall review proposed RNG supply arrangements with the Department
Docket No 8667
Orprcp oF THE Crnm
Dated at Montpelier Vermont this day of+hb
Z Roisman
Cheney
Page 14
20t7
Puslrc Urrlnv
CovtriquestIssIoN
OP VERMONT
(
)))
)))
Fired otildeeglcL ( JotTAttest c
of the Commission
NorIcE To READERS This decision is subject to revision oftechnical errors Reqders are requested tonotify the Clerk of the Commission (by e-mail telephone or inwriting) or any appqrent errors in order that anynecessary corrections may be made (E-mail address pucclerkvermontgov)
Appeal of this decision to the Supreme Court of Vermont must befiledwith the Clerk of the Comnissionwithin thirty days Appeal will not stay the efect of thszlig Order absentfurther order by this Commission orappropriate actiacuteon by the Supreme Court of Vermont Motions for reconsideration or stay if any must be filed withthe Clerk of the Commissionwithin ten days of the date of this deciacutesion and Order
Exhibit 22 VGS RNG Tariff Rate Filing
Exhibit 23 PUC Approval of VGS RNG Rates
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Case No l8-03 13-TF
Petition of Vermont Gas Systems Inc fotapproval of a new tariff implementing theRenewable Natural Gas program
Order entered
OnonRAppnovINc Tiquestrurn
On January 302018 Vermont Gas Systems Inc (VGS) filed a petition for approval of
a new tariff implementing the Renewable Natural Gas (RNG) program approved by the
Vermont Public Utility Commission (Commission) in Docket No 8667 In that Docket the
Commission required VGS to file a tariff implementing the RNG program when it has procured
RNG supply in amounts reasonably estimated to be sufficient to meet customer demandl In
this Order the Commission approves the new tariff marketed under the name EcoGas with an
effective date of bills rendered on and after March 15 2018
VGS states that it has executed an RNG supply contract with deliveries scheduled for
2018 and that two additional contracts are being negotiated for deliveries beginningin2019
VGS is proposing to set its initial RNG adder at$ll749lCcf which represents a five-year
blended rate based on the three RNG supply arrangements VGS intends to account for the
difference between the cost of RNG supply and the RNG adder as a regulatory asset within gas
costs As additional lower-cost supply is added to the portfolio the regulatory asset balance will
be recovered from EcoGas participants with the goal of fully reducing the balance by the end of
five years Accordingly VGS states that the RNG program will be rate-neutral to VGS and its
non-RNG customers
On February 272018 the Vermont Department of Public Service (Department) filed a
letter recommending that the Commission approve the tariff without a hearing or further
investigation The Department states that the tariff filing and proposed accounting treatment
comply with Vermont rate-setting practices policies precedents and statutes
lslaotx
I Docket 8667 Order of 96117 at 13
Page2Case No 18-0313-TF
Based on the foregoing we hereby approve VGSs proposed RNG tariff to be effective
on a bills-rendered basis beginning on March 15 2018 Recovery of any regulatory asset
balance at the end of the fifth year would need to be approved by the Commission in a future
proceeding
So Omnnnn
Case No l8-0313-TF
8r- day of lruacuterLiquestiquest
Page 3
Dated at Montpelier Vermont this 2018
Roisman PueIrc Urlrrv
CoiriexcllriquestlssloN
Cheney
OF VERMONT
Sarah Hofmann
Onncp oF THE CLBRr
Filed huacuteveuroAacute- icirc dollAttest I
Clerk of the Commission
Notice to Readers This decision is subiect to revision oftechnical errors Readers are requested to notify
the Clerk of the Commission (by e-mail telephone or in writing) or qny qpparent errors in order that any
necessary corrections may be made (E-mail address pucclerkvermontgov)Appeal of this decisiacuteon to the Supreme Court of Yermont must be filed with the Clerk of the Commission
within 30 days Appeal will not stay the efect of this Order oslashbsent further order by this Commission or appropriate
action by the Supreme Court of Vermont Motionsthornr reconsideration or stay if any must befiledwith the Clerk ofthe Commissionwithin 28 doslashys of the date of this decision and Order
)))
))))
PUC Case No 18-0313-TF
Eileen SimollardesLauren HammerVermont Gas
85 Swift StreetSouth Burlington VT 05403
June E Tiemey CommissionerVermont Department of Public Service1 12 State StreetMontpelier VT 05620 -2601
Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
Exhibit 31 Accounting Procedures
Exhibit 31 Accounting for VGS Renewable Natural Gas (Ver-9202019)
1 Purchase of RNG Supply
RNG supply purchases are separated into the cost of the commodity and the cost of the renewable attribute The commodity portion is expensed to gas costs in the delivery month while the renewable attribute is booked to an inventory account referenced herein as the ldquoRenewable Inventory Accountrdquo Like VGSrsquo existing storage inventory accounting the Renewable Inventory Account will track both the dollar value of the renewable attribute and the renewable attribute Mcfs Renewable attribute dollar values are record to ldquo16410050 Inventory RNG Storagerdquo while Mcf values are recorded in the gas cost model maintained by accounting In the month VGS purchases the renewable attribute it is accrued in a book model and goes in to 16410150 Inventory RNG Accrued then moves to the 16410050 in a final model the following month for final
RNG may be purchased at different locations and using varying pricing structures While the accounting for RNG does not vary with the purchase location or price the determination of the value of the renewable attribute will vary depending on whether or not the supply pricing expressly values the renewable attribute as an adder or it is embedded in a fixed price Examples of each are shown below The accounting of RNG supply is intended to separate the cost of the renewable attribute from the cost of the commodity The examples below are not all inclusive of what may occur but intended to show the accounting procedures used to separate the renewable attribute from the commodity and specify ownership of each aspect
In all cases the commodity cost portion - which is the total cost of the RNG purchased excluding the renewable attribute - will be expensed in the delivery month as a cost of gas
Example 1 ndash The fixed price of RNG includes both the commodity and the renewable attribute
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The total cost of the RNG supply purchased during the month is calculated by Accounting within the gas cost model as follows
MMBtu Purchased (as validated in step 2) $ MMBtu purchase price (as provided in a supply confirmation provided by gas supply)
4 For purposes of booking the renewable attribute to inventory it is necessary to calculate the RNG cost per Mcf The RNG cost Mcf is calculated using the total cost of RNG supply as calculated in step 3 divided by the Mcf in step 1
5 The renewable attribute price per Mcf is calculated as follows
RNG cost per Mcf as determined in step 4 ndashplus ldquoother componentsrdquo as calculated pursuant to Attachment A ndash minus ldquoAverage Commodity Costrdquo as calculated pursuant to Attachment A The ldquoother componentsrdquo added to the RNG cost per Mcf will vary depending on where the RNG supply was delivered but in each case will be identified in the calculation shown on Attachment A
6 The renewable attribute price per Mcf the total RNG Mcf delivered is recorded in the Inventory RNG Storage account
7 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
Example 2 - RNG purchased at a renewable attribute price plus a daily or monthly index
Where the pricing of RNG specifically separates the commodity from the renewable attribute the renewable attribute price will be what is recorded in the Renewable Inventory Account
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The renewable attribute price per Mcf the total RNG Mcf delivered as determined in step 1 is recorded in the Renewable Inventory Account
4 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
2 Recalculating the RNG Adder
The RNG Adder paid by customers will be recalculated anytime the Natural Gas charge portion of rates changes The Manager of Gas SupplyGas control is responsible for recalculating the RNG Adder The calculation will be verified and approved by the Vice President ndash Regulatory Affairs The determination of the RNG Adder will be pursuant to the methodology shown in Attachment A The Regulatory Department will prepare the amended RNG Adder tariff for filing with the PUC Upon PUC approval of the RNG Adder the Regulatory Department will prepare a memorandum advising Accounting and Gas Supply of the new RNG Adder as approved
3 Customer purchases VGS Renewable Natural Gas
The RNG Adder at the percent selected by the customer will be applied to the entire monthrsquos usage on the customersrsquo next bill For customers utilizing the S-RNG adder the entire volume elected with be on the customersrsquo next bill The S-RNG Adder nor the RNG Adder and percentage selected will not be prorated based on enrollment or termination date
Customers may terminate or modify their RNG selection upon 3 dayrsquos notice to VGS The termination or modification will be effective on the customerrsquos next monthly bill
The customerrsquos usage for the month will be multiplied by the percentage and the approved RNG Adder For customers utilizing the S-RNG adder the volume elected will be multiplied by the approved RNG adder This amount will then be recorded to SAP accounts 4010015-40010021 depending on which rate class the customer is in The RNG Adder is the same regardless of which rate class a customer is in At the end of the month a report is run by billing from the customer information system that shows total usage and which percentage of RNG the customer has signed up for to calculate the number of MCFrsquos of renewable attribute sold during the billing period Billing also provides a report of the volumes sold through the S-RNG Tarriff The Inventory RNG Storage account maintained within the gas cost model by Accounting is reduced by these Mcf The MCFrsquos are then multiplied by the RNG Adder in effect for the billing month and an entry is made to remove that dollar amount from the Inventory RNG Storage account and into the monthly cost of gas The intent of this transaction is to ensure that cost of the renewable attribute is reflected in the cost of gas in the month it is purchased by the customer This results in a matching of the renewable attribute revenue and expense
The RNG Adder revenue and renewable attributes removed from storage will be included in the gas cost deferral calculation However because there is a matching of the renewable attribute revenue and expense the impact on the deferral calculation will be zero
The calculation of unbilled revenues will exclude RNG as a customer can cancel their participation prior to their next bill
In the event Vermont Gas issues a credit to a customer related to the RNG program the value of the renewable attribute credited and the associated Mcf will not be applied to the Renewable Inventory Account
4 Controls
A spreadsheet is maintained by accounting that shows the MCFrsquos and dollar values of the Renewable Inventory Account This is reconciled monthly by the accounting team and will be reviewed by the Manager Gas SupplyGas Control
Accounting will validate that the amount removed from the Renewable Inventory Account matches the RNG Adder revenue Any discrepancies will be reviewed and corrected
A report will be run for each bill cycle that shows any changes to the RNG percentages selected this will include customers opting to withdraw from the RNG program The customer care team will validate any changes against customer confirmation paperwork
5 Renewable Inventory Account Reconciliation and Forecast
The PUC Order approving the RNG program contains provisions describing how RNG supply and demand imbalances will be addressed These provisions and how VGS will track and comply with them are as discussed in this section The PUC Order approving the RNG Program provides that if the available RNG supply during the previous 12 months is less than the amount purchased by customers VGS may use the funds collected to purchase carbon offsets (Finding 13) If carbon offset are not available VGS will contribute the RNG program revenues to the Clean Energy Development Fund or issue prorated credits to affected customers (Finding 15) The Order also provides that in the event RNG supply exceeds customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any remaining RNG attribute inventory amounts through the PGA or through a rate case as part of its cost of service if the s PGA is no longer in effect at that time (Finding 16 as modified) Finding 11 provides that VGS will use a ldquotrue-uprdquo period of up to 12 months in order to balance the difference between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply) Taken together these provisions require VGS to evaluate the imbalance after 12-months and then true-up the imbalance over the next twelve months To provide a forecast of the supplydemand imbalance quarterly the billing area will run a report showing the expected RNG volumes based on current customer commitments by month for the next 12-months Current customers commitments will be calculated based on the previous 12 months of usage multiplied by the RNG percentage currently signed up for The marketing department will provide their forecast of new RNG sales for the next 12-months Both will be provided to the Manager Gas SupplyGas Control The Manager Gas SupplyGas Control will compare the forecasted RNG sales known and expected to RNG supply commitments and provide a 24-month forecast of the supplydemand balance The supplydemand balance will be reviewed at the risk management meeting The strategy for addressing the imbalance consistent with the PUC order will be determined by the risk management committee
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
VGS Renewable Natural Gas Program Manual
Page 14
Section 5 Customer Information and Billing
KEY BILLING AND REVENUE STEPS Item Description Owner Billing Enrollment of VGS Renewable Natural Gas
Customers Contact Center
Notice Customer Notice of VGS Renewable Natural Gas Rates
Contact CenterBilling Group
Program Assurance Verification of VGS Renewable Natural Gas program procedures
Billing and Finance
51 CUSTOMER ENROLLMENT AND BILLING PROCESS The VGS Customer Care team will enroll customers and establish the VGS Renewable Natural Gas Adder on customer accounts Customers will be able to order VGS Renewable Natural Gas via VGSrsquo website (preferred method) calling VGS contact center or through the VGS Energy Services team An RNG calculator is available on VGSrsquo website httpswwwvermontgascomrenewablenaturalgasadder-calculator that can assist customers in estimating the costs of VGS Renewable Natural Gas at the various percentage levels based on the customerrsquos gas consumption VGS will inform customers of the current RNG Adder premium when they enroll Customers have two options when enrolling in the RNG program Customers may select their desired percentage of VGS Renewable Natural Gas ( 10 25 50 or 100) or they may allocate a fixed amount of RNG attributes (ldquoS-RNGrdquo) for each month that they are enrolled in Customer Care will then set up the billing on their account VGS will send an order confirmation via email or as a separate mailing (see Exhibit 51) thanking the customer for subscribing to VGS Renewable Natural Gas and informing the customer of the estimated impact on their bill As shown on Exhibit 51 the order confirmation letter will also include the RNG program guidelines These guidelines are discussed in section 53 below
52 VGS RENEWABLE NATURAL GAS WEBSITE AND FREQUENTLY ASKED QUESTIONS The VGS Renewable Natural Gas web page contains general VGS Renewable Natural Gas information an FAQ a VGS Renewable Natural Gas calculator current VGS Renewable Natural Gas Adder and an easy-to-use sign up form
For the most recent Frequently Answered Questions visit httpwwwvermontgascomVGS Renewable Natural Gas
VGS Renewable Natural Gas Program Manual
Page 15
53 VGS RENEWABLE NATURAL GAS PROGRAM GUIDELINES VGS Renewable Natural Gas customers will fall under VGSrsquo General Terms and Conditions outlined in VGSrsquo tariffs and PUC rules (ex Disconnection practices late fees taxes) VGS tariffs can be found at httpwwwvermontgascomaccountrates
VGS will notify VGS Renewable Natural Gas customers of rate changes in advance of implementation on both their individual bills and the Companyrsquos website RNG customers have the ability to cancel or modify their RNG account profile consistent with the tariff
VGSrsquo RNG customers can subscribe to VGS Renewable Natural Gas service with no term commitment and can cancel with three daysrsquo notice The RNG Adder will apply at either the percentage or fixed quantity allocated by the customer to the usage shown on the monthly bill regardless of enrollment or termination date The RNG Adder will not be pro-rated for partial-month usage
VGS customers receiving the low-income rate discount can subscribe to VGS Renewable Natural Gas however the 20 low income discount will not apply to the RNG Adder
Customers currently on a budget program will be encouraged to request a recalculation of their budget plan to adjust for the RNG Adder costs but it is not required
54 VGS RENEWABLE NATURAL GAS PROGRAM ASSURANCE
On an annual basis VGS will conduct a program review to ensure the VGS Renewable Natural Gas program is managed consistent with this manual The VGS Renewable Natural Gas program is a new product for the US natural gas utility industry and as such no industry specific standards exist VGS is working with on a national effort to develop a ldquoGreen-Erdquo certification process for Renewable Natural Gas programs that process is targeted for completion in 2020
SECTION 5 EXHIBITS
bull Exhibit 51 ECIS Customer Confirmation
VGS Renewable Natural Gas Program Manual
Page 16
EXHIBITS
Exhibit 21 VT PUC Approval Order
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Docket No 8667
Petition of Vermont Gas Systems Inc for aRenewable Natural Gas Program andOptional Tariff
)))
Hearing atMontpelier Vermont
September 22016
order entered q leacute I aon
PRBsBNI Andrea C McHugh Hearing Officer
AppeeReNcBs Peter H Zamore Esq
Owen J McClain EsqSheehey Furlong amp Behrn PCfor Vermont Gas Systems Inc
Louise C Porter EsqTimotthorn M Duggan Esq
for the Vermont Department of Public Service
Sandra Levine Esqfor Conservation Law Foundation
Gerald R Tarrant EsqTarcant Gillies amp Richardsonfor Lincoln Renewable Natural Gas LLC
I INrnooucrroN
This case involves a petition filed by Vermont Gas Systems Inc (VGS) with the
Vermont Public Utility Commission (oCommission) I for approval of a Renewable Natural Gas
(RNG) program and optional RNG tariff service for its customers The proposed RNG
progriquestigravem establishes a framework for VGS to offer its customers the option to purchase RNG for
I Pursuant to Section 9 of Act 53 of the 2017 legislafive session the Vermont Public Service Boards name waschanged to the Vermont Public Utility Commission effective July l 2017 For claity activities of the VermontPublic Service Board that occurred before the name change will be referred to in Commission documents as
activities of the Commission unless that would be conntildersing in the specific context
Docket No 8667 Page2
program establishes a framework for VGS to offer its customers the option to purchase RNG for
as a portion of their usage RNG is produced from materials such as agricultural waste manure
municipal waste plant material or compost and is also referred to as bio-methane In this
proposal for decision I recommend that the Commission approve the proposed RNG program
and require VGS to make compliance filings as set forth herein
il PnocnrunnlHrsroRY
On October 232015 VGS figraveled a petition for approval for its RNG program including
prefiled testimony and exhibits of Thomas Murray
On January 192016I held a prehearing conference and on January 252016I issued
an Order establishing a schedule
On February 122016 VGS filed a revised RNG Plan
On March 102016I held a workshop to discuss the proposed program
On March 152016I issued an Order revising the schedule
On March 222016 Conservation Law Foundation (CLF) and Lincoln Renewable
Natural Gas LLC (Lincoln) filed motions to intervene in this proceeding
On April 12016 VGS filed supplemental testimony and exhibits
On April 82016I issued an Order granting CLFs and Lincolns intervention requests
On July 72016 the Vermont Department of Public Service (Department) CLF and
Lincoln filed testimony
On August 82016 Lincoln filed supplemental testimony
A technical hearing was hthornld on September 22016
On September 30 20|6VGS filed a draft proposal for decision supported by the
Department In addition CLF filed a brief on the same date Reply briefs were filed by VGS
and CLF on October 142016
III Posnroxs oF THE PlRrlns
VGS
VGS requests approval of its proposed RNG program for the sale of RNG to customers
on a voluntary basis VGS claims that its proposal contains reasonable provisions to align its
RNG purchases with the amounts sold to its customers appropriate mechanisms to address over-
Docket No 8667 Page 3
or under-supply of RNG and verification requirements to ensure that sales in fact consist of
RNG VGS maintains that the RNG program is an appropriate first step in stimulating RNG
producer supply and customer demand and is oamply supported by Vermonts experience of
measured implementation of electric renewable pricing programs2 VGS argues that the
program is responsive to the Commissions condition in its Order in Docket 79701o develop a
proposal to promote bio-methane project development3
Department of Public Service
Although the Department did not file a brief or reply brief it did present witness
testimony and indicated its support for the draft proposal for decision filed by VGS The
Department recommends that VGS review all proposed RNG supply arrangements with the
Department (in addition to seeking 30 VSA $ 248 approval where required) and suggests that
in the event of an undersupply of RNG VGS obtain carbon offsets in an amount equivalent to
the unused customer contributions The Department recommends that the RNG program be
reviewed at the end of three years at which time the protocol regarding the purchase of offsets
would be revisited
C ons ervation Law Foundation
CLF urges that the Commission reject the RNG program and instead adopt an RNG
content standard similar to the electric renewable portfolio standarda CLF maintains that the
expected annual sales volume is not apace that is consistent with Vermonts legislative and
planning targets for meeting energy needs with renewable energy or for reducing greenhouse gas
emissionss CLF claims that the proposed voluntary tariff falls short of being a program or
strategy that promotes the increased use of RNG resources or supply or fosters bio-methane
projects in Addison county6
2 VGS reply brief aI23 In Docket 7970the Commission considered the petition of VGS for a certificate of public good (CPG) pursuant
to 30 VSA $ 248 authorizing the construction of the Addison Natural Gas Pipeline In an Order issued on
December 232013 the Commission granted the CPG As a condition of approval the Commission required VGSin consultation with the Department to file a petition with the [Commission] proposing a program to promote bio-methane project development Docket 7970 Order of l2l23ll3 at 147
a CLF brief at 12s CLF brief at 36 CLF brief at 4
Docket No 8667 Page 4
Lincoln
Lincoln maintains that itis essential to promote development of agricultural-based bio-
methane supply in VermontT Lincoln states that the Commission is not in a position to
adequately address VGSs proposed RNG program until negotiations for sale of itsoutput
involving VGS and Middlebury College are completes
IV Punrrc CounnnNrs
The Commission received three letters of support for VGSs RNG program On March 10
2016 the Chittenden County Transportation Authority filed comments indicating that it intends to
explore the possibility of utilizing RNG to cover a portion of the energy needs for its fleet of 70
buses On March 182016 Champlain College filed comments noting that it is interested in using
RNG for a portion of its energy needs that are currently met with conventional natural gas On
March 282016 Casella Waste Systems made a filing with the Commission stating its intention
to explore using RNG to meet some of its energy needs for its fleet of vehicles
V trrutrxcs
Based on the evidence of record I hereby report the following findings and
recommendations to the Commission in accordance with 30 VSA $ 8(c)
1 RNG is produced from raw materials such as agricultural waste manure municipal
waste plant material or food waste Decomposition or digestion of these materials produces
raw methane which is then cleaned or upgraded to bio-methane in order to meet the receiving
pipelines gas quality specifications prior to injection into an existing pipeline system Thomas
Murray VGS (Murray) supp pf at3
2 VGS is exploring options to purchase RNG supply from Lincoln and from landfill gas
projects located outside Vermont that would be received through the Trans-CanadaPipeline
(TCPL) system Murray supp pf at 8-9
7 Daniel Smith Lincoln Renewable Natural Gas LLC (Smith) supp pf at L8 On August 152016 Lincoln filed a motion to continue this proceeding for a period of not less than 60 days statingthat the continuance would allow [it] VGS and Middlebury College to complete discussions as to VGSsinvolvement in the RNG supply in Vermont and allow the record in this case to be properly developed VGS and
the Department opposed the request for continuance On August 222016I issued an Order denying Lincolnsrequest and determined that Lincoln did not demonstrate good cause to postpone the technical hearing
Docket No 8667 Page 5
3 Under the program retail customers would voluntarily purchase RNG in amounts equal to
l0oo25yo50o or 100 of their total monthly requirements at specified prices per Ccf as an
adder to other retail charges Customers could terminate RNG purchases upon providing three
days of advance notice to VGS Murray supp pf at l-2 exhs Pet-VGS-l and Pet-VGS-3
4 Intemrptible customers will have the opportunity to participate in the RNG program
through VGSs existing Lock Price Program which currently provides for up to a two-year
commitment Murray supp pf at 5
5 VGS will develop and file for Commission approval a separate tariff for use of RNG as a
transportation fuel This tariff will allow VGS to take advantage of the sale of the associated
Renewable Identification Numbers (ooRINs) When RNG is used as a transportation fuel it is
eligible to receive RINs under the Federal Renewable Fuel Standard RINs can be resold on the
wholesale market and would be used to offset the price of RNG to transportation customers
receiving service under the tariff Joan E White
Department (White) pf at7tr912116 at 62-
63 (White) exh Pet-VGS-5 Response 4
6 VGS will also initiate a review of the RNG program by the Commission Department and
others after three years White pf at9tr912116 (Munay) at24
7 The adder price for each Ccf of RNG will be equal to the average RNG commodity cost to
VGS less the average commodity cost of natural gas VGS will adjust the adder price per Ccf on
a quarterly basis as part of its Purchased Gas Adjustment (PGA) filing Murray supp pf at 4
8 The proposed RNG program will include a tariff that is very similar in concept to the
Green Mountain Power Corporation (GMP) Cow Power tariff However Cow Power is based
on a fixed rate per kWh no matter what the cost of the renewable energy Murray supp pf at llVhite pf at 4
9 VGSs RNG tariff will be calculated quarterly based on actual RNG and natural gas costs
and will provide accurate price signals as to the price differential between natural gas and RNG
White pf at 4
10 Based on a survey conducted by VGS 85 of its customers are willingto pay l0oo
more for a renewable product VGS projects that customers could potentially consume over
500000 Mcf of RNG over the next five years Murray supp pf at 5
DocketNo8667 Page 6
11 VGS will use a true-up period of up to 12 months in order to balance the difference
between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply)
Murray supp pf at 9
12 There is a risk that due to the voluntary nature of the RNG program supply and demand
will be mismatched White pf at41 David G Hill CLF (Hi11) pf at 9
13 If the available RNG supply during the previous 12 months is less than the amount
purchased by VGS customers the RNG program provides that VGS may use funds collected to
purchase carbon offsets from an established carbon registry such as the American Carbon
Registry VGS will purchase an amount of carbon offsets equal to the amount of the revenue
resulting from the undersupply in order to result in a revenue-neutral program At the time of the
three-year implementation review VGS will propose an environmental accounting protocol in
order to quantify the environmental benefits of the program and to evaluate the financial risk of
purchasing carbon offsets in an amount equivalent to the environmental benefits of unsold RNG
due to undersupply Murray supp pf at 6 l0 exh Pet-VGS-s Responses 1
14 The development and standardization of RNG attributes is in its infancy as compared to
the existing markets for the environmental attributes used in the electric industry (renewable
energy credits or (RECs)) Murray supp pf at 12
15 If carbon offsets are not available VGS will contribute the RNG program revenues to the
Clean Energy Development Fund or issue prorated credits to affected customers Exh Pet-
VGS-S Responses 3
16 If RNG supply exceeds customer demand VGS would seek to sell the excess RNG at
wholesale Murray supp pf at 10
17 VGS will provide proposed RNG supply contracts to the Department prior to execution
It will also consult with the Department before making decisions that could dramatically impact
price or the integrity of the RNG program Exh Pet-VGS-S Responses 2 White pf at 5
18 The estimated cost of RNG supply ranges from $l2lMcf to $25lMcf The cost of natural
gas is less than $3Mcf Murray supp pf at 8-9
19 VGS will implement an RNG Quality Assurance Plan establishing a testing and
monitoring process to ensure that RNG injected (via in-state RNG producers) into the VGS
system is pipeline quality and meets the specifications of the TCPL transportation tariff for bio-
methane gas quality Murray supp pf at 14 exh Pet-VGS-4
Docket No 8667 PageT
20 VGS will file an annual report on the RNG program with the Commission and the
Department containing the following information
1 Number of subscribers by customer class
2 Sales volume by customer class
3 Sales revenues
4 Any sales or purchases of carbon offsets
5 Supplyconsumption matching portfolio including any shortfall or excess
supply of RNG
6 True-up schedule for any imbalances
7 RNG supply verification
8 Quantification of the impact of any excess RNG costs flowing through the
PGA if VGS remains under altemative regulation
9 Accounting of any carbon ofszligets or other incentives
10 Status of any contracts for RNG including plans to acquire new supply
contracts
I 1 Revenue from Renewable Identification Number (RlN) sales and impact
on the transport tariff as well as any projections about the RIN market that are
available to VGS and
12 Complete reports and environmental verifications by an independent
verifier
Murray supp pf at 11 exh Pet-VGS-3 White pf at 8-9 tr912116 at23-24 (Munay)
21 Except as described below concerning RlN-eligible RNG VGS will annually verify that
the RNG was produced by a renewable gas production facility that VGS is the exclusive oryner
of any environmental attributes associated with RNG it sells under the program that it acquired
the RNG from its transferor and sold itatretail and that neither the RNG nor any renewable
attribute associated with the RNG has been sold twice at any point between RNG production and
sale to VGS whether by sales into carbon offset markets or otherwise This verification will be
based on certifications by VGSs suppliers and by an independent third party retained by VGS
for this purpose Exh Pet-VGS-3 exh Pet-VGS-s Response 5 White pf at 8
Docket No 8667 Page I
22 For RlN-eligible RNG used as vehicle fuel verification will be addressed in detail in the
future as part of VGSs proposed Renewable Vehicle Fuel Tariff Exh Pet VGS-5 Response 4
rr912116 at 65 (White)
23 There are few natural gas utilities currently offering RNG at retail VGS modeled its
RNG program after the program designed by FortisBC a local distribution company in British
Columbia Canada VGS also had discussions with SoCalGas in Southern California Both of
these companies are leaders in developing RNG offerings and fostering RNG supply resources
Murray supp pf at 7
24 VGS will file with the Commission and Department a marketing plan containing the
following elements
l An evaluation element that includes concrete metrics such as sales
volume targets and enrollment targets
2 Identification of target market segment(s)
3 Development of materials and language for customer-marketing efforts
that explain the RNG program in plain language easily understandable to the
average customer
4 An online bill calculator
5 An implementation plan that identifies specific activities and a timetable
and
6 Abudget
Exh Pet-VGS-5 White pf at 10 Tr912116 at22-23 (Munay)
25 VGS and the Department represent that the RNG progriquestun is responsive to the
Commissions condition in its Order in Docket 7970 rcquiring VGS to develop a proposal to
promote bio-methane project development Murray supp pf al 13-14tr912116 at 63 (Vhite)
26 VGS asserts that the RNG program represents appropriate progress toward the Vermont
Comprehensive Energy Plan (CEP) goal to meet90o of Vermonts energy needs through
renewable sources by 2050 Murray supp pf at 12-13
VI DlscussroN iexclxu Coxclustox
Vith this proposal for decision I recommend that the Commission approve the RNG
program in accordance with the findings described above and based upon the evidence in the
Docket No 8667 Page 9
record In Docket 7970 the Commission required VGS in consultation with the Department to
file a petition with the [Commission] proposing a program to promote bio-methane project
development It is reasonable to expectthat aprogram meant to stimulate development of a
specific energy source would look to stimulate demand for that resource by offering an
opportunity for customers to purchase supply from RNG producers
The RNG program proposed by VGS and supported by the Department seeks to offer
ratepayers the option to purchase renewable energy as part of their individual energy-use
portfolio Furthermore the program includes a provision requiring that VGS develop a detailed
marketing plan that will serve to educate customers on the availability costs and benefits of
such resources which could lead to increased demand for the product
VGS intends to take advantage of the existing market for RINs associated with RNG used
as transportation fuel by proposing a Renewable Vehicle Fuel Tariff As described above in the
Public Comments section the Chittenden County Transportation Authority and Casella Vaste
Systems are interested in exploring the use of RNG to fuel their vehicle fleets which
demonstrates that there is existing customer demand for this product
Unlike the markets relating to RNG supply used for transportation fuel or renewable
electric generation and the associated trading and verification of RECs the RNG market is in its
infancy At this time it would not be appropriate to expect VGS to implement an RNG program
utilizing an RNG content standard similar to the electric renewable portfolio standard as
recommended by CLF because the equivalent standards and processes do not exist However
the RNG program represents a meaningful first step in encouraging customer interest in
purchasing RNG at retail thereby stimulating supply of RNG into the market and is consistent
with the Commissions condition requiring VGS to develop a proposal to promote bio-methane
project development
VGSs RNG program includes appropriate mechanisms for periodic reporting and
verification of program activities as well as an opportunity to comprehensively review the
program after three years of implementation Furthermore determinations regarding recovery of
costs associated with the RNG program will be made in the context of future proceedings
regarding VGSs rates The RNG program should evolve with the RNG markets in the near-term
and over the course of the next several years which will allow progress towards achievement of
Vermonts 2050 CEP renewable energy goals
Docket No 8667 Page 10
Because not all parties to this proceeding have waived their rights under 3 VSA $ 811
to file written comments or present oral argument with respect to this proposal for decision I am
circulating the proposal for decision to the parties for their review and comment
Dated at Montpelier Vermont this rrtl day of QrIltt 2017a0AndreaHearing Officer
Docket No 8667 Page 11
VII Corumrssron Drscussrox
On August 22017 the Department filed a letter stating that it supports the issuance of an
Order by the Commission that adopts the proposal for decision in full
Also on August 22017 VGS filed comments on the proposal for decision requesting
that Finding 16 be modified as follows (additional text in italics) If RNG supply exceeds
customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary
flow any remaining RNG attribute inventory amounts through the PGA or through a rate case ifVGS was under traditional cost of service regulation (subject to [Commission] approval)
VGS asserts that [a]bsent such specific language it is possible that VGS would be unable [to]
defer such costs for future recovery and that removal of that component introduces uncertainty
about the potential procedural mechanisms available for cost recovery in the last resort VGS
states that with the Commissions consideraacutetion of this request it does not request oral argument
No other comments were filed on the proposal for decision
The Hearing Officer recommended that the Commission find that determinations
regarding recovery of costs associated with the RNG program will be made in the context of
future proceedings regarding VGSs rates We agree with this recommendation VGS should
have an opportunity to request rate recovery for excess RNG supply However this proceeding
is not the proper time for such a determination Accordingly Finding 16 is hereby modified as
follows If RNG supply exceeds customer demand VGS would first seek to sell the excess
RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any
remaining RNG attribute inventory amounts through the PGA or through arate case as part of
its cost of service if the PGA is no longer in effect atthat timeWe emphasize the importance of the successful implementation of the RNG program in
helping to meet the States renewable energy policy objectives The annual report on the
implementation of the RNG program will serve as a valuable tool to assess that progress In this
proceeding CLF has raised policy considerations that should serve to guide these future reviews
of the RNG program For example CLF has raised concerns regarding the effectiveness of the
voluntary nature of the program In assessing its program we expect VGS to revisit and report
on the feasibility of incorporating RNG as a portion of its supply mix in the future It is
important for VGSs RNG program to be sustainable and continue to evolve ensuring significant
DocketNo8667 Page 12
contributions toward meeting the States renewable energy goals and reducing the consumption
of fossil fuel Accordingly it is critical that the annual report and the three-year comprehensive
review address not only the effectiveness of the program but also its affordability and the
feasibility of other policy options to advance the production and use of RNG in Vermont
Docket No 8667 Page 13
VIII Onunn
Ir rs Hennsy oRDERED ADJUDGED AND DECRnnn by the Public Utility Commission of the
State of Vermont that
1 The findings conclusions and recommendations of the Hearing Officer are
adopted and the Renewable Natural Gas (RNG) program to be implemented by Vermont Gas
SystemsInc (VGS) is approved
2 When VGS has procured RNG supply in amounts reasonably estimated to be
sufficient for estimated customer demand it shall file a formal tariff including proposed rates for
sale of RNG The tariff shall be reviewedpursuantto the procedures of 30 VSA ccedilccedil225226
and227 and sales under the program shall begin after Commission approval of the tariff
3 VGS shall develop and file for Commission approval a separate Renewable
Vehicle Fuel Tariff to serve customers using RNG as a transportation fuel
4 VGS shall file a marketing plan for the RNG program consistent with the
requirements set forth above within one month of the issuance of this Order
5 VGS shall file an annual report consistent with the requirements set forth above
upon implementation of the RNG program
6 VGS shall file a comprehensive review of the performance of the program with
the Commission and the Department after three years of implementation This review will
include an environmental accounting protocol to quantiff the environmental benefits of the
progrfim
7 VGS shall review proposed RNG supply arrangements with the Department
Docket No 8667
Orprcp oF THE Crnm
Dated at Montpelier Vermont this day of+hb
Z Roisman
Cheney
Page 14
20t7
Puslrc Urrlnv
CovtriquestIssIoN
OP VERMONT
(
)))
)))
Fired otildeeglcL ( JotTAttest c
of the Commission
NorIcE To READERS This decision is subject to revision oftechnical errors Reqders are requested tonotify the Clerk of the Commission (by e-mail telephone or inwriting) or any appqrent errors in order that anynecessary corrections may be made (E-mail address pucclerkvermontgov)
Appeal of this decision to the Supreme Court of Vermont must befiledwith the Clerk of the Comnissionwithin thirty days Appeal will not stay the efect of thszlig Order absentfurther order by this Commission orappropriate actiacuteon by the Supreme Court of Vermont Motions for reconsideration or stay if any must be filed withthe Clerk of the Commissionwithin ten days of the date of this deciacutesion and Order
Exhibit 22 VGS RNG Tariff Rate Filing
Exhibit 23 PUC Approval of VGS RNG Rates
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Case No l8-03 13-TF
Petition of Vermont Gas Systems Inc fotapproval of a new tariff implementing theRenewable Natural Gas program
Order entered
OnonRAppnovINc Tiquestrurn
On January 302018 Vermont Gas Systems Inc (VGS) filed a petition for approval of
a new tariff implementing the Renewable Natural Gas (RNG) program approved by the
Vermont Public Utility Commission (Commission) in Docket No 8667 In that Docket the
Commission required VGS to file a tariff implementing the RNG program when it has procured
RNG supply in amounts reasonably estimated to be sufficient to meet customer demandl In
this Order the Commission approves the new tariff marketed under the name EcoGas with an
effective date of bills rendered on and after March 15 2018
VGS states that it has executed an RNG supply contract with deliveries scheduled for
2018 and that two additional contracts are being negotiated for deliveries beginningin2019
VGS is proposing to set its initial RNG adder at$ll749lCcf which represents a five-year
blended rate based on the three RNG supply arrangements VGS intends to account for the
difference between the cost of RNG supply and the RNG adder as a regulatory asset within gas
costs As additional lower-cost supply is added to the portfolio the regulatory asset balance will
be recovered from EcoGas participants with the goal of fully reducing the balance by the end of
five years Accordingly VGS states that the RNG program will be rate-neutral to VGS and its
non-RNG customers
On February 272018 the Vermont Department of Public Service (Department) filed a
letter recommending that the Commission approve the tariff without a hearing or further
investigation The Department states that the tariff filing and proposed accounting treatment
comply with Vermont rate-setting practices policies precedents and statutes
lslaotx
I Docket 8667 Order of 96117 at 13
Page2Case No 18-0313-TF
Based on the foregoing we hereby approve VGSs proposed RNG tariff to be effective
on a bills-rendered basis beginning on March 15 2018 Recovery of any regulatory asset
balance at the end of the fifth year would need to be approved by the Commission in a future
proceeding
So Omnnnn
Case No l8-0313-TF
8r- day of lruacuterLiquestiquest
Page 3
Dated at Montpelier Vermont this 2018
Roisman PueIrc Urlrrv
CoiriexcllriquestlssloN
Cheney
OF VERMONT
Sarah Hofmann
Onncp oF THE CLBRr
Filed huacuteveuroAacute- icirc dollAttest I
Clerk of the Commission
Notice to Readers This decision is subiect to revision oftechnical errors Readers are requested to notify
the Clerk of the Commission (by e-mail telephone or in writing) or qny qpparent errors in order that any
necessary corrections may be made (E-mail address pucclerkvermontgov)Appeal of this decisiacuteon to the Supreme Court of Yermont must be filed with the Clerk of the Commission
within 30 days Appeal will not stay the efect of this Order oslashbsent further order by this Commission or appropriate
action by the Supreme Court of Vermont Motionsthornr reconsideration or stay if any must befiledwith the Clerk ofthe Commissionwithin 28 doslashys of the date of this decision and Order
)))
))))
PUC Case No 18-0313-TF
Eileen SimollardesLauren HammerVermont Gas
85 Swift StreetSouth Burlington VT 05403
June E Tiemey CommissionerVermont Department of Public Service1 12 State StreetMontpelier VT 05620 -2601
Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
Exhibit 31 Accounting Procedures
Exhibit 31 Accounting for VGS Renewable Natural Gas (Ver-9202019)
1 Purchase of RNG Supply
RNG supply purchases are separated into the cost of the commodity and the cost of the renewable attribute The commodity portion is expensed to gas costs in the delivery month while the renewable attribute is booked to an inventory account referenced herein as the ldquoRenewable Inventory Accountrdquo Like VGSrsquo existing storage inventory accounting the Renewable Inventory Account will track both the dollar value of the renewable attribute and the renewable attribute Mcfs Renewable attribute dollar values are record to ldquo16410050 Inventory RNG Storagerdquo while Mcf values are recorded in the gas cost model maintained by accounting In the month VGS purchases the renewable attribute it is accrued in a book model and goes in to 16410150 Inventory RNG Accrued then moves to the 16410050 in a final model the following month for final
RNG may be purchased at different locations and using varying pricing structures While the accounting for RNG does not vary with the purchase location or price the determination of the value of the renewable attribute will vary depending on whether or not the supply pricing expressly values the renewable attribute as an adder or it is embedded in a fixed price Examples of each are shown below The accounting of RNG supply is intended to separate the cost of the renewable attribute from the cost of the commodity The examples below are not all inclusive of what may occur but intended to show the accounting procedures used to separate the renewable attribute from the commodity and specify ownership of each aspect
In all cases the commodity cost portion - which is the total cost of the RNG purchased excluding the renewable attribute - will be expensed in the delivery month as a cost of gas
Example 1 ndash The fixed price of RNG includes both the commodity and the renewable attribute
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The total cost of the RNG supply purchased during the month is calculated by Accounting within the gas cost model as follows
MMBtu Purchased (as validated in step 2) $ MMBtu purchase price (as provided in a supply confirmation provided by gas supply)
4 For purposes of booking the renewable attribute to inventory it is necessary to calculate the RNG cost per Mcf The RNG cost Mcf is calculated using the total cost of RNG supply as calculated in step 3 divided by the Mcf in step 1
5 The renewable attribute price per Mcf is calculated as follows
RNG cost per Mcf as determined in step 4 ndashplus ldquoother componentsrdquo as calculated pursuant to Attachment A ndash minus ldquoAverage Commodity Costrdquo as calculated pursuant to Attachment A The ldquoother componentsrdquo added to the RNG cost per Mcf will vary depending on where the RNG supply was delivered but in each case will be identified in the calculation shown on Attachment A
6 The renewable attribute price per Mcf the total RNG Mcf delivered is recorded in the Inventory RNG Storage account
7 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
Example 2 - RNG purchased at a renewable attribute price plus a daily or monthly index
Where the pricing of RNG specifically separates the commodity from the renewable attribute the renewable attribute price will be what is recorded in the Renewable Inventory Account
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The renewable attribute price per Mcf the total RNG Mcf delivered as determined in step 1 is recorded in the Renewable Inventory Account
4 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
2 Recalculating the RNG Adder
The RNG Adder paid by customers will be recalculated anytime the Natural Gas charge portion of rates changes The Manager of Gas SupplyGas control is responsible for recalculating the RNG Adder The calculation will be verified and approved by the Vice President ndash Regulatory Affairs The determination of the RNG Adder will be pursuant to the methodology shown in Attachment A The Regulatory Department will prepare the amended RNG Adder tariff for filing with the PUC Upon PUC approval of the RNG Adder the Regulatory Department will prepare a memorandum advising Accounting and Gas Supply of the new RNG Adder as approved
3 Customer purchases VGS Renewable Natural Gas
The RNG Adder at the percent selected by the customer will be applied to the entire monthrsquos usage on the customersrsquo next bill For customers utilizing the S-RNG adder the entire volume elected with be on the customersrsquo next bill The S-RNG Adder nor the RNG Adder and percentage selected will not be prorated based on enrollment or termination date
Customers may terminate or modify their RNG selection upon 3 dayrsquos notice to VGS The termination or modification will be effective on the customerrsquos next monthly bill
The customerrsquos usage for the month will be multiplied by the percentage and the approved RNG Adder For customers utilizing the S-RNG adder the volume elected will be multiplied by the approved RNG adder This amount will then be recorded to SAP accounts 4010015-40010021 depending on which rate class the customer is in The RNG Adder is the same regardless of which rate class a customer is in At the end of the month a report is run by billing from the customer information system that shows total usage and which percentage of RNG the customer has signed up for to calculate the number of MCFrsquos of renewable attribute sold during the billing period Billing also provides a report of the volumes sold through the S-RNG Tarriff The Inventory RNG Storage account maintained within the gas cost model by Accounting is reduced by these Mcf The MCFrsquos are then multiplied by the RNG Adder in effect for the billing month and an entry is made to remove that dollar amount from the Inventory RNG Storage account and into the monthly cost of gas The intent of this transaction is to ensure that cost of the renewable attribute is reflected in the cost of gas in the month it is purchased by the customer This results in a matching of the renewable attribute revenue and expense
The RNG Adder revenue and renewable attributes removed from storage will be included in the gas cost deferral calculation However because there is a matching of the renewable attribute revenue and expense the impact on the deferral calculation will be zero
The calculation of unbilled revenues will exclude RNG as a customer can cancel their participation prior to their next bill
In the event Vermont Gas issues a credit to a customer related to the RNG program the value of the renewable attribute credited and the associated Mcf will not be applied to the Renewable Inventory Account
4 Controls
A spreadsheet is maintained by accounting that shows the MCFrsquos and dollar values of the Renewable Inventory Account This is reconciled monthly by the accounting team and will be reviewed by the Manager Gas SupplyGas Control
Accounting will validate that the amount removed from the Renewable Inventory Account matches the RNG Adder revenue Any discrepancies will be reviewed and corrected
A report will be run for each bill cycle that shows any changes to the RNG percentages selected this will include customers opting to withdraw from the RNG program The customer care team will validate any changes against customer confirmation paperwork
5 Renewable Inventory Account Reconciliation and Forecast
The PUC Order approving the RNG program contains provisions describing how RNG supply and demand imbalances will be addressed These provisions and how VGS will track and comply with them are as discussed in this section The PUC Order approving the RNG Program provides that if the available RNG supply during the previous 12 months is less than the amount purchased by customers VGS may use the funds collected to purchase carbon offsets (Finding 13) If carbon offset are not available VGS will contribute the RNG program revenues to the Clean Energy Development Fund or issue prorated credits to affected customers (Finding 15) The Order also provides that in the event RNG supply exceeds customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any remaining RNG attribute inventory amounts through the PGA or through a rate case as part of its cost of service if the s PGA is no longer in effect at that time (Finding 16 as modified) Finding 11 provides that VGS will use a ldquotrue-uprdquo period of up to 12 months in order to balance the difference between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply) Taken together these provisions require VGS to evaluate the imbalance after 12-months and then true-up the imbalance over the next twelve months To provide a forecast of the supplydemand imbalance quarterly the billing area will run a report showing the expected RNG volumes based on current customer commitments by month for the next 12-months Current customers commitments will be calculated based on the previous 12 months of usage multiplied by the RNG percentage currently signed up for The marketing department will provide their forecast of new RNG sales for the next 12-months Both will be provided to the Manager Gas SupplyGas Control The Manager Gas SupplyGas Control will compare the forecasted RNG sales known and expected to RNG supply commitments and provide a 24-month forecast of the supplydemand balance The supplydemand balance will be reviewed at the risk management meeting The strategy for addressing the imbalance consistent with the PUC order will be determined by the risk management committee
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
VGS Renewable Natural Gas Program Manual
Page 15
53 VGS RENEWABLE NATURAL GAS PROGRAM GUIDELINES VGS Renewable Natural Gas customers will fall under VGSrsquo General Terms and Conditions outlined in VGSrsquo tariffs and PUC rules (ex Disconnection practices late fees taxes) VGS tariffs can be found at httpwwwvermontgascomaccountrates
VGS will notify VGS Renewable Natural Gas customers of rate changes in advance of implementation on both their individual bills and the Companyrsquos website RNG customers have the ability to cancel or modify their RNG account profile consistent with the tariff
VGSrsquo RNG customers can subscribe to VGS Renewable Natural Gas service with no term commitment and can cancel with three daysrsquo notice The RNG Adder will apply at either the percentage or fixed quantity allocated by the customer to the usage shown on the monthly bill regardless of enrollment or termination date The RNG Adder will not be pro-rated for partial-month usage
VGS customers receiving the low-income rate discount can subscribe to VGS Renewable Natural Gas however the 20 low income discount will not apply to the RNG Adder
Customers currently on a budget program will be encouraged to request a recalculation of their budget plan to adjust for the RNG Adder costs but it is not required
54 VGS RENEWABLE NATURAL GAS PROGRAM ASSURANCE
On an annual basis VGS will conduct a program review to ensure the VGS Renewable Natural Gas program is managed consistent with this manual The VGS Renewable Natural Gas program is a new product for the US natural gas utility industry and as such no industry specific standards exist VGS is working with on a national effort to develop a ldquoGreen-Erdquo certification process for Renewable Natural Gas programs that process is targeted for completion in 2020
SECTION 5 EXHIBITS
bull Exhibit 51 ECIS Customer Confirmation
VGS Renewable Natural Gas Program Manual
Page 16
EXHIBITS
Exhibit 21 VT PUC Approval Order
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Docket No 8667
Petition of Vermont Gas Systems Inc for aRenewable Natural Gas Program andOptional Tariff
)))
Hearing atMontpelier Vermont
September 22016
order entered q leacute I aon
PRBsBNI Andrea C McHugh Hearing Officer
AppeeReNcBs Peter H Zamore Esq
Owen J McClain EsqSheehey Furlong amp Behrn PCfor Vermont Gas Systems Inc
Louise C Porter EsqTimotthorn M Duggan Esq
for the Vermont Department of Public Service
Sandra Levine Esqfor Conservation Law Foundation
Gerald R Tarrant EsqTarcant Gillies amp Richardsonfor Lincoln Renewable Natural Gas LLC
I INrnooucrroN
This case involves a petition filed by Vermont Gas Systems Inc (VGS) with the
Vermont Public Utility Commission (oCommission) I for approval of a Renewable Natural Gas
(RNG) program and optional RNG tariff service for its customers The proposed RNG
progriquestigravem establishes a framework for VGS to offer its customers the option to purchase RNG for
I Pursuant to Section 9 of Act 53 of the 2017 legislafive session the Vermont Public Service Boards name waschanged to the Vermont Public Utility Commission effective July l 2017 For claity activities of the VermontPublic Service Board that occurred before the name change will be referred to in Commission documents as
activities of the Commission unless that would be conntildersing in the specific context
Docket No 8667 Page2
program establishes a framework for VGS to offer its customers the option to purchase RNG for
as a portion of their usage RNG is produced from materials such as agricultural waste manure
municipal waste plant material or compost and is also referred to as bio-methane In this
proposal for decision I recommend that the Commission approve the proposed RNG program
and require VGS to make compliance filings as set forth herein
il PnocnrunnlHrsroRY
On October 232015 VGS figraveled a petition for approval for its RNG program including
prefiled testimony and exhibits of Thomas Murray
On January 192016I held a prehearing conference and on January 252016I issued
an Order establishing a schedule
On February 122016 VGS filed a revised RNG Plan
On March 102016I held a workshop to discuss the proposed program
On March 152016I issued an Order revising the schedule
On March 222016 Conservation Law Foundation (CLF) and Lincoln Renewable
Natural Gas LLC (Lincoln) filed motions to intervene in this proceeding
On April 12016 VGS filed supplemental testimony and exhibits
On April 82016I issued an Order granting CLFs and Lincolns intervention requests
On July 72016 the Vermont Department of Public Service (Department) CLF and
Lincoln filed testimony
On August 82016 Lincoln filed supplemental testimony
A technical hearing was hthornld on September 22016
On September 30 20|6VGS filed a draft proposal for decision supported by the
Department In addition CLF filed a brief on the same date Reply briefs were filed by VGS
and CLF on October 142016
III Posnroxs oF THE PlRrlns
VGS
VGS requests approval of its proposed RNG program for the sale of RNG to customers
on a voluntary basis VGS claims that its proposal contains reasonable provisions to align its
RNG purchases with the amounts sold to its customers appropriate mechanisms to address over-
Docket No 8667 Page 3
or under-supply of RNG and verification requirements to ensure that sales in fact consist of
RNG VGS maintains that the RNG program is an appropriate first step in stimulating RNG
producer supply and customer demand and is oamply supported by Vermonts experience of
measured implementation of electric renewable pricing programs2 VGS argues that the
program is responsive to the Commissions condition in its Order in Docket 79701o develop a
proposal to promote bio-methane project development3
Department of Public Service
Although the Department did not file a brief or reply brief it did present witness
testimony and indicated its support for the draft proposal for decision filed by VGS The
Department recommends that VGS review all proposed RNG supply arrangements with the
Department (in addition to seeking 30 VSA $ 248 approval where required) and suggests that
in the event of an undersupply of RNG VGS obtain carbon offsets in an amount equivalent to
the unused customer contributions The Department recommends that the RNG program be
reviewed at the end of three years at which time the protocol regarding the purchase of offsets
would be revisited
C ons ervation Law Foundation
CLF urges that the Commission reject the RNG program and instead adopt an RNG
content standard similar to the electric renewable portfolio standarda CLF maintains that the
expected annual sales volume is not apace that is consistent with Vermonts legislative and
planning targets for meeting energy needs with renewable energy or for reducing greenhouse gas
emissionss CLF claims that the proposed voluntary tariff falls short of being a program or
strategy that promotes the increased use of RNG resources or supply or fosters bio-methane
projects in Addison county6
2 VGS reply brief aI23 In Docket 7970the Commission considered the petition of VGS for a certificate of public good (CPG) pursuant
to 30 VSA $ 248 authorizing the construction of the Addison Natural Gas Pipeline In an Order issued on
December 232013 the Commission granted the CPG As a condition of approval the Commission required VGSin consultation with the Department to file a petition with the [Commission] proposing a program to promote bio-methane project development Docket 7970 Order of l2l23ll3 at 147
a CLF brief at 12s CLF brief at 36 CLF brief at 4
Docket No 8667 Page 4
Lincoln
Lincoln maintains that itis essential to promote development of agricultural-based bio-
methane supply in VermontT Lincoln states that the Commission is not in a position to
adequately address VGSs proposed RNG program until negotiations for sale of itsoutput
involving VGS and Middlebury College are completes
IV Punrrc CounnnNrs
The Commission received three letters of support for VGSs RNG program On March 10
2016 the Chittenden County Transportation Authority filed comments indicating that it intends to
explore the possibility of utilizing RNG to cover a portion of the energy needs for its fleet of 70
buses On March 182016 Champlain College filed comments noting that it is interested in using
RNG for a portion of its energy needs that are currently met with conventional natural gas On
March 282016 Casella Waste Systems made a filing with the Commission stating its intention
to explore using RNG to meet some of its energy needs for its fleet of vehicles
V trrutrxcs
Based on the evidence of record I hereby report the following findings and
recommendations to the Commission in accordance with 30 VSA $ 8(c)
1 RNG is produced from raw materials such as agricultural waste manure municipal
waste plant material or food waste Decomposition or digestion of these materials produces
raw methane which is then cleaned or upgraded to bio-methane in order to meet the receiving
pipelines gas quality specifications prior to injection into an existing pipeline system Thomas
Murray VGS (Murray) supp pf at3
2 VGS is exploring options to purchase RNG supply from Lincoln and from landfill gas
projects located outside Vermont that would be received through the Trans-CanadaPipeline
(TCPL) system Murray supp pf at 8-9
7 Daniel Smith Lincoln Renewable Natural Gas LLC (Smith) supp pf at L8 On August 152016 Lincoln filed a motion to continue this proceeding for a period of not less than 60 days statingthat the continuance would allow [it] VGS and Middlebury College to complete discussions as to VGSsinvolvement in the RNG supply in Vermont and allow the record in this case to be properly developed VGS and
the Department opposed the request for continuance On August 222016I issued an Order denying Lincolnsrequest and determined that Lincoln did not demonstrate good cause to postpone the technical hearing
Docket No 8667 Page 5
3 Under the program retail customers would voluntarily purchase RNG in amounts equal to
l0oo25yo50o or 100 of their total monthly requirements at specified prices per Ccf as an
adder to other retail charges Customers could terminate RNG purchases upon providing three
days of advance notice to VGS Murray supp pf at l-2 exhs Pet-VGS-l and Pet-VGS-3
4 Intemrptible customers will have the opportunity to participate in the RNG program
through VGSs existing Lock Price Program which currently provides for up to a two-year
commitment Murray supp pf at 5
5 VGS will develop and file for Commission approval a separate tariff for use of RNG as a
transportation fuel This tariff will allow VGS to take advantage of the sale of the associated
Renewable Identification Numbers (ooRINs) When RNG is used as a transportation fuel it is
eligible to receive RINs under the Federal Renewable Fuel Standard RINs can be resold on the
wholesale market and would be used to offset the price of RNG to transportation customers
receiving service under the tariff Joan E White
Department (White) pf at7tr912116 at 62-
63 (White) exh Pet-VGS-5 Response 4
6 VGS will also initiate a review of the RNG program by the Commission Department and
others after three years White pf at9tr912116 (Munay) at24
7 The adder price for each Ccf of RNG will be equal to the average RNG commodity cost to
VGS less the average commodity cost of natural gas VGS will adjust the adder price per Ccf on
a quarterly basis as part of its Purchased Gas Adjustment (PGA) filing Murray supp pf at 4
8 The proposed RNG program will include a tariff that is very similar in concept to the
Green Mountain Power Corporation (GMP) Cow Power tariff However Cow Power is based
on a fixed rate per kWh no matter what the cost of the renewable energy Murray supp pf at llVhite pf at 4
9 VGSs RNG tariff will be calculated quarterly based on actual RNG and natural gas costs
and will provide accurate price signals as to the price differential between natural gas and RNG
White pf at 4
10 Based on a survey conducted by VGS 85 of its customers are willingto pay l0oo
more for a renewable product VGS projects that customers could potentially consume over
500000 Mcf of RNG over the next five years Murray supp pf at 5
DocketNo8667 Page 6
11 VGS will use a true-up period of up to 12 months in order to balance the difference
between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply)
Murray supp pf at 9
12 There is a risk that due to the voluntary nature of the RNG program supply and demand
will be mismatched White pf at41 David G Hill CLF (Hi11) pf at 9
13 If the available RNG supply during the previous 12 months is less than the amount
purchased by VGS customers the RNG program provides that VGS may use funds collected to
purchase carbon offsets from an established carbon registry such as the American Carbon
Registry VGS will purchase an amount of carbon offsets equal to the amount of the revenue
resulting from the undersupply in order to result in a revenue-neutral program At the time of the
three-year implementation review VGS will propose an environmental accounting protocol in
order to quantify the environmental benefits of the program and to evaluate the financial risk of
purchasing carbon offsets in an amount equivalent to the environmental benefits of unsold RNG
due to undersupply Murray supp pf at 6 l0 exh Pet-VGS-s Responses 1
14 The development and standardization of RNG attributes is in its infancy as compared to
the existing markets for the environmental attributes used in the electric industry (renewable
energy credits or (RECs)) Murray supp pf at 12
15 If carbon offsets are not available VGS will contribute the RNG program revenues to the
Clean Energy Development Fund or issue prorated credits to affected customers Exh Pet-
VGS-S Responses 3
16 If RNG supply exceeds customer demand VGS would seek to sell the excess RNG at
wholesale Murray supp pf at 10
17 VGS will provide proposed RNG supply contracts to the Department prior to execution
It will also consult with the Department before making decisions that could dramatically impact
price or the integrity of the RNG program Exh Pet-VGS-S Responses 2 White pf at 5
18 The estimated cost of RNG supply ranges from $l2lMcf to $25lMcf The cost of natural
gas is less than $3Mcf Murray supp pf at 8-9
19 VGS will implement an RNG Quality Assurance Plan establishing a testing and
monitoring process to ensure that RNG injected (via in-state RNG producers) into the VGS
system is pipeline quality and meets the specifications of the TCPL transportation tariff for bio-
methane gas quality Murray supp pf at 14 exh Pet-VGS-4
Docket No 8667 PageT
20 VGS will file an annual report on the RNG program with the Commission and the
Department containing the following information
1 Number of subscribers by customer class
2 Sales volume by customer class
3 Sales revenues
4 Any sales or purchases of carbon offsets
5 Supplyconsumption matching portfolio including any shortfall or excess
supply of RNG
6 True-up schedule for any imbalances
7 RNG supply verification
8 Quantification of the impact of any excess RNG costs flowing through the
PGA if VGS remains under altemative regulation
9 Accounting of any carbon ofszligets or other incentives
10 Status of any contracts for RNG including plans to acquire new supply
contracts
I 1 Revenue from Renewable Identification Number (RlN) sales and impact
on the transport tariff as well as any projections about the RIN market that are
available to VGS and
12 Complete reports and environmental verifications by an independent
verifier
Murray supp pf at 11 exh Pet-VGS-3 White pf at 8-9 tr912116 at23-24 (Munay)
21 Except as described below concerning RlN-eligible RNG VGS will annually verify that
the RNG was produced by a renewable gas production facility that VGS is the exclusive oryner
of any environmental attributes associated with RNG it sells under the program that it acquired
the RNG from its transferor and sold itatretail and that neither the RNG nor any renewable
attribute associated with the RNG has been sold twice at any point between RNG production and
sale to VGS whether by sales into carbon offset markets or otherwise This verification will be
based on certifications by VGSs suppliers and by an independent third party retained by VGS
for this purpose Exh Pet-VGS-3 exh Pet-VGS-s Response 5 White pf at 8
Docket No 8667 Page I
22 For RlN-eligible RNG used as vehicle fuel verification will be addressed in detail in the
future as part of VGSs proposed Renewable Vehicle Fuel Tariff Exh Pet VGS-5 Response 4
rr912116 at 65 (White)
23 There are few natural gas utilities currently offering RNG at retail VGS modeled its
RNG program after the program designed by FortisBC a local distribution company in British
Columbia Canada VGS also had discussions with SoCalGas in Southern California Both of
these companies are leaders in developing RNG offerings and fostering RNG supply resources
Murray supp pf at 7
24 VGS will file with the Commission and Department a marketing plan containing the
following elements
l An evaluation element that includes concrete metrics such as sales
volume targets and enrollment targets
2 Identification of target market segment(s)
3 Development of materials and language for customer-marketing efforts
that explain the RNG program in plain language easily understandable to the
average customer
4 An online bill calculator
5 An implementation plan that identifies specific activities and a timetable
and
6 Abudget
Exh Pet-VGS-5 White pf at 10 Tr912116 at22-23 (Munay)
25 VGS and the Department represent that the RNG progriquestun is responsive to the
Commissions condition in its Order in Docket 7970 rcquiring VGS to develop a proposal to
promote bio-methane project development Murray supp pf al 13-14tr912116 at 63 (Vhite)
26 VGS asserts that the RNG program represents appropriate progress toward the Vermont
Comprehensive Energy Plan (CEP) goal to meet90o of Vermonts energy needs through
renewable sources by 2050 Murray supp pf at 12-13
VI DlscussroN iexclxu Coxclustox
Vith this proposal for decision I recommend that the Commission approve the RNG
program in accordance with the findings described above and based upon the evidence in the
Docket No 8667 Page 9
record In Docket 7970 the Commission required VGS in consultation with the Department to
file a petition with the [Commission] proposing a program to promote bio-methane project
development It is reasonable to expectthat aprogram meant to stimulate development of a
specific energy source would look to stimulate demand for that resource by offering an
opportunity for customers to purchase supply from RNG producers
The RNG program proposed by VGS and supported by the Department seeks to offer
ratepayers the option to purchase renewable energy as part of their individual energy-use
portfolio Furthermore the program includes a provision requiring that VGS develop a detailed
marketing plan that will serve to educate customers on the availability costs and benefits of
such resources which could lead to increased demand for the product
VGS intends to take advantage of the existing market for RINs associated with RNG used
as transportation fuel by proposing a Renewable Vehicle Fuel Tariff As described above in the
Public Comments section the Chittenden County Transportation Authority and Casella Vaste
Systems are interested in exploring the use of RNG to fuel their vehicle fleets which
demonstrates that there is existing customer demand for this product
Unlike the markets relating to RNG supply used for transportation fuel or renewable
electric generation and the associated trading and verification of RECs the RNG market is in its
infancy At this time it would not be appropriate to expect VGS to implement an RNG program
utilizing an RNG content standard similar to the electric renewable portfolio standard as
recommended by CLF because the equivalent standards and processes do not exist However
the RNG program represents a meaningful first step in encouraging customer interest in
purchasing RNG at retail thereby stimulating supply of RNG into the market and is consistent
with the Commissions condition requiring VGS to develop a proposal to promote bio-methane
project development
VGSs RNG program includes appropriate mechanisms for periodic reporting and
verification of program activities as well as an opportunity to comprehensively review the
program after three years of implementation Furthermore determinations regarding recovery of
costs associated with the RNG program will be made in the context of future proceedings
regarding VGSs rates The RNG program should evolve with the RNG markets in the near-term
and over the course of the next several years which will allow progress towards achievement of
Vermonts 2050 CEP renewable energy goals
Docket No 8667 Page 10
Because not all parties to this proceeding have waived their rights under 3 VSA $ 811
to file written comments or present oral argument with respect to this proposal for decision I am
circulating the proposal for decision to the parties for their review and comment
Dated at Montpelier Vermont this rrtl day of QrIltt 2017a0AndreaHearing Officer
Docket No 8667 Page 11
VII Corumrssron Drscussrox
On August 22017 the Department filed a letter stating that it supports the issuance of an
Order by the Commission that adopts the proposal for decision in full
Also on August 22017 VGS filed comments on the proposal for decision requesting
that Finding 16 be modified as follows (additional text in italics) If RNG supply exceeds
customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary
flow any remaining RNG attribute inventory amounts through the PGA or through a rate case ifVGS was under traditional cost of service regulation (subject to [Commission] approval)
VGS asserts that [a]bsent such specific language it is possible that VGS would be unable [to]
defer such costs for future recovery and that removal of that component introduces uncertainty
about the potential procedural mechanisms available for cost recovery in the last resort VGS
states that with the Commissions consideraacutetion of this request it does not request oral argument
No other comments were filed on the proposal for decision
The Hearing Officer recommended that the Commission find that determinations
regarding recovery of costs associated with the RNG program will be made in the context of
future proceedings regarding VGSs rates We agree with this recommendation VGS should
have an opportunity to request rate recovery for excess RNG supply However this proceeding
is not the proper time for such a determination Accordingly Finding 16 is hereby modified as
follows If RNG supply exceeds customer demand VGS would first seek to sell the excess
RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any
remaining RNG attribute inventory amounts through the PGA or through arate case as part of
its cost of service if the PGA is no longer in effect atthat timeWe emphasize the importance of the successful implementation of the RNG program in
helping to meet the States renewable energy policy objectives The annual report on the
implementation of the RNG program will serve as a valuable tool to assess that progress In this
proceeding CLF has raised policy considerations that should serve to guide these future reviews
of the RNG program For example CLF has raised concerns regarding the effectiveness of the
voluntary nature of the program In assessing its program we expect VGS to revisit and report
on the feasibility of incorporating RNG as a portion of its supply mix in the future It is
important for VGSs RNG program to be sustainable and continue to evolve ensuring significant
DocketNo8667 Page 12
contributions toward meeting the States renewable energy goals and reducing the consumption
of fossil fuel Accordingly it is critical that the annual report and the three-year comprehensive
review address not only the effectiveness of the program but also its affordability and the
feasibility of other policy options to advance the production and use of RNG in Vermont
Docket No 8667 Page 13
VIII Onunn
Ir rs Hennsy oRDERED ADJUDGED AND DECRnnn by the Public Utility Commission of the
State of Vermont that
1 The findings conclusions and recommendations of the Hearing Officer are
adopted and the Renewable Natural Gas (RNG) program to be implemented by Vermont Gas
SystemsInc (VGS) is approved
2 When VGS has procured RNG supply in amounts reasonably estimated to be
sufficient for estimated customer demand it shall file a formal tariff including proposed rates for
sale of RNG The tariff shall be reviewedpursuantto the procedures of 30 VSA ccedilccedil225226
and227 and sales under the program shall begin after Commission approval of the tariff
3 VGS shall develop and file for Commission approval a separate Renewable
Vehicle Fuel Tariff to serve customers using RNG as a transportation fuel
4 VGS shall file a marketing plan for the RNG program consistent with the
requirements set forth above within one month of the issuance of this Order
5 VGS shall file an annual report consistent with the requirements set forth above
upon implementation of the RNG program
6 VGS shall file a comprehensive review of the performance of the program with
the Commission and the Department after three years of implementation This review will
include an environmental accounting protocol to quantiff the environmental benefits of the
progrfim
7 VGS shall review proposed RNG supply arrangements with the Department
Docket No 8667
Orprcp oF THE Crnm
Dated at Montpelier Vermont this day of+hb
Z Roisman
Cheney
Page 14
20t7
Puslrc Urrlnv
CovtriquestIssIoN
OP VERMONT
(
)))
)))
Fired otildeeglcL ( JotTAttest c
of the Commission
NorIcE To READERS This decision is subject to revision oftechnical errors Reqders are requested tonotify the Clerk of the Commission (by e-mail telephone or inwriting) or any appqrent errors in order that anynecessary corrections may be made (E-mail address pucclerkvermontgov)
Appeal of this decision to the Supreme Court of Vermont must befiledwith the Clerk of the Comnissionwithin thirty days Appeal will not stay the efect of thszlig Order absentfurther order by this Commission orappropriate actiacuteon by the Supreme Court of Vermont Motions for reconsideration or stay if any must be filed withthe Clerk of the Commissionwithin ten days of the date of this deciacutesion and Order
Exhibit 22 VGS RNG Tariff Rate Filing
Exhibit 23 PUC Approval of VGS RNG Rates
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Case No l8-03 13-TF
Petition of Vermont Gas Systems Inc fotapproval of a new tariff implementing theRenewable Natural Gas program
Order entered
OnonRAppnovINc Tiquestrurn
On January 302018 Vermont Gas Systems Inc (VGS) filed a petition for approval of
a new tariff implementing the Renewable Natural Gas (RNG) program approved by the
Vermont Public Utility Commission (Commission) in Docket No 8667 In that Docket the
Commission required VGS to file a tariff implementing the RNG program when it has procured
RNG supply in amounts reasonably estimated to be sufficient to meet customer demandl In
this Order the Commission approves the new tariff marketed under the name EcoGas with an
effective date of bills rendered on and after March 15 2018
VGS states that it has executed an RNG supply contract with deliveries scheduled for
2018 and that two additional contracts are being negotiated for deliveries beginningin2019
VGS is proposing to set its initial RNG adder at$ll749lCcf which represents a five-year
blended rate based on the three RNG supply arrangements VGS intends to account for the
difference between the cost of RNG supply and the RNG adder as a regulatory asset within gas
costs As additional lower-cost supply is added to the portfolio the regulatory asset balance will
be recovered from EcoGas participants with the goal of fully reducing the balance by the end of
five years Accordingly VGS states that the RNG program will be rate-neutral to VGS and its
non-RNG customers
On February 272018 the Vermont Department of Public Service (Department) filed a
letter recommending that the Commission approve the tariff without a hearing or further
investigation The Department states that the tariff filing and proposed accounting treatment
comply with Vermont rate-setting practices policies precedents and statutes
lslaotx
I Docket 8667 Order of 96117 at 13
Page2Case No 18-0313-TF
Based on the foregoing we hereby approve VGSs proposed RNG tariff to be effective
on a bills-rendered basis beginning on March 15 2018 Recovery of any regulatory asset
balance at the end of the fifth year would need to be approved by the Commission in a future
proceeding
So Omnnnn
Case No l8-0313-TF
8r- day of lruacuterLiquestiquest
Page 3
Dated at Montpelier Vermont this 2018
Roisman PueIrc Urlrrv
CoiriexcllriquestlssloN
Cheney
OF VERMONT
Sarah Hofmann
Onncp oF THE CLBRr
Filed huacuteveuroAacute- icirc dollAttest I
Clerk of the Commission
Notice to Readers This decision is subiect to revision oftechnical errors Readers are requested to notify
the Clerk of the Commission (by e-mail telephone or in writing) or qny qpparent errors in order that any
necessary corrections may be made (E-mail address pucclerkvermontgov)Appeal of this decisiacuteon to the Supreme Court of Yermont must be filed with the Clerk of the Commission
within 30 days Appeal will not stay the efect of this Order oslashbsent further order by this Commission or appropriate
action by the Supreme Court of Vermont Motionsthornr reconsideration or stay if any must befiledwith the Clerk ofthe Commissionwithin 28 doslashys of the date of this decision and Order
)))
))))
PUC Case No 18-0313-TF
Eileen SimollardesLauren HammerVermont Gas
85 Swift StreetSouth Burlington VT 05403
June E Tiemey CommissionerVermont Department of Public Service1 12 State StreetMontpelier VT 05620 -2601
Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
Exhibit 31 Accounting Procedures
Exhibit 31 Accounting for VGS Renewable Natural Gas (Ver-9202019)
1 Purchase of RNG Supply
RNG supply purchases are separated into the cost of the commodity and the cost of the renewable attribute The commodity portion is expensed to gas costs in the delivery month while the renewable attribute is booked to an inventory account referenced herein as the ldquoRenewable Inventory Accountrdquo Like VGSrsquo existing storage inventory accounting the Renewable Inventory Account will track both the dollar value of the renewable attribute and the renewable attribute Mcfs Renewable attribute dollar values are record to ldquo16410050 Inventory RNG Storagerdquo while Mcf values are recorded in the gas cost model maintained by accounting In the month VGS purchases the renewable attribute it is accrued in a book model and goes in to 16410150 Inventory RNG Accrued then moves to the 16410050 in a final model the following month for final
RNG may be purchased at different locations and using varying pricing structures While the accounting for RNG does not vary with the purchase location or price the determination of the value of the renewable attribute will vary depending on whether or not the supply pricing expressly values the renewable attribute as an adder or it is embedded in a fixed price Examples of each are shown below The accounting of RNG supply is intended to separate the cost of the renewable attribute from the cost of the commodity The examples below are not all inclusive of what may occur but intended to show the accounting procedures used to separate the renewable attribute from the commodity and specify ownership of each aspect
In all cases the commodity cost portion - which is the total cost of the RNG purchased excluding the renewable attribute - will be expensed in the delivery month as a cost of gas
Example 1 ndash The fixed price of RNG includes both the commodity and the renewable attribute
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The total cost of the RNG supply purchased during the month is calculated by Accounting within the gas cost model as follows
MMBtu Purchased (as validated in step 2) $ MMBtu purchase price (as provided in a supply confirmation provided by gas supply)
4 For purposes of booking the renewable attribute to inventory it is necessary to calculate the RNG cost per Mcf The RNG cost Mcf is calculated using the total cost of RNG supply as calculated in step 3 divided by the Mcf in step 1
5 The renewable attribute price per Mcf is calculated as follows
RNG cost per Mcf as determined in step 4 ndashplus ldquoother componentsrdquo as calculated pursuant to Attachment A ndash minus ldquoAverage Commodity Costrdquo as calculated pursuant to Attachment A The ldquoother componentsrdquo added to the RNG cost per Mcf will vary depending on where the RNG supply was delivered but in each case will be identified in the calculation shown on Attachment A
6 The renewable attribute price per Mcf the total RNG Mcf delivered is recorded in the Inventory RNG Storage account
7 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
Example 2 - RNG purchased at a renewable attribute price plus a daily or monthly index
Where the pricing of RNG specifically separates the commodity from the renewable attribute the renewable attribute price will be what is recorded in the Renewable Inventory Account
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The renewable attribute price per Mcf the total RNG Mcf delivered as determined in step 1 is recorded in the Renewable Inventory Account
4 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
2 Recalculating the RNG Adder
The RNG Adder paid by customers will be recalculated anytime the Natural Gas charge portion of rates changes The Manager of Gas SupplyGas control is responsible for recalculating the RNG Adder The calculation will be verified and approved by the Vice President ndash Regulatory Affairs The determination of the RNG Adder will be pursuant to the methodology shown in Attachment A The Regulatory Department will prepare the amended RNG Adder tariff for filing with the PUC Upon PUC approval of the RNG Adder the Regulatory Department will prepare a memorandum advising Accounting and Gas Supply of the new RNG Adder as approved
3 Customer purchases VGS Renewable Natural Gas
The RNG Adder at the percent selected by the customer will be applied to the entire monthrsquos usage on the customersrsquo next bill For customers utilizing the S-RNG adder the entire volume elected with be on the customersrsquo next bill The S-RNG Adder nor the RNG Adder and percentage selected will not be prorated based on enrollment or termination date
Customers may terminate or modify their RNG selection upon 3 dayrsquos notice to VGS The termination or modification will be effective on the customerrsquos next monthly bill
The customerrsquos usage for the month will be multiplied by the percentage and the approved RNG Adder For customers utilizing the S-RNG adder the volume elected will be multiplied by the approved RNG adder This amount will then be recorded to SAP accounts 4010015-40010021 depending on which rate class the customer is in The RNG Adder is the same regardless of which rate class a customer is in At the end of the month a report is run by billing from the customer information system that shows total usage and which percentage of RNG the customer has signed up for to calculate the number of MCFrsquos of renewable attribute sold during the billing period Billing also provides a report of the volumes sold through the S-RNG Tarriff The Inventory RNG Storage account maintained within the gas cost model by Accounting is reduced by these Mcf The MCFrsquos are then multiplied by the RNG Adder in effect for the billing month and an entry is made to remove that dollar amount from the Inventory RNG Storage account and into the monthly cost of gas The intent of this transaction is to ensure that cost of the renewable attribute is reflected in the cost of gas in the month it is purchased by the customer This results in a matching of the renewable attribute revenue and expense
The RNG Adder revenue and renewable attributes removed from storage will be included in the gas cost deferral calculation However because there is a matching of the renewable attribute revenue and expense the impact on the deferral calculation will be zero
The calculation of unbilled revenues will exclude RNG as a customer can cancel their participation prior to their next bill
In the event Vermont Gas issues a credit to a customer related to the RNG program the value of the renewable attribute credited and the associated Mcf will not be applied to the Renewable Inventory Account
4 Controls
A spreadsheet is maintained by accounting that shows the MCFrsquos and dollar values of the Renewable Inventory Account This is reconciled monthly by the accounting team and will be reviewed by the Manager Gas SupplyGas Control
Accounting will validate that the amount removed from the Renewable Inventory Account matches the RNG Adder revenue Any discrepancies will be reviewed and corrected
A report will be run for each bill cycle that shows any changes to the RNG percentages selected this will include customers opting to withdraw from the RNG program The customer care team will validate any changes against customer confirmation paperwork
5 Renewable Inventory Account Reconciliation and Forecast
The PUC Order approving the RNG program contains provisions describing how RNG supply and demand imbalances will be addressed These provisions and how VGS will track and comply with them are as discussed in this section The PUC Order approving the RNG Program provides that if the available RNG supply during the previous 12 months is less than the amount purchased by customers VGS may use the funds collected to purchase carbon offsets (Finding 13) If carbon offset are not available VGS will contribute the RNG program revenues to the Clean Energy Development Fund or issue prorated credits to affected customers (Finding 15) The Order also provides that in the event RNG supply exceeds customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any remaining RNG attribute inventory amounts through the PGA or through a rate case as part of its cost of service if the s PGA is no longer in effect at that time (Finding 16 as modified) Finding 11 provides that VGS will use a ldquotrue-uprdquo period of up to 12 months in order to balance the difference between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply) Taken together these provisions require VGS to evaluate the imbalance after 12-months and then true-up the imbalance over the next twelve months To provide a forecast of the supplydemand imbalance quarterly the billing area will run a report showing the expected RNG volumes based on current customer commitments by month for the next 12-months Current customers commitments will be calculated based on the previous 12 months of usage multiplied by the RNG percentage currently signed up for The marketing department will provide their forecast of new RNG sales for the next 12-months Both will be provided to the Manager Gas SupplyGas Control The Manager Gas SupplyGas Control will compare the forecasted RNG sales known and expected to RNG supply commitments and provide a 24-month forecast of the supplydemand balance The supplydemand balance will be reviewed at the risk management meeting The strategy for addressing the imbalance consistent with the PUC order will be determined by the risk management committee
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
VGS Renewable Natural Gas Program Manual
Page 16
EXHIBITS
Exhibit 21 VT PUC Approval Order
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Docket No 8667
Petition of Vermont Gas Systems Inc for aRenewable Natural Gas Program andOptional Tariff
)))
Hearing atMontpelier Vermont
September 22016
order entered q leacute I aon
PRBsBNI Andrea C McHugh Hearing Officer
AppeeReNcBs Peter H Zamore Esq
Owen J McClain EsqSheehey Furlong amp Behrn PCfor Vermont Gas Systems Inc
Louise C Porter EsqTimotthorn M Duggan Esq
for the Vermont Department of Public Service
Sandra Levine Esqfor Conservation Law Foundation
Gerald R Tarrant EsqTarcant Gillies amp Richardsonfor Lincoln Renewable Natural Gas LLC
I INrnooucrroN
This case involves a petition filed by Vermont Gas Systems Inc (VGS) with the
Vermont Public Utility Commission (oCommission) I for approval of a Renewable Natural Gas
(RNG) program and optional RNG tariff service for its customers The proposed RNG
progriquestigravem establishes a framework for VGS to offer its customers the option to purchase RNG for
I Pursuant to Section 9 of Act 53 of the 2017 legislafive session the Vermont Public Service Boards name waschanged to the Vermont Public Utility Commission effective July l 2017 For claity activities of the VermontPublic Service Board that occurred before the name change will be referred to in Commission documents as
activities of the Commission unless that would be conntildersing in the specific context
Docket No 8667 Page2
program establishes a framework for VGS to offer its customers the option to purchase RNG for
as a portion of their usage RNG is produced from materials such as agricultural waste manure
municipal waste plant material or compost and is also referred to as bio-methane In this
proposal for decision I recommend that the Commission approve the proposed RNG program
and require VGS to make compliance filings as set forth herein
il PnocnrunnlHrsroRY
On October 232015 VGS figraveled a petition for approval for its RNG program including
prefiled testimony and exhibits of Thomas Murray
On January 192016I held a prehearing conference and on January 252016I issued
an Order establishing a schedule
On February 122016 VGS filed a revised RNG Plan
On March 102016I held a workshop to discuss the proposed program
On March 152016I issued an Order revising the schedule
On March 222016 Conservation Law Foundation (CLF) and Lincoln Renewable
Natural Gas LLC (Lincoln) filed motions to intervene in this proceeding
On April 12016 VGS filed supplemental testimony and exhibits
On April 82016I issued an Order granting CLFs and Lincolns intervention requests
On July 72016 the Vermont Department of Public Service (Department) CLF and
Lincoln filed testimony
On August 82016 Lincoln filed supplemental testimony
A technical hearing was hthornld on September 22016
On September 30 20|6VGS filed a draft proposal for decision supported by the
Department In addition CLF filed a brief on the same date Reply briefs were filed by VGS
and CLF on October 142016
III Posnroxs oF THE PlRrlns
VGS
VGS requests approval of its proposed RNG program for the sale of RNG to customers
on a voluntary basis VGS claims that its proposal contains reasonable provisions to align its
RNG purchases with the amounts sold to its customers appropriate mechanisms to address over-
Docket No 8667 Page 3
or under-supply of RNG and verification requirements to ensure that sales in fact consist of
RNG VGS maintains that the RNG program is an appropriate first step in stimulating RNG
producer supply and customer demand and is oamply supported by Vermonts experience of
measured implementation of electric renewable pricing programs2 VGS argues that the
program is responsive to the Commissions condition in its Order in Docket 79701o develop a
proposal to promote bio-methane project development3
Department of Public Service
Although the Department did not file a brief or reply brief it did present witness
testimony and indicated its support for the draft proposal for decision filed by VGS The
Department recommends that VGS review all proposed RNG supply arrangements with the
Department (in addition to seeking 30 VSA $ 248 approval where required) and suggests that
in the event of an undersupply of RNG VGS obtain carbon offsets in an amount equivalent to
the unused customer contributions The Department recommends that the RNG program be
reviewed at the end of three years at which time the protocol regarding the purchase of offsets
would be revisited
C ons ervation Law Foundation
CLF urges that the Commission reject the RNG program and instead adopt an RNG
content standard similar to the electric renewable portfolio standarda CLF maintains that the
expected annual sales volume is not apace that is consistent with Vermonts legislative and
planning targets for meeting energy needs with renewable energy or for reducing greenhouse gas
emissionss CLF claims that the proposed voluntary tariff falls short of being a program or
strategy that promotes the increased use of RNG resources or supply or fosters bio-methane
projects in Addison county6
2 VGS reply brief aI23 In Docket 7970the Commission considered the petition of VGS for a certificate of public good (CPG) pursuant
to 30 VSA $ 248 authorizing the construction of the Addison Natural Gas Pipeline In an Order issued on
December 232013 the Commission granted the CPG As a condition of approval the Commission required VGSin consultation with the Department to file a petition with the [Commission] proposing a program to promote bio-methane project development Docket 7970 Order of l2l23ll3 at 147
a CLF brief at 12s CLF brief at 36 CLF brief at 4
Docket No 8667 Page 4
Lincoln
Lincoln maintains that itis essential to promote development of agricultural-based bio-
methane supply in VermontT Lincoln states that the Commission is not in a position to
adequately address VGSs proposed RNG program until negotiations for sale of itsoutput
involving VGS and Middlebury College are completes
IV Punrrc CounnnNrs
The Commission received three letters of support for VGSs RNG program On March 10
2016 the Chittenden County Transportation Authority filed comments indicating that it intends to
explore the possibility of utilizing RNG to cover a portion of the energy needs for its fleet of 70
buses On March 182016 Champlain College filed comments noting that it is interested in using
RNG for a portion of its energy needs that are currently met with conventional natural gas On
March 282016 Casella Waste Systems made a filing with the Commission stating its intention
to explore using RNG to meet some of its energy needs for its fleet of vehicles
V trrutrxcs
Based on the evidence of record I hereby report the following findings and
recommendations to the Commission in accordance with 30 VSA $ 8(c)
1 RNG is produced from raw materials such as agricultural waste manure municipal
waste plant material or food waste Decomposition or digestion of these materials produces
raw methane which is then cleaned or upgraded to bio-methane in order to meet the receiving
pipelines gas quality specifications prior to injection into an existing pipeline system Thomas
Murray VGS (Murray) supp pf at3
2 VGS is exploring options to purchase RNG supply from Lincoln and from landfill gas
projects located outside Vermont that would be received through the Trans-CanadaPipeline
(TCPL) system Murray supp pf at 8-9
7 Daniel Smith Lincoln Renewable Natural Gas LLC (Smith) supp pf at L8 On August 152016 Lincoln filed a motion to continue this proceeding for a period of not less than 60 days statingthat the continuance would allow [it] VGS and Middlebury College to complete discussions as to VGSsinvolvement in the RNG supply in Vermont and allow the record in this case to be properly developed VGS and
the Department opposed the request for continuance On August 222016I issued an Order denying Lincolnsrequest and determined that Lincoln did not demonstrate good cause to postpone the technical hearing
Docket No 8667 Page 5
3 Under the program retail customers would voluntarily purchase RNG in amounts equal to
l0oo25yo50o or 100 of their total monthly requirements at specified prices per Ccf as an
adder to other retail charges Customers could terminate RNG purchases upon providing three
days of advance notice to VGS Murray supp pf at l-2 exhs Pet-VGS-l and Pet-VGS-3
4 Intemrptible customers will have the opportunity to participate in the RNG program
through VGSs existing Lock Price Program which currently provides for up to a two-year
commitment Murray supp pf at 5
5 VGS will develop and file for Commission approval a separate tariff for use of RNG as a
transportation fuel This tariff will allow VGS to take advantage of the sale of the associated
Renewable Identification Numbers (ooRINs) When RNG is used as a transportation fuel it is
eligible to receive RINs under the Federal Renewable Fuel Standard RINs can be resold on the
wholesale market and would be used to offset the price of RNG to transportation customers
receiving service under the tariff Joan E White
Department (White) pf at7tr912116 at 62-
63 (White) exh Pet-VGS-5 Response 4
6 VGS will also initiate a review of the RNG program by the Commission Department and
others after three years White pf at9tr912116 (Munay) at24
7 The adder price for each Ccf of RNG will be equal to the average RNG commodity cost to
VGS less the average commodity cost of natural gas VGS will adjust the adder price per Ccf on
a quarterly basis as part of its Purchased Gas Adjustment (PGA) filing Murray supp pf at 4
8 The proposed RNG program will include a tariff that is very similar in concept to the
Green Mountain Power Corporation (GMP) Cow Power tariff However Cow Power is based
on a fixed rate per kWh no matter what the cost of the renewable energy Murray supp pf at llVhite pf at 4
9 VGSs RNG tariff will be calculated quarterly based on actual RNG and natural gas costs
and will provide accurate price signals as to the price differential between natural gas and RNG
White pf at 4
10 Based on a survey conducted by VGS 85 of its customers are willingto pay l0oo
more for a renewable product VGS projects that customers could potentially consume over
500000 Mcf of RNG over the next five years Murray supp pf at 5
DocketNo8667 Page 6
11 VGS will use a true-up period of up to 12 months in order to balance the difference
between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply)
Murray supp pf at 9
12 There is a risk that due to the voluntary nature of the RNG program supply and demand
will be mismatched White pf at41 David G Hill CLF (Hi11) pf at 9
13 If the available RNG supply during the previous 12 months is less than the amount
purchased by VGS customers the RNG program provides that VGS may use funds collected to
purchase carbon offsets from an established carbon registry such as the American Carbon
Registry VGS will purchase an amount of carbon offsets equal to the amount of the revenue
resulting from the undersupply in order to result in a revenue-neutral program At the time of the
three-year implementation review VGS will propose an environmental accounting protocol in
order to quantify the environmental benefits of the program and to evaluate the financial risk of
purchasing carbon offsets in an amount equivalent to the environmental benefits of unsold RNG
due to undersupply Murray supp pf at 6 l0 exh Pet-VGS-s Responses 1
14 The development and standardization of RNG attributes is in its infancy as compared to
the existing markets for the environmental attributes used in the electric industry (renewable
energy credits or (RECs)) Murray supp pf at 12
15 If carbon offsets are not available VGS will contribute the RNG program revenues to the
Clean Energy Development Fund or issue prorated credits to affected customers Exh Pet-
VGS-S Responses 3
16 If RNG supply exceeds customer demand VGS would seek to sell the excess RNG at
wholesale Murray supp pf at 10
17 VGS will provide proposed RNG supply contracts to the Department prior to execution
It will also consult with the Department before making decisions that could dramatically impact
price or the integrity of the RNG program Exh Pet-VGS-S Responses 2 White pf at 5
18 The estimated cost of RNG supply ranges from $l2lMcf to $25lMcf The cost of natural
gas is less than $3Mcf Murray supp pf at 8-9
19 VGS will implement an RNG Quality Assurance Plan establishing a testing and
monitoring process to ensure that RNG injected (via in-state RNG producers) into the VGS
system is pipeline quality and meets the specifications of the TCPL transportation tariff for bio-
methane gas quality Murray supp pf at 14 exh Pet-VGS-4
Docket No 8667 PageT
20 VGS will file an annual report on the RNG program with the Commission and the
Department containing the following information
1 Number of subscribers by customer class
2 Sales volume by customer class
3 Sales revenues
4 Any sales or purchases of carbon offsets
5 Supplyconsumption matching portfolio including any shortfall or excess
supply of RNG
6 True-up schedule for any imbalances
7 RNG supply verification
8 Quantification of the impact of any excess RNG costs flowing through the
PGA if VGS remains under altemative regulation
9 Accounting of any carbon ofszligets or other incentives
10 Status of any contracts for RNG including plans to acquire new supply
contracts
I 1 Revenue from Renewable Identification Number (RlN) sales and impact
on the transport tariff as well as any projections about the RIN market that are
available to VGS and
12 Complete reports and environmental verifications by an independent
verifier
Murray supp pf at 11 exh Pet-VGS-3 White pf at 8-9 tr912116 at23-24 (Munay)
21 Except as described below concerning RlN-eligible RNG VGS will annually verify that
the RNG was produced by a renewable gas production facility that VGS is the exclusive oryner
of any environmental attributes associated with RNG it sells under the program that it acquired
the RNG from its transferor and sold itatretail and that neither the RNG nor any renewable
attribute associated with the RNG has been sold twice at any point between RNG production and
sale to VGS whether by sales into carbon offset markets or otherwise This verification will be
based on certifications by VGSs suppliers and by an independent third party retained by VGS
for this purpose Exh Pet-VGS-3 exh Pet-VGS-s Response 5 White pf at 8
Docket No 8667 Page I
22 For RlN-eligible RNG used as vehicle fuel verification will be addressed in detail in the
future as part of VGSs proposed Renewable Vehicle Fuel Tariff Exh Pet VGS-5 Response 4
rr912116 at 65 (White)
23 There are few natural gas utilities currently offering RNG at retail VGS modeled its
RNG program after the program designed by FortisBC a local distribution company in British
Columbia Canada VGS also had discussions with SoCalGas in Southern California Both of
these companies are leaders in developing RNG offerings and fostering RNG supply resources
Murray supp pf at 7
24 VGS will file with the Commission and Department a marketing plan containing the
following elements
l An evaluation element that includes concrete metrics such as sales
volume targets and enrollment targets
2 Identification of target market segment(s)
3 Development of materials and language for customer-marketing efforts
that explain the RNG program in plain language easily understandable to the
average customer
4 An online bill calculator
5 An implementation plan that identifies specific activities and a timetable
and
6 Abudget
Exh Pet-VGS-5 White pf at 10 Tr912116 at22-23 (Munay)
25 VGS and the Department represent that the RNG progriquestun is responsive to the
Commissions condition in its Order in Docket 7970 rcquiring VGS to develop a proposal to
promote bio-methane project development Murray supp pf al 13-14tr912116 at 63 (Vhite)
26 VGS asserts that the RNG program represents appropriate progress toward the Vermont
Comprehensive Energy Plan (CEP) goal to meet90o of Vermonts energy needs through
renewable sources by 2050 Murray supp pf at 12-13
VI DlscussroN iexclxu Coxclustox
Vith this proposal for decision I recommend that the Commission approve the RNG
program in accordance with the findings described above and based upon the evidence in the
Docket No 8667 Page 9
record In Docket 7970 the Commission required VGS in consultation with the Department to
file a petition with the [Commission] proposing a program to promote bio-methane project
development It is reasonable to expectthat aprogram meant to stimulate development of a
specific energy source would look to stimulate demand for that resource by offering an
opportunity for customers to purchase supply from RNG producers
The RNG program proposed by VGS and supported by the Department seeks to offer
ratepayers the option to purchase renewable energy as part of their individual energy-use
portfolio Furthermore the program includes a provision requiring that VGS develop a detailed
marketing plan that will serve to educate customers on the availability costs and benefits of
such resources which could lead to increased demand for the product
VGS intends to take advantage of the existing market for RINs associated with RNG used
as transportation fuel by proposing a Renewable Vehicle Fuel Tariff As described above in the
Public Comments section the Chittenden County Transportation Authority and Casella Vaste
Systems are interested in exploring the use of RNG to fuel their vehicle fleets which
demonstrates that there is existing customer demand for this product
Unlike the markets relating to RNG supply used for transportation fuel or renewable
electric generation and the associated trading and verification of RECs the RNG market is in its
infancy At this time it would not be appropriate to expect VGS to implement an RNG program
utilizing an RNG content standard similar to the electric renewable portfolio standard as
recommended by CLF because the equivalent standards and processes do not exist However
the RNG program represents a meaningful first step in encouraging customer interest in
purchasing RNG at retail thereby stimulating supply of RNG into the market and is consistent
with the Commissions condition requiring VGS to develop a proposal to promote bio-methane
project development
VGSs RNG program includes appropriate mechanisms for periodic reporting and
verification of program activities as well as an opportunity to comprehensively review the
program after three years of implementation Furthermore determinations regarding recovery of
costs associated with the RNG program will be made in the context of future proceedings
regarding VGSs rates The RNG program should evolve with the RNG markets in the near-term
and over the course of the next several years which will allow progress towards achievement of
Vermonts 2050 CEP renewable energy goals
Docket No 8667 Page 10
Because not all parties to this proceeding have waived their rights under 3 VSA $ 811
to file written comments or present oral argument with respect to this proposal for decision I am
circulating the proposal for decision to the parties for their review and comment
Dated at Montpelier Vermont this rrtl day of QrIltt 2017a0AndreaHearing Officer
Docket No 8667 Page 11
VII Corumrssron Drscussrox
On August 22017 the Department filed a letter stating that it supports the issuance of an
Order by the Commission that adopts the proposal for decision in full
Also on August 22017 VGS filed comments on the proposal for decision requesting
that Finding 16 be modified as follows (additional text in italics) If RNG supply exceeds
customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary
flow any remaining RNG attribute inventory amounts through the PGA or through a rate case ifVGS was under traditional cost of service regulation (subject to [Commission] approval)
VGS asserts that [a]bsent such specific language it is possible that VGS would be unable [to]
defer such costs for future recovery and that removal of that component introduces uncertainty
about the potential procedural mechanisms available for cost recovery in the last resort VGS
states that with the Commissions consideraacutetion of this request it does not request oral argument
No other comments were filed on the proposal for decision
The Hearing Officer recommended that the Commission find that determinations
regarding recovery of costs associated with the RNG program will be made in the context of
future proceedings regarding VGSs rates We agree with this recommendation VGS should
have an opportunity to request rate recovery for excess RNG supply However this proceeding
is not the proper time for such a determination Accordingly Finding 16 is hereby modified as
follows If RNG supply exceeds customer demand VGS would first seek to sell the excess
RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any
remaining RNG attribute inventory amounts through the PGA or through arate case as part of
its cost of service if the PGA is no longer in effect atthat timeWe emphasize the importance of the successful implementation of the RNG program in
helping to meet the States renewable energy policy objectives The annual report on the
implementation of the RNG program will serve as a valuable tool to assess that progress In this
proceeding CLF has raised policy considerations that should serve to guide these future reviews
of the RNG program For example CLF has raised concerns regarding the effectiveness of the
voluntary nature of the program In assessing its program we expect VGS to revisit and report
on the feasibility of incorporating RNG as a portion of its supply mix in the future It is
important for VGSs RNG program to be sustainable and continue to evolve ensuring significant
DocketNo8667 Page 12
contributions toward meeting the States renewable energy goals and reducing the consumption
of fossil fuel Accordingly it is critical that the annual report and the three-year comprehensive
review address not only the effectiveness of the program but also its affordability and the
feasibility of other policy options to advance the production and use of RNG in Vermont
Docket No 8667 Page 13
VIII Onunn
Ir rs Hennsy oRDERED ADJUDGED AND DECRnnn by the Public Utility Commission of the
State of Vermont that
1 The findings conclusions and recommendations of the Hearing Officer are
adopted and the Renewable Natural Gas (RNG) program to be implemented by Vermont Gas
SystemsInc (VGS) is approved
2 When VGS has procured RNG supply in amounts reasonably estimated to be
sufficient for estimated customer demand it shall file a formal tariff including proposed rates for
sale of RNG The tariff shall be reviewedpursuantto the procedures of 30 VSA ccedilccedil225226
and227 and sales under the program shall begin after Commission approval of the tariff
3 VGS shall develop and file for Commission approval a separate Renewable
Vehicle Fuel Tariff to serve customers using RNG as a transportation fuel
4 VGS shall file a marketing plan for the RNG program consistent with the
requirements set forth above within one month of the issuance of this Order
5 VGS shall file an annual report consistent with the requirements set forth above
upon implementation of the RNG program
6 VGS shall file a comprehensive review of the performance of the program with
the Commission and the Department after three years of implementation This review will
include an environmental accounting protocol to quantiff the environmental benefits of the
progrfim
7 VGS shall review proposed RNG supply arrangements with the Department
Docket No 8667
Orprcp oF THE Crnm
Dated at Montpelier Vermont this day of+hb
Z Roisman
Cheney
Page 14
20t7
Puslrc Urrlnv
CovtriquestIssIoN
OP VERMONT
(
)))
)))
Fired otildeeglcL ( JotTAttest c
of the Commission
NorIcE To READERS This decision is subject to revision oftechnical errors Reqders are requested tonotify the Clerk of the Commission (by e-mail telephone or inwriting) or any appqrent errors in order that anynecessary corrections may be made (E-mail address pucclerkvermontgov)
Appeal of this decision to the Supreme Court of Vermont must befiledwith the Clerk of the Comnissionwithin thirty days Appeal will not stay the efect of thszlig Order absentfurther order by this Commission orappropriate actiacuteon by the Supreme Court of Vermont Motions for reconsideration or stay if any must be filed withthe Clerk of the Commissionwithin ten days of the date of this deciacutesion and Order
Exhibit 22 VGS RNG Tariff Rate Filing
Exhibit 23 PUC Approval of VGS RNG Rates
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Case No l8-03 13-TF
Petition of Vermont Gas Systems Inc fotapproval of a new tariff implementing theRenewable Natural Gas program
Order entered
OnonRAppnovINc Tiquestrurn
On January 302018 Vermont Gas Systems Inc (VGS) filed a petition for approval of
a new tariff implementing the Renewable Natural Gas (RNG) program approved by the
Vermont Public Utility Commission (Commission) in Docket No 8667 In that Docket the
Commission required VGS to file a tariff implementing the RNG program when it has procured
RNG supply in amounts reasonably estimated to be sufficient to meet customer demandl In
this Order the Commission approves the new tariff marketed under the name EcoGas with an
effective date of bills rendered on and after March 15 2018
VGS states that it has executed an RNG supply contract with deliveries scheduled for
2018 and that two additional contracts are being negotiated for deliveries beginningin2019
VGS is proposing to set its initial RNG adder at$ll749lCcf which represents a five-year
blended rate based on the three RNG supply arrangements VGS intends to account for the
difference between the cost of RNG supply and the RNG adder as a regulatory asset within gas
costs As additional lower-cost supply is added to the portfolio the regulatory asset balance will
be recovered from EcoGas participants with the goal of fully reducing the balance by the end of
five years Accordingly VGS states that the RNG program will be rate-neutral to VGS and its
non-RNG customers
On February 272018 the Vermont Department of Public Service (Department) filed a
letter recommending that the Commission approve the tariff without a hearing or further
investigation The Department states that the tariff filing and proposed accounting treatment
comply with Vermont rate-setting practices policies precedents and statutes
lslaotx
I Docket 8667 Order of 96117 at 13
Page2Case No 18-0313-TF
Based on the foregoing we hereby approve VGSs proposed RNG tariff to be effective
on a bills-rendered basis beginning on March 15 2018 Recovery of any regulatory asset
balance at the end of the fifth year would need to be approved by the Commission in a future
proceeding
So Omnnnn
Case No l8-0313-TF
8r- day of lruacuterLiquestiquest
Page 3
Dated at Montpelier Vermont this 2018
Roisman PueIrc Urlrrv
CoiriexcllriquestlssloN
Cheney
OF VERMONT
Sarah Hofmann
Onncp oF THE CLBRr
Filed huacuteveuroAacute- icirc dollAttest I
Clerk of the Commission
Notice to Readers This decision is subiect to revision oftechnical errors Readers are requested to notify
the Clerk of the Commission (by e-mail telephone or in writing) or qny qpparent errors in order that any
necessary corrections may be made (E-mail address pucclerkvermontgov)Appeal of this decisiacuteon to the Supreme Court of Yermont must be filed with the Clerk of the Commission
within 30 days Appeal will not stay the efect of this Order oslashbsent further order by this Commission or appropriate
action by the Supreme Court of Vermont Motionsthornr reconsideration or stay if any must befiledwith the Clerk ofthe Commissionwithin 28 doslashys of the date of this decision and Order
)))
))))
PUC Case No 18-0313-TF
Eileen SimollardesLauren HammerVermont Gas
85 Swift StreetSouth Burlington VT 05403
June E Tiemey CommissionerVermont Department of Public Service1 12 State StreetMontpelier VT 05620 -2601
Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
Exhibit 31 Accounting Procedures
Exhibit 31 Accounting for VGS Renewable Natural Gas (Ver-9202019)
1 Purchase of RNG Supply
RNG supply purchases are separated into the cost of the commodity and the cost of the renewable attribute The commodity portion is expensed to gas costs in the delivery month while the renewable attribute is booked to an inventory account referenced herein as the ldquoRenewable Inventory Accountrdquo Like VGSrsquo existing storage inventory accounting the Renewable Inventory Account will track both the dollar value of the renewable attribute and the renewable attribute Mcfs Renewable attribute dollar values are record to ldquo16410050 Inventory RNG Storagerdquo while Mcf values are recorded in the gas cost model maintained by accounting In the month VGS purchases the renewable attribute it is accrued in a book model and goes in to 16410150 Inventory RNG Accrued then moves to the 16410050 in a final model the following month for final
RNG may be purchased at different locations and using varying pricing structures While the accounting for RNG does not vary with the purchase location or price the determination of the value of the renewable attribute will vary depending on whether or not the supply pricing expressly values the renewable attribute as an adder or it is embedded in a fixed price Examples of each are shown below The accounting of RNG supply is intended to separate the cost of the renewable attribute from the cost of the commodity The examples below are not all inclusive of what may occur but intended to show the accounting procedures used to separate the renewable attribute from the commodity and specify ownership of each aspect
In all cases the commodity cost portion - which is the total cost of the RNG purchased excluding the renewable attribute - will be expensed in the delivery month as a cost of gas
Example 1 ndash The fixed price of RNG includes both the commodity and the renewable attribute
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The total cost of the RNG supply purchased during the month is calculated by Accounting within the gas cost model as follows
MMBtu Purchased (as validated in step 2) $ MMBtu purchase price (as provided in a supply confirmation provided by gas supply)
4 For purposes of booking the renewable attribute to inventory it is necessary to calculate the RNG cost per Mcf The RNG cost Mcf is calculated using the total cost of RNG supply as calculated in step 3 divided by the Mcf in step 1
5 The renewable attribute price per Mcf is calculated as follows
RNG cost per Mcf as determined in step 4 ndashplus ldquoother componentsrdquo as calculated pursuant to Attachment A ndash minus ldquoAverage Commodity Costrdquo as calculated pursuant to Attachment A The ldquoother componentsrdquo added to the RNG cost per Mcf will vary depending on where the RNG supply was delivered but in each case will be identified in the calculation shown on Attachment A
6 The renewable attribute price per Mcf the total RNG Mcf delivered is recorded in the Inventory RNG Storage account
7 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
Example 2 - RNG purchased at a renewable attribute price plus a daily or monthly index
Where the pricing of RNG specifically separates the commodity from the renewable attribute the renewable attribute price will be what is recorded in the Renewable Inventory Account
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The renewable attribute price per Mcf the total RNG Mcf delivered as determined in step 1 is recorded in the Renewable Inventory Account
4 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
2 Recalculating the RNG Adder
The RNG Adder paid by customers will be recalculated anytime the Natural Gas charge portion of rates changes The Manager of Gas SupplyGas control is responsible for recalculating the RNG Adder The calculation will be verified and approved by the Vice President ndash Regulatory Affairs The determination of the RNG Adder will be pursuant to the methodology shown in Attachment A The Regulatory Department will prepare the amended RNG Adder tariff for filing with the PUC Upon PUC approval of the RNG Adder the Regulatory Department will prepare a memorandum advising Accounting and Gas Supply of the new RNG Adder as approved
3 Customer purchases VGS Renewable Natural Gas
The RNG Adder at the percent selected by the customer will be applied to the entire monthrsquos usage on the customersrsquo next bill For customers utilizing the S-RNG adder the entire volume elected with be on the customersrsquo next bill The S-RNG Adder nor the RNG Adder and percentage selected will not be prorated based on enrollment or termination date
Customers may terminate or modify their RNG selection upon 3 dayrsquos notice to VGS The termination or modification will be effective on the customerrsquos next monthly bill
The customerrsquos usage for the month will be multiplied by the percentage and the approved RNG Adder For customers utilizing the S-RNG adder the volume elected will be multiplied by the approved RNG adder This amount will then be recorded to SAP accounts 4010015-40010021 depending on which rate class the customer is in The RNG Adder is the same regardless of which rate class a customer is in At the end of the month a report is run by billing from the customer information system that shows total usage and which percentage of RNG the customer has signed up for to calculate the number of MCFrsquos of renewable attribute sold during the billing period Billing also provides a report of the volumes sold through the S-RNG Tarriff The Inventory RNG Storage account maintained within the gas cost model by Accounting is reduced by these Mcf The MCFrsquos are then multiplied by the RNG Adder in effect for the billing month and an entry is made to remove that dollar amount from the Inventory RNG Storage account and into the monthly cost of gas The intent of this transaction is to ensure that cost of the renewable attribute is reflected in the cost of gas in the month it is purchased by the customer This results in a matching of the renewable attribute revenue and expense
The RNG Adder revenue and renewable attributes removed from storage will be included in the gas cost deferral calculation However because there is a matching of the renewable attribute revenue and expense the impact on the deferral calculation will be zero
The calculation of unbilled revenues will exclude RNG as a customer can cancel their participation prior to their next bill
In the event Vermont Gas issues a credit to a customer related to the RNG program the value of the renewable attribute credited and the associated Mcf will not be applied to the Renewable Inventory Account
4 Controls
A spreadsheet is maintained by accounting that shows the MCFrsquos and dollar values of the Renewable Inventory Account This is reconciled monthly by the accounting team and will be reviewed by the Manager Gas SupplyGas Control
Accounting will validate that the amount removed from the Renewable Inventory Account matches the RNG Adder revenue Any discrepancies will be reviewed and corrected
A report will be run for each bill cycle that shows any changes to the RNG percentages selected this will include customers opting to withdraw from the RNG program The customer care team will validate any changes against customer confirmation paperwork
5 Renewable Inventory Account Reconciliation and Forecast
The PUC Order approving the RNG program contains provisions describing how RNG supply and demand imbalances will be addressed These provisions and how VGS will track and comply with them are as discussed in this section The PUC Order approving the RNG Program provides that if the available RNG supply during the previous 12 months is less than the amount purchased by customers VGS may use the funds collected to purchase carbon offsets (Finding 13) If carbon offset are not available VGS will contribute the RNG program revenues to the Clean Energy Development Fund or issue prorated credits to affected customers (Finding 15) The Order also provides that in the event RNG supply exceeds customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any remaining RNG attribute inventory amounts through the PGA or through a rate case as part of its cost of service if the s PGA is no longer in effect at that time (Finding 16 as modified) Finding 11 provides that VGS will use a ldquotrue-uprdquo period of up to 12 months in order to balance the difference between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply) Taken together these provisions require VGS to evaluate the imbalance after 12-months and then true-up the imbalance over the next twelve months To provide a forecast of the supplydemand imbalance quarterly the billing area will run a report showing the expected RNG volumes based on current customer commitments by month for the next 12-months Current customers commitments will be calculated based on the previous 12 months of usage multiplied by the RNG percentage currently signed up for The marketing department will provide their forecast of new RNG sales for the next 12-months Both will be provided to the Manager Gas SupplyGas Control The Manager Gas SupplyGas Control will compare the forecasted RNG sales known and expected to RNG supply commitments and provide a 24-month forecast of the supplydemand balance The supplydemand balance will be reviewed at the risk management meeting The strategy for addressing the imbalance consistent with the PUC order will be determined by the risk management committee
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
Exhibit 21 VT PUC Approval Order
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Docket No 8667
Petition of Vermont Gas Systems Inc for aRenewable Natural Gas Program andOptional Tariff
)))
Hearing atMontpelier Vermont
September 22016
order entered q leacute I aon
PRBsBNI Andrea C McHugh Hearing Officer
AppeeReNcBs Peter H Zamore Esq
Owen J McClain EsqSheehey Furlong amp Behrn PCfor Vermont Gas Systems Inc
Louise C Porter EsqTimotthorn M Duggan Esq
for the Vermont Department of Public Service
Sandra Levine Esqfor Conservation Law Foundation
Gerald R Tarrant EsqTarcant Gillies amp Richardsonfor Lincoln Renewable Natural Gas LLC
I INrnooucrroN
This case involves a petition filed by Vermont Gas Systems Inc (VGS) with the
Vermont Public Utility Commission (oCommission) I for approval of a Renewable Natural Gas
(RNG) program and optional RNG tariff service for its customers The proposed RNG
progriquestigravem establishes a framework for VGS to offer its customers the option to purchase RNG for
I Pursuant to Section 9 of Act 53 of the 2017 legislafive session the Vermont Public Service Boards name waschanged to the Vermont Public Utility Commission effective July l 2017 For claity activities of the VermontPublic Service Board that occurred before the name change will be referred to in Commission documents as
activities of the Commission unless that would be conntildersing in the specific context
Docket No 8667 Page2
program establishes a framework for VGS to offer its customers the option to purchase RNG for
as a portion of their usage RNG is produced from materials such as agricultural waste manure
municipal waste plant material or compost and is also referred to as bio-methane In this
proposal for decision I recommend that the Commission approve the proposed RNG program
and require VGS to make compliance filings as set forth herein
il PnocnrunnlHrsroRY
On October 232015 VGS figraveled a petition for approval for its RNG program including
prefiled testimony and exhibits of Thomas Murray
On January 192016I held a prehearing conference and on January 252016I issued
an Order establishing a schedule
On February 122016 VGS filed a revised RNG Plan
On March 102016I held a workshop to discuss the proposed program
On March 152016I issued an Order revising the schedule
On March 222016 Conservation Law Foundation (CLF) and Lincoln Renewable
Natural Gas LLC (Lincoln) filed motions to intervene in this proceeding
On April 12016 VGS filed supplemental testimony and exhibits
On April 82016I issued an Order granting CLFs and Lincolns intervention requests
On July 72016 the Vermont Department of Public Service (Department) CLF and
Lincoln filed testimony
On August 82016 Lincoln filed supplemental testimony
A technical hearing was hthornld on September 22016
On September 30 20|6VGS filed a draft proposal for decision supported by the
Department In addition CLF filed a brief on the same date Reply briefs were filed by VGS
and CLF on October 142016
III Posnroxs oF THE PlRrlns
VGS
VGS requests approval of its proposed RNG program for the sale of RNG to customers
on a voluntary basis VGS claims that its proposal contains reasonable provisions to align its
RNG purchases with the amounts sold to its customers appropriate mechanisms to address over-
Docket No 8667 Page 3
or under-supply of RNG and verification requirements to ensure that sales in fact consist of
RNG VGS maintains that the RNG program is an appropriate first step in stimulating RNG
producer supply and customer demand and is oamply supported by Vermonts experience of
measured implementation of electric renewable pricing programs2 VGS argues that the
program is responsive to the Commissions condition in its Order in Docket 79701o develop a
proposal to promote bio-methane project development3
Department of Public Service
Although the Department did not file a brief or reply brief it did present witness
testimony and indicated its support for the draft proposal for decision filed by VGS The
Department recommends that VGS review all proposed RNG supply arrangements with the
Department (in addition to seeking 30 VSA $ 248 approval where required) and suggests that
in the event of an undersupply of RNG VGS obtain carbon offsets in an amount equivalent to
the unused customer contributions The Department recommends that the RNG program be
reviewed at the end of three years at which time the protocol regarding the purchase of offsets
would be revisited
C ons ervation Law Foundation
CLF urges that the Commission reject the RNG program and instead adopt an RNG
content standard similar to the electric renewable portfolio standarda CLF maintains that the
expected annual sales volume is not apace that is consistent with Vermonts legislative and
planning targets for meeting energy needs with renewable energy or for reducing greenhouse gas
emissionss CLF claims that the proposed voluntary tariff falls short of being a program or
strategy that promotes the increased use of RNG resources or supply or fosters bio-methane
projects in Addison county6
2 VGS reply brief aI23 In Docket 7970the Commission considered the petition of VGS for a certificate of public good (CPG) pursuant
to 30 VSA $ 248 authorizing the construction of the Addison Natural Gas Pipeline In an Order issued on
December 232013 the Commission granted the CPG As a condition of approval the Commission required VGSin consultation with the Department to file a petition with the [Commission] proposing a program to promote bio-methane project development Docket 7970 Order of l2l23ll3 at 147
a CLF brief at 12s CLF brief at 36 CLF brief at 4
Docket No 8667 Page 4
Lincoln
Lincoln maintains that itis essential to promote development of agricultural-based bio-
methane supply in VermontT Lincoln states that the Commission is not in a position to
adequately address VGSs proposed RNG program until negotiations for sale of itsoutput
involving VGS and Middlebury College are completes
IV Punrrc CounnnNrs
The Commission received three letters of support for VGSs RNG program On March 10
2016 the Chittenden County Transportation Authority filed comments indicating that it intends to
explore the possibility of utilizing RNG to cover a portion of the energy needs for its fleet of 70
buses On March 182016 Champlain College filed comments noting that it is interested in using
RNG for a portion of its energy needs that are currently met with conventional natural gas On
March 282016 Casella Waste Systems made a filing with the Commission stating its intention
to explore using RNG to meet some of its energy needs for its fleet of vehicles
V trrutrxcs
Based on the evidence of record I hereby report the following findings and
recommendations to the Commission in accordance with 30 VSA $ 8(c)
1 RNG is produced from raw materials such as agricultural waste manure municipal
waste plant material or food waste Decomposition or digestion of these materials produces
raw methane which is then cleaned or upgraded to bio-methane in order to meet the receiving
pipelines gas quality specifications prior to injection into an existing pipeline system Thomas
Murray VGS (Murray) supp pf at3
2 VGS is exploring options to purchase RNG supply from Lincoln and from landfill gas
projects located outside Vermont that would be received through the Trans-CanadaPipeline
(TCPL) system Murray supp pf at 8-9
7 Daniel Smith Lincoln Renewable Natural Gas LLC (Smith) supp pf at L8 On August 152016 Lincoln filed a motion to continue this proceeding for a period of not less than 60 days statingthat the continuance would allow [it] VGS and Middlebury College to complete discussions as to VGSsinvolvement in the RNG supply in Vermont and allow the record in this case to be properly developed VGS and
the Department opposed the request for continuance On August 222016I issued an Order denying Lincolnsrequest and determined that Lincoln did not demonstrate good cause to postpone the technical hearing
Docket No 8667 Page 5
3 Under the program retail customers would voluntarily purchase RNG in amounts equal to
l0oo25yo50o or 100 of their total monthly requirements at specified prices per Ccf as an
adder to other retail charges Customers could terminate RNG purchases upon providing three
days of advance notice to VGS Murray supp pf at l-2 exhs Pet-VGS-l and Pet-VGS-3
4 Intemrptible customers will have the opportunity to participate in the RNG program
through VGSs existing Lock Price Program which currently provides for up to a two-year
commitment Murray supp pf at 5
5 VGS will develop and file for Commission approval a separate tariff for use of RNG as a
transportation fuel This tariff will allow VGS to take advantage of the sale of the associated
Renewable Identification Numbers (ooRINs) When RNG is used as a transportation fuel it is
eligible to receive RINs under the Federal Renewable Fuel Standard RINs can be resold on the
wholesale market and would be used to offset the price of RNG to transportation customers
receiving service under the tariff Joan E White
Department (White) pf at7tr912116 at 62-
63 (White) exh Pet-VGS-5 Response 4
6 VGS will also initiate a review of the RNG program by the Commission Department and
others after three years White pf at9tr912116 (Munay) at24
7 The adder price for each Ccf of RNG will be equal to the average RNG commodity cost to
VGS less the average commodity cost of natural gas VGS will adjust the adder price per Ccf on
a quarterly basis as part of its Purchased Gas Adjustment (PGA) filing Murray supp pf at 4
8 The proposed RNG program will include a tariff that is very similar in concept to the
Green Mountain Power Corporation (GMP) Cow Power tariff However Cow Power is based
on a fixed rate per kWh no matter what the cost of the renewable energy Murray supp pf at llVhite pf at 4
9 VGSs RNG tariff will be calculated quarterly based on actual RNG and natural gas costs
and will provide accurate price signals as to the price differential between natural gas and RNG
White pf at 4
10 Based on a survey conducted by VGS 85 of its customers are willingto pay l0oo
more for a renewable product VGS projects that customers could potentially consume over
500000 Mcf of RNG over the next five years Murray supp pf at 5
DocketNo8667 Page 6
11 VGS will use a true-up period of up to 12 months in order to balance the difference
between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply)
Murray supp pf at 9
12 There is a risk that due to the voluntary nature of the RNG program supply and demand
will be mismatched White pf at41 David G Hill CLF (Hi11) pf at 9
13 If the available RNG supply during the previous 12 months is less than the amount
purchased by VGS customers the RNG program provides that VGS may use funds collected to
purchase carbon offsets from an established carbon registry such as the American Carbon
Registry VGS will purchase an amount of carbon offsets equal to the amount of the revenue
resulting from the undersupply in order to result in a revenue-neutral program At the time of the
three-year implementation review VGS will propose an environmental accounting protocol in
order to quantify the environmental benefits of the program and to evaluate the financial risk of
purchasing carbon offsets in an amount equivalent to the environmental benefits of unsold RNG
due to undersupply Murray supp pf at 6 l0 exh Pet-VGS-s Responses 1
14 The development and standardization of RNG attributes is in its infancy as compared to
the existing markets for the environmental attributes used in the electric industry (renewable
energy credits or (RECs)) Murray supp pf at 12
15 If carbon offsets are not available VGS will contribute the RNG program revenues to the
Clean Energy Development Fund or issue prorated credits to affected customers Exh Pet-
VGS-S Responses 3
16 If RNG supply exceeds customer demand VGS would seek to sell the excess RNG at
wholesale Murray supp pf at 10
17 VGS will provide proposed RNG supply contracts to the Department prior to execution
It will also consult with the Department before making decisions that could dramatically impact
price or the integrity of the RNG program Exh Pet-VGS-S Responses 2 White pf at 5
18 The estimated cost of RNG supply ranges from $l2lMcf to $25lMcf The cost of natural
gas is less than $3Mcf Murray supp pf at 8-9
19 VGS will implement an RNG Quality Assurance Plan establishing a testing and
monitoring process to ensure that RNG injected (via in-state RNG producers) into the VGS
system is pipeline quality and meets the specifications of the TCPL transportation tariff for bio-
methane gas quality Murray supp pf at 14 exh Pet-VGS-4
Docket No 8667 PageT
20 VGS will file an annual report on the RNG program with the Commission and the
Department containing the following information
1 Number of subscribers by customer class
2 Sales volume by customer class
3 Sales revenues
4 Any sales or purchases of carbon offsets
5 Supplyconsumption matching portfolio including any shortfall or excess
supply of RNG
6 True-up schedule for any imbalances
7 RNG supply verification
8 Quantification of the impact of any excess RNG costs flowing through the
PGA if VGS remains under altemative regulation
9 Accounting of any carbon ofszligets or other incentives
10 Status of any contracts for RNG including plans to acquire new supply
contracts
I 1 Revenue from Renewable Identification Number (RlN) sales and impact
on the transport tariff as well as any projections about the RIN market that are
available to VGS and
12 Complete reports and environmental verifications by an independent
verifier
Murray supp pf at 11 exh Pet-VGS-3 White pf at 8-9 tr912116 at23-24 (Munay)
21 Except as described below concerning RlN-eligible RNG VGS will annually verify that
the RNG was produced by a renewable gas production facility that VGS is the exclusive oryner
of any environmental attributes associated with RNG it sells under the program that it acquired
the RNG from its transferor and sold itatretail and that neither the RNG nor any renewable
attribute associated with the RNG has been sold twice at any point between RNG production and
sale to VGS whether by sales into carbon offset markets or otherwise This verification will be
based on certifications by VGSs suppliers and by an independent third party retained by VGS
for this purpose Exh Pet-VGS-3 exh Pet-VGS-s Response 5 White pf at 8
Docket No 8667 Page I
22 For RlN-eligible RNG used as vehicle fuel verification will be addressed in detail in the
future as part of VGSs proposed Renewable Vehicle Fuel Tariff Exh Pet VGS-5 Response 4
rr912116 at 65 (White)
23 There are few natural gas utilities currently offering RNG at retail VGS modeled its
RNG program after the program designed by FortisBC a local distribution company in British
Columbia Canada VGS also had discussions with SoCalGas in Southern California Both of
these companies are leaders in developing RNG offerings and fostering RNG supply resources
Murray supp pf at 7
24 VGS will file with the Commission and Department a marketing plan containing the
following elements
l An evaluation element that includes concrete metrics such as sales
volume targets and enrollment targets
2 Identification of target market segment(s)
3 Development of materials and language for customer-marketing efforts
that explain the RNG program in plain language easily understandable to the
average customer
4 An online bill calculator
5 An implementation plan that identifies specific activities and a timetable
and
6 Abudget
Exh Pet-VGS-5 White pf at 10 Tr912116 at22-23 (Munay)
25 VGS and the Department represent that the RNG progriquestun is responsive to the
Commissions condition in its Order in Docket 7970 rcquiring VGS to develop a proposal to
promote bio-methane project development Murray supp pf al 13-14tr912116 at 63 (Vhite)
26 VGS asserts that the RNG program represents appropriate progress toward the Vermont
Comprehensive Energy Plan (CEP) goal to meet90o of Vermonts energy needs through
renewable sources by 2050 Murray supp pf at 12-13
VI DlscussroN iexclxu Coxclustox
Vith this proposal for decision I recommend that the Commission approve the RNG
program in accordance with the findings described above and based upon the evidence in the
Docket No 8667 Page 9
record In Docket 7970 the Commission required VGS in consultation with the Department to
file a petition with the [Commission] proposing a program to promote bio-methane project
development It is reasonable to expectthat aprogram meant to stimulate development of a
specific energy source would look to stimulate demand for that resource by offering an
opportunity for customers to purchase supply from RNG producers
The RNG program proposed by VGS and supported by the Department seeks to offer
ratepayers the option to purchase renewable energy as part of their individual energy-use
portfolio Furthermore the program includes a provision requiring that VGS develop a detailed
marketing plan that will serve to educate customers on the availability costs and benefits of
such resources which could lead to increased demand for the product
VGS intends to take advantage of the existing market for RINs associated with RNG used
as transportation fuel by proposing a Renewable Vehicle Fuel Tariff As described above in the
Public Comments section the Chittenden County Transportation Authority and Casella Vaste
Systems are interested in exploring the use of RNG to fuel their vehicle fleets which
demonstrates that there is existing customer demand for this product
Unlike the markets relating to RNG supply used for transportation fuel or renewable
electric generation and the associated trading and verification of RECs the RNG market is in its
infancy At this time it would not be appropriate to expect VGS to implement an RNG program
utilizing an RNG content standard similar to the electric renewable portfolio standard as
recommended by CLF because the equivalent standards and processes do not exist However
the RNG program represents a meaningful first step in encouraging customer interest in
purchasing RNG at retail thereby stimulating supply of RNG into the market and is consistent
with the Commissions condition requiring VGS to develop a proposal to promote bio-methane
project development
VGSs RNG program includes appropriate mechanisms for periodic reporting and
verification of program activities as well as an opportunity to comprehensively review the
program after three years of implementation Furthermore determinations regarding recovery of
costs associated with the RNG program will be made in the context of future proceedings
regarding VGSs rates The RNG program should evolve with the RNG markets in the near-term
and over the course of the next several years which will allow progress towards achievement of
Vermonts 2050 CEP renewable energy goals
Docket No 8667 Page 10
Because not all parties to this proceeding have waived their rights under 3 VSA $ 811
to file written comments or present oral argument with respect to this proposal for decision I am
circulating the proposal for decision to the parties for their review and comment
Dated at Montpelier Vermont this rrtl day of QrIltt 2017a0AndreaHearing Officer
Docket No 8667 Page 11
VII Corumrssron Drscussrox
On August 22017 the Department filed a letter stating that it supports the issuance of an
Order by the Commission that adopts the proposal for decision in full
Also on August 22017 VGS filed comments on the proposal for decision requesting
that Finding 16 be modified as follows (additional text in italics) If RNG supply exceeds
customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary
flow any remaining RNG attribute inventory amounts through the PGA or through a rate case ifVGS was under traditional cost of service regulation (subject to [Commission] approval)
VGS asserts that [a]bsent such specific language it is possible that VGS would be unable [to]
defer such costs for future recovery and that removal of that component introduces uncertainty
about the potential procedural mechanisms available for cost recovery in the last resort VGS
states that with the Commissions consideraacutetion of this request it does not request oral argument
No other comments were filed on the proposal for decision
The Hearing Officer recommended that the Commission find that determinations
regarding recovery of costs associated with the RNG program will be made in the context of
future proceedings regarding VGSs rates We agree with this recommendation VGS should
have an opportunity to request rate recovery for excess RNG supply However this proceeding
is not the proper time for such a determination Accordingly Finding 16 is hereby modified as
follows If RNG supply exceeds customer demand VGS would first seek to sell the excess
RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any
remaining RNG attribute inventory amounts through the PGA or through arate case as part of
its cost of service if the PGA is no longer in effect atthat timeWe emphasize the importance of the successful implementation of the RNG program in
helping to meet the States renewable energy policy objectives The annual report on the
implementation of the RNG program will serve as a valuable tool to assess that progress In this
proceeding CLF has raised policy considerations that should serve to guide these future reviews
of the RNG program For example CLF has raised concerns regarding the effectiveness of the
voluntary nature of the program In assessing its program we expect VGS to revisit and report
on the feasibility of incorporating RNG as a portion of its supply mix in the future It is
important for VGSs RNG program to be sustainable and continue to evolve ensuring significant
DocketNo8667 Page 12
contributions toward meeting the States renewable energy goals and reducing the consumption
of fossil fuel Accordingly it is critical that the annual report and the three-year comprehensive
review address not only the effectiveness of the program but also its affordability and the
feasibility of other policy options to advance the production and use of RNG in Vermont
Docket No 8667 Page 13
VIII Onunn
Ir rs Hennsy oRDERED ADJUDGED AND DECRnnn by the Public Utility Commission of the
State of Vermont that
1 The findings conclusions and recommendations of the Hearing Officer are
adopted and the Renewable Natural Gas (RNG) program to be implemented by Vermont Gas
SystemsInc (VGS) is approved
2 When VGS has procured RNG supply in amounts reasonably estimated to be
sufficient for estimated customer demand it shall file a formal tariff including proposed rates for
sale of RNG The tariff shall be reviewedpursuantto the procedures of 30 VSA ccedilccedil225226
and227 and sales under the program shall begin after Commission approval of the tariff
3 VGS shall develop and file for Commission approval a separate Renewable
Vehicle Fuel Tariff to serve customers using RNG as a transportation fuel
4 VGS shall file a marketing plan for the RNG program consistent with the
requirements set forth above within one month of the issuance of this Order
5 VGS shall file an annual report consistent with the requirements set forth above
upon implementation of the RNG program
6 VGS shall file a comprehensive review of the performance of the program with
the Commission and the Department after three years of implementation This review will
include an environmental accounting protocol to quantiff the environmental benefits of the
progrfim
7 VGS shall review proposed RNG supply arrangements with the Department
Docket No 8667
Orprcp oF THE Crnm
Dated at Montpelier Vermont this day of+hb
Z Roisman
Cheney
Page 14
20t7
Puslrc Urrlnv
CovtriquestIssIoN
OP VERMONT
(
)))
)))
Fired otildeeglcL ( JotTAttest c
of the Commission
NorIcE To READERS This decision is subject to revision oftechnical errors Reqders are requested tonotify the Clerk of the Commission (by e-mail telephone or inwriting) or any appqrent errors in order that anynecessary corrections may be made (E-mail address pucclerkvermontgov)
Appeal of this decision to the Supreme Court of Vermont must befiledwith the Clerk of the Comnissionwithin thirty days Appeal will not stay the efect of thszlig Order absentfurther order by this Commission orappropriate actiacuteon by the Supreme Court of Vermont Motions for reconsideration or stay if any must be filed withthe Clerk of the Commissionwithin ten days of the date of this deciacutesion and Order
Exhibit 22 VGS RNG Tariff Rate Filing
Exhibit 23 PUC Approval of VGS RNG Rates
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Case No l8-03 13-TF
Petition of Vermont Gas Systems Inc fotapproval of a new tariff implementing theRenewable Natural Gas program
Order entered
OnonRAppnovINc Tiquestrurn
On January 302018 Vermont Gas Systems Inc (VGS) filed a petition for approval of
a new tariff implementing the Renewable Natural Gas (RNG) program approved by the
Vermont Public Utility Commission (Commission) in Docket No 8667 In that Docket the
Commission required VGS to file a tariff implementing the RNG program when it has procured
RNG supply in amounts reasonably estimated to be sufficient to meet customer demandl In
this Order the Commission approves the new tariff marketed under the name EcoGas with an
effective date of bills rendered on and after March 15 2018
VGS states that it has executed an RNG supply contract with deliveries scheduled for
2018 and that two additional contracts are being negotiated for deliveries beginningin2019
VGS is proposing to set its initial RNG adder at$ll749lCcf which represents a five-year
blended rate based on the three RNG supply arrangements VGS intends to account for the
difference between the cost of RNG supply and the RNG adder as a regulatory asset within gas
costs As additional lower-cost supply is added to the portfolio the regulatory asset balance will
be recovered from EcoGas participants with the goal of fully reducing the balance by the end of
five years Accordingly VGS states that the RNG program will be rate-neutral to VGS and its
non-RNG customers
On February 272018 the Vermont Department of Public Service (Department) filed a
letter recommending that the Commission approve the tariff without a hearing or further
investigation The Department states that the tariff filing and proposed accounting treatment
comply with Vermont rate-setting practices policies precedents and statutes
lslaotx
I Docket 8667 Order of 96117 at 13
Page2Case No 18-0313-TF
Based on the foregoing we hereby approve VGSs proposed RNG tariff to be effective
on a bills-rendered basis beginning on March 15 2018 Recovery of any regulatory asset
balance at the end of the fifth year would need to be approved by the Commission in a future
proceeding
So Omnnnn
Case No l8-0313-TF
8r- day of lruacuterLiquestiquest
Page 3
Dated at Montpelier Vermont this 2018
Roisman PueIrc Urlrrv
CoiriexcllriquestlssloN
Cheney
OF VERMONT
Sarah Hofmann
Onncp oF THE CLBRr
Filed huacuteveuroAacute- icirc dollAttest I
Clerk of the Commission
Notice to Readers This decision is subiect to revision oftechnical errors Readers are requested to notify
the Clerk of the Commission (by e-mail telephone or in writing) or qny qpparent errors in order that any
necessary corrections may be made (E-mail address pucclerkvermontgov)Appeal of this decisiacuteon to the Supreme Court of Yermont must be filed with the Clerk of the Commission
within 30 days Appeal will not stay the efect of this Order oslashbsent further order by this Commission or appropriate
action by the Supreme Court of Vermont Motionsthornr reconsideration or stay if any must befiledwith the Clerk ofthe Commissionwithin 28 doslashys of the date of this decision and Order
)))
))))
PUC Case No 18-0313-TF
Eileen SimollardesLauren HammerVermont Gas
85 Swift StreetSouth Burlington VT 05403
June E Tiemey CommissionerVermont Department of Public Service1 12 State StreetMontpelier VT 05620 -2601
Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
Exhibit 31 Accounting Procedures
Exhibit 31 Accounting for VGS Renewable Natural Gas (Ver-9202019)
1 Purchase of RNG Supply
RNG supply purchases are separated into the cost of the commodity and the cost of the renewable attribute The commodity portion is expensed to gas costs in the delivery month while the renewable attribute is booked to an inventory account referenced herein as the ldquoRenewable Inventory Accountrdquo Like VGSrsquo existing storage inventory accounting the Renewable Inventory Account will track both the dollar value of the renewable attribute and the renewable attribute Mcfs Renewable attribute dollar values are record to ldquo16410050 Inventory RNG Storagerdquo while Mcf values are recorded in the gas cost model maintained by accounting In the month VGS purchases the renewable attribute it is accrued in a book model and goes in to 16410150 Inventory RNG Accrued then moves to the 16410050 in a final model the following month for final
RNG may be purchased at different locations and using varying pricing structures While the accounting for RNG does not vary with the purchase location or price the determination of the value of the renewable attribute will vary depending on whether or not the supply pricing expressly values the renewable attribute as an adder or it is embedded in a fixed price Examples of each are shown below The accounting of RNG supply is intended to separate the cost of the renewable attribute from the cost of the commodity The examples below are not all inclusive of what may occur but intended to show the accounting procedures used to separate the renewable attribute from the commodity and specify ownership of each aspect
In all cases the commodity cost portion - which is the total cost of the RNG purchased excluding the renewable attribute - will be expensed in the delivery month as a cost of gas
Example 1 ndash The fixed price of RNG includes both the commodity and the renewable attribute
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The total cost of the RNG supply purchased during the month is calculated by Accounting within the gas cost model as follows
MMBtu Purchased (as validated in step 2) $ MMBtu purchase price (as provided in a supply confirmation provided by gas supply)
4 For purposes of booking the renewable attribute to inventory it is necessary to calculate the RNG cost per Mcf The RNG cost Mcf is calculated using the total cost of RNG supply as calculated in step 3 divided by the Mcf in step 1
5 The renewable attribute price per Mcf is calculated as follows
RNG cost per Mcf as determined in step 4 ndashplus ldquoother componentsrdquo as calculated pursuant to Attachment A ndash minus ldquoAverage Commodity Costrdquo as calculated pursuant to Attachment A The ldquoother componentsrdquo added to the RNG cost per Mcf will vary depending on where the RNG supply was delivered but in each case will be identified in the calculation shown on Attachment A
6 The renewable attribute price per Mcf the total RNG Mcf delivered is recorded in the Inventory RNG Storage account
7 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
Example 2 - RNG purchased at a renewable attribute price plus a daily or monthly index
Where the pricing of RNG specifically separates the commodity from the renewable attribute the renewable attribute price will be what is recorded in the Renewable Inventory Account
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The renewable attribute price per Mcf the total RNG Mcf delivered as determined in step 1 is recorded in the Renewable Inventory Account
4 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
2 Recalculating the RNG Adder
The RNG Adder paid by customers will be recalculated anytime the Natural Gas charge portion of rates changes The Manager of Gas SupplyGas control is responsible for recalculating the RNG Adder The calculation will be verified and approved by the Vice President ndash Regulatory Affairs The determination of the RNG Adder will be pursuant to the methodology shown in Attachment A The Regulatory Department will prepare the amended RNG Adder tariff for filing with the PUC Upon PUC approval of the RNG Adder the Regulatory Department will prepare a memorandum advising Accounting and Gas Supply of the new RNG Adder as approved
3 Customer purchases VGS Renewable Natural Gas
The RNG Adder at the percent selected by the customer will be applied to the entire monthrsquos usage on the customersrsquo next bill For customers utilizing the S-RNG adder the entire volume elected with be on the customersrsquo next bill The S-RNG Adder nor the RNG Adder and percentage selected will not be prorated based on enrollment or termination date
Customers may terminate or modify their RNG selection upon 3 dayrsquos notice to VGS The termination or modification will be effective on the customerrsquos next monthly bill
The customerrsquos usage for the month will be multiplied by the percentage and the approved RNG Adder For customers utilizing the S-RNG adder the volume elected will be multiplied by the approved RNG adder This amount will then be recorded to SAP accounts 4010015-40010021 depending on which rate class the customer is in The RNG Adder is the same regardless of which rate class a customer is in At the end of the month a report is run by billing from the customer information system that shows total usage and which percentage of RNG the customer has signed up for to calculate the number of MCFrsquos of renewable attribute sold during the billing period Billing also provides a report of the volumes sold through the S-RNG Tarriff The Inventory RNG Storage account maintained within the gas cost model by Accounting is reduced by these Mcf The MCFrsquos are then multiplied by the RNG Adder in effect for the billing month and an entry is made to remove that dollar amount from the Inventory RNG Storage account and into the monthly cost of gas The intent of this transaction is to ensure that cost of the renewable attribute is reflected in the cost of gas in the month it is purchased by the customer This results in a matching of the renewable attribute revenue and expense
The RNG Adder revenue and renewable attributes removed from storage will be included in the gas cost deferral calculation However because there is a matching of the renewable attribute revenue and expense the impact on the deferral calculation will be zero
The calculation of unbilled revenues will exclude RNG as a customer can cancel their participation prior to their next bill
In the event Vermont Gas issues a credit to a customer related to the RNG program the value of the renewable attribute credited and the associated Mcf will not be applied to the Renewable Inventory Account
4 Controls
A spreadsheet is maintained by accounting that shows the MCFrsquos and dollar values of the Renewable Inventory Account This is reconciled monthly by the accounting team and will be reviewed by the Manager Gas SupplyGas Control
Accounting will validate that the amount removed from the Renewable Inventory Account matches the RNG Adder revenue Any discrepancies will be reviewed and corrected
A report will be run for each bill cycle that shows any changes to the RNG percentages selected this will include customers opting to withdraw from the RNG program The customer care team will validate any changes against customer confirmation paperwork
5 Renewable Inventory Account Reconciliation and Forecast
The PUC Order approving the RNG program contains provisions describing how RNG supply and demand imbalances will be addressed These provisions and how VGS will track and comply with them are as discussed in this section The PUC Order approving the RNG Program provides that if the available RNG supply during the previous 12 months is less than the amount purchased by customers VGS may use the funds collected to purchase carbon offsets (Finding 13) If carbon offset are not available VGS will contribute the RNG program revenues to the Clean Energy Development Fund or issue prorated credits to affected customers (Finding 15) The Order also provides that in the event RNG supply exceeds customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any remaining RNG attribute inventory amounts through the PGA or through a rate case as part of its cost of service if the s PGA is no longer in effect at that time (Finding 16 as modified) Finding 11 provides that VGS will use a ldquotrue-uprdquo period of up to 12 months in order to balance the difference between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply) Taken together these provisions require VGS to evaluate the imbalance after 12-months and then true-up the imbalance over the next twelve months To provide a forecast of the supplydemand imbalance quarterly the billing area will run a report showing the expected RNG volumes based on current customer commitments by month for the next 12-months Current customers commitments will be calculated based on the previous 12 months of usage multiplied by the RNG percentage currently signed up for The marketing department will provide their forecast of new RNG sales for the next 12-months Both will be provided to the Manager Gas SupplyGas Control The Manager Gas SupplyGas Control will compare the forecasted RNG sales known and expected to RNG supply commitments and provide a 24-month forecast of the supplydemand balance The supplydemand balance will be reviewed at the risk management meeting The strategy for addressing the imbalance consistent with the PUC order will be determined by the risk management committee
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Docket No 8667
Petition of Vermont Gas Systems Inc for aRenewable Natural Gas Program andOptional Tariff
)))
Hearing atMontpelier Vermont
September 22016
order entered q leacute I aon
PRBsBNI Andrea C McHugh Hearing Officer
AppeeReNcBs Peter H Zamore Esq
Owen J McClain EsqSheehey Furlong amp Behrn PCfor Vermont Gas Systems Inc
Louise C Porter EsqTimotthorn M Duggan Esq
for the Vermont Department of Public Service
Sandra Levine Esqfor Conservation Law Foundation
Gerald R Tarrant EsqTarcant Gillies amp Richardsonfor Lincoln Renewable Natural Gas LLC
I INrnooucrroN
This case involves a petition filed by Vermont Gas Systems Inc (VGS) with the
Vermont Public Utility Commission (oCommission) I for approval of a Renewable Natural Gas
(RNG) program and optional RNG tariff service for its customers The proposed RNG
progriquestigravem establishes a framework for VGS to offer its customers the option to purchase RNG for
I Pursuant to Section 9 of Act 53 of the 2017 legislafive session the Vermont Public Service Boards name waschanged to the Vermont Public Utility Commission effective July l 2017 For claity activities of the VermontPublic Service Board that occurred before the name change will be referred to in Commission documents as
activities of the Commission unless that would be conntildersing in the specific context
Docket No 8667 Page2
program establishes a framework for VGS to offer its customers the option to purchase RNG for
as a portion of their usage RNG is produced from materials such as agricultural waste manure
municipal waste plant material or compost and is also referred to as bio-methane In this
proposal for decision I recommend that the Commission approve the proposed RNG program
and require VGS to make compliance filings as set forth herein
il PnocnrunnlHrsroRY
On October 232015 VGS figraveled a petition for approval for its RNG program including
prefiled testimony and exhibits of Thomas Murray
On January 192016I held a prehearing conference and on January 252016I issued
an Order establishing a schedule
On February 122016 VGS filed a revised RNG Plan
On March 102016I held a workshop to discuss the proposed program
On March 152016I issued an Order revising the schedule
On March 222016 Conservation Law Foundation (CLF) and Lincoln Renewable
Natural Gas LLC (Lincoln) filed motions to intervene in this proceeding
On April 12016 VGS filed supplemental testimony and exhibits
On April 82016I issued an Order granting CLFs and Lincolns intervention requests
On July 72016 the Vermont Department of Public Service (Department) CLF and
Lincoln filed testimony
On August 82016 Lincoln filed supplemental testimony
A technical hearing was hthornld on September 22016
On September 30 20|6VGS filed a draft proposal for decision supported by the
Department In addition CLF filed a brief on the same date Reply briefs were filed by VGS
and CLF on October 142016
III Posnroxs oF THE PlRrlns
VGS
VGS requests approval of its proposed RNG program for the sale of RNG to customers
on a voluntary basis VGS claims that its proposal contains reasonable provisions to align its
RNG purchases with the amounts sold to its customers appropriate mechanisms to address over-
Docket No 8667 Page 3
or under-supply of RNG and verification requirements to ensure that sales in fact consist of
RNG VGS maintains that the RNG program is an appropriate first step in stimulating RNG
producer supply and customer demand and is oamply supported by Vermonts experience of
measured implementation of electric renewable pricing programs2 VGS argues that the
program is responsive to the Commissions condition in its Order in Docket 79701o develop a
proposal to promote bio-methane project development3
Department of Public Service
Although the Department did not file a brief or reply brief it did present witness
testimony and indicated its support for the draft proposal for decision filed by VGS The
Department recommends that VGS review all proposed RNG supply arrangements with the
Department (in addition to seeking 30 VSA $ 248 approval where required) and suggests that
in the event of an undersupply of RNG VGS obtain carbon offsets in an amount equivalent to
the unused customer contributions The Department recommends that the RNG program be
reviewed at the end of three years at which time the protocol regarding the purchase of offsets
would be revisited
C ons ervation Law Foundation
CLF urges that the Commission reject the RNG program and instead adopt an RNG
content standard similar to the electric renewable portfolio standarda CLF maintains that the
expected annual sales volume is not apace that is consistent with Vermonts legislative and
planning targets for meeting energy needs with renewable energy or for reducing greenhouse gas
emissionss CLF claims that the proposed voluntary tariff falls short of being a program or
strategy that promotes the increased use of RNG resources or supply or fosters bio-methane
projects in Addison county6
2 VGS reply brief aI23 In Docket 7970the Commission considered the petition of VGS for a certificate of public good (CPG) pursuant
to 30 VSA $ 248 authorizing the construction of the Addison Natural Gas Pipeline In an Order issued on
December 232013 the Commission granted the CPG As a condition of approval the Commission required VGSin consultation with the Department to file a petition with the [Commission] proposing a program to promote bio-methane project development Docket 7970 Order of l2l23ll3 at 147
a CLF brief at 12s CLF brief at 36 CLF brief at 4
Docket No 8667 Page 4
Lincoln
Lincoln maintains that itis essential to promote development of agricultural-based bio-
methane supply in VermontT Lincoln states that the Commission is not in a position to
adequately address VGSs proposed RNG program until negotiations for sale of itsoutput
involving VGS and Middlebury College are completes
IV Punrrc CounnnNrs
The Commission received three letters of support for VGSs RNG program On March 10
2016 the Chittenden County Transportation Authority filed comments indicating that it intends to
explore the possibility of utilizing RNG to cover a portion of the energy needs for its fleet of 70
buses On March 182016 Champlain College filed comments noting that it is interested in using
RNG for a portion of its energy needs that are currently met with conventional natural gas On
March 282016 Casella Waste Systems made a filing with the Commission stating its intention
to explore using RNG to meet some of its energy needs for its fleet of vehicles
V trrutrxcs
Based on the evidence of record I hereby report the following findings and
recommendations to the Commission in accordance with 30 VSA $ 8(c)
1 RNG is produced from raw materials such as agricultural waste manure municipal
waste plant material or food waste Decomposition or digestion of these materials produces
raw methane which is then cleaned or upgraded to bio-methane in order to meet the receiving
pipelines gas quality specifications prior to injection into an existing pipeline system Thomas
Murray VGS (Murray) supp pf at3
2 VGS is exploring options to purchase RNG supply from Lincoln and from landfill gas
projects located outside Vermont that would be received through the Trans-CanadaPipeline
(TCPL) system Murray supp pf at 8-9
7 Daniel Smith Lincoln Renewable Natural Gas LLC (Smith) supp pf at L8 On August 152016 Lincoln filed a motion to continue this proceeding for a period of not less than 60 days statingthat the continuance would allow [it] VGS and Middlebury College to complete discussions as to VGSsinvolvement in the RNG supply in Vermont and allow the record in this case to be properly developed VGS and
the Department opposed the request for continuance On August 222016I issued an Order denying Lincolnsrequest and determined that Lincoln did not demonstrate good cause to postpone the technical hearing
Docket No 8667 Page 5
3 Under the program retail customers would voluntarily purchase RNG in amounts equal to
l0oo25yo50o or 100 of their total monthly requirements at specified prices per Ccf as an
adder to other retail charges Customers could terminate RNG purchases upon providing three
days of advance notice to VGS Murray supp pf at l-2 exhs Pet-VGS-l and Pet-VGS-3
4 Intemrptible customers will have the opportunity to participate in the RNG program
through VGSs existing Lock Price Program which currently provides for up to a two-year
commitment Murray supp pf at 5
5 VGS will develop and file for Commission approval a separate tariff for use of RNG as a
transportation fuel This tariff will allow VGS to take advantage of the sale of the associated
Renewable Identification Numbers (ooRINs) When RNG is used as a transportation fuel it is
eligible to receive RINs under the Federal Renewable Fuel Standard RINs can be resold on the
wholesale market and would be used to offset the price of RNG to transportation customers
receiving service under the tariff Joan E White
Department (White) pf at7tr912116 at 62-
63 (White) exh Pet-VGS-5 Response 4
6 VGS will also initiate a review of the RNG program by the Commission Department and
others after three years White pf at9tr912116 (Munay) at24
7 The adder price for each Ccf of RNG will be equal to the average RNG commodity cost to
VGS less the average commodity cost of natural gas VGS will adjust the adder price per Ccf on
a quarterly basis as part of its Purchased Gas Adjustment (PGA) filing Murray supp pf at 4
8 The proposed RNG program will include a tariff that is very similar in concept to the
Green Mountain Power Corporation (GMP) Cow Power tariff However Cow Power is based
on a fixed rate per kWh no matter what the cost of the renewable energy Murray supp pf at llVhite pf at 4
9 VGSs RNG tariff will be calculated quarterly based on actual RNG and natural gas costs
and will provide accurate price signals as to the price differential between natural gas and RNG
White pf at 4
10 Based on a survey conducted by VGS 85 of its customers are willingto pay l0oo
more for a renewable product VGS projects that customers could potentially consume over
500000 Mcf of RNG over the next five years Murray supp pf at 5
DocketNo8667 Page 6
11 VGS will use a true-up period of up to 12 months in order to balance the difference
between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply)
Murray supp pf at 9
12 There is a risk that due to the voluntary nature of the RNG program supply and demand
will be mismatched White pf at41 David G Hill CLF (Hi11) pf at 9
13 If the available RNG supply during the previous 12 months is less than the amount
purchased by VGS customers the RNG program provides that VGS may use funds collected to
purchase carbon offsets from an established carbon registry such as the American Carbon
Registry VGS will purchase an amount of carbon offsets equal to the amount of the revenue
resulting from the undersupply in order to result in a revenue-neutral program At the time of the
three-year implementation review VGS will propose an environmental accounting protocol in
order to quantify the environmental benefits of the program and to evaluate the financial risk of
purchasing carbon offsets in an amount equivalent to the environmental benefits of unsold RNG
due to undersupply Murray supp pf at 6 l0 exh Pet-VGS-s Responses 1
14 The development and standardization of RNG attributes is in its infancy as compared to
the existing markets for the environmental attributes used in the electric industry (renewable
energy credits or (RECs)) Murray supp pf at 12
15 If carbon offsets are not available VGS will contribute the RNG program revenues to the
Clean Energy Development Fund or issue prorated credits to affected customers Exh Pet-
VGS-S Responses 3
16 If RNG supply exceeds customer demand VGS would seek to sell the excess RNG at
wholesale Murray supp pf at 10
17 VGS will provide proposed RNG supply contracts to the Department prior to execution
It will also consult with the Department before making decisions that could dramatically impact
price or the integrity of the RNG program Exh Pet-VGS-S Responses 2 White pf at 5
18 The estimated cost of RNG supply ranges from $l2lMcf to $25lMcf The cost of natural
gas is less than $3Mcf Murray supp pf at 8-9
19 VGS will implement an RNG Quality Assurance Plan establishing a testing and
monitoring process to ensure that RNG injected (via in-state RNG producers) into the VGS
system is pipeline quality and meets the specifications of the TCPL transportation tariff for bio-
methane gas quality Murray supp pf at 14 exh Pet-VGS-4
Docket No 8667 PageT
20 VGS will file an annual report on the RNG program with the Commission and the
Department containing the following information
1 Number of subscribers by customer class
2 Sales volume by customer class
3 Sales revenues
4 Any sales or purchases of carbon offsets
5 Supplyconsumption matching portfolio including any shortfall or excess
supply of RNG
6 True-up schedule for any imbalances
7 RNG supply verification
8 Quantification of the impact of any excess RNG costs flowing through the
PGA if VGS remains under altemative regulation
9 Accounting of any carbon ofszligets or other incentives
10 Status of any contracts for RNG including plans to acquire new supply
contracts
I 1 Revenue from Renewable Identification Number (RlN) sales and impact
on the transport tariff as well as any projections about the RIN market that are
available to VGS and
12 Complete reports and environmental verifications by an independent
verifier
Murray supp pf at 11 exh Pet-VGS-3 White pf at 8-9 tr912116 at23-24 (Munay)
21 Except as described below concerning RlN-eligible RNG VGS will annually verify that
the RNG was produced by a renewable gas production facility that VGS is the exclusive oryner
of any environmental attributes associated with RNG it sells under the program that it acquired
the RNG from its transferor and sold itatretail and that neither the RNG nor any renewable
attribute associated with the RNG has been sold twice at any point between RNG production and
sale to VGS whether by sales into carbon offset markets or otherwise This verification will be
based on certifications by VGSs suppliers and by an independent third party retained by VGS
for this purpose Exh Pet-VGS-3 exh Pet-VGS-s Response 5 White pf at 8
Docket No 8667 Page I
22 For RlN-eligible RNG used as vehicle fuel verification will be addressed in detail in the
future as part of VGSs proposed Renewable Vehicle Fuel Tariff Exh Pet VGS-5 Response 4
rr912116 at 65 (White)
23 There are few natural gas utilities currently offering RNG at retail VGS modeled its
RNG program after the program designed by FortisBC a local distribution company in British
Columbia Canada VGS also had discussions with SoCalGas in Southern California Both of
these companies are leaders in developing RNG offerings and fostering RNG supply resources
Murray supp pf at 7
24 VGS will file with the Commission and Department a marketing plan containing the
following elements
l An evaluation element that includes concrete metrics such as sales
volume targets and enrollment targets
2 Identification of target market segment(s)
3 Development of materials and language for customer-marketing efforts
that explain the RNG program in plain language easily understandable to the
average customer
4 An online bill calculator
5 An implementation plan that identifies specific activities and a timetable
and
6 Abudget
Exh Pet-VGS-5 White pf at 10 Tr912116 at22-23 (Munay)
25 VGS and the Department represent that the RNG progriquestun is responsive to the
Commissions condition in its Order in Docket 7970 rcquiring VGS to develop a proposal to
promote bio-methane project development Murray supp pf al 13-14tr912116 at 63 (Vhite)
26 VGS asserts that the RNG program represents appropriate progress toward the Vermont
Comprehensive Energy Plan (CEP) goal to meet90o of Vermonts energy needs through
renewable sources by 2050 Murray supp pf at 12-13
VI DlscussroN iexclxu Coxclustox
Vith this proposal for decision I recommend that the Commission approve the RNG
program in accordance with the findings described above and based upon the evidence in the
Docket No 8667 Page 9
record In Docket 7970 the Commission required VGS in consultation with the Department to
file a petition with the [Commission] proposing a program to promote bio-methane project
development It is reasonable to expectthat aprogram meant to stimulate development of a
specific energy source would look to stimulate demand for that resource by offering an
opportunity for customers to purchase supply from RNG producers
The RNG program proposed by VGS and supported by the Department seeks to offer
ratepayers the option to purchase renewable energy as part of their individual energy-use
portfolio Furthermore the program includes a provision requiring that VGS develop a detailed
marketing plan that will serve to educate customers on the availability costs and benefits of
such resources which could lead to increased demand for the product
VGS intends to take advantage of the existing market for RINs associated with RNG used
as transportation fuel by proposing a Renewable Vehicle Fuel Tariff As described above in the
Public Comments section the Chittenden County Transportation Authority and Casella Vaste
Systems are interested in exploring the use of RNG to fuel their vehicle fleets which
demonstrates that there is existing customer demand for this product
Unlike the markets relating to RNG supply used for transportation fuel or renewable
electric generation and the associated trading and verification of RECs the RNG market is in its
infancy At this time it would not be appropriate to expect VGS to implement an RNG program
utilizing an RNG content standard similar to the electric renewable portfolio standard as
recommended by CLF because the equivalent standards and processes do not exist However
the RNG program represents a meaningful first step in encouraging customer interest in
purchasing RNG at retail thereby stimulating supply of RNG into the market and is consistent
with the Commissions condition requiring VGS to develop a proposal to promote bio-methane
project development
VGSs RNG program includes appropriate mechanisms for periodic reporting and
verification of program activities as well as an opportunity to comprehensively review the
program after three years of implementation Furthermore determinations regarding recovery of
costs associated with the RNG program will be made in the context of future proceedings
regarding VGSs rates The RNG program should evolve with the RNG markets in the near-term
and over the course of the next several years which will allow progress towards achievement of
Vermonts 2050 CEP renewable energy goals
Docket No 8667 Page 10
Because not all parties to this proceeding have waived their rights under 3 VSA $ 811
to file written comments or present oral argument with respect to this proposal for decision I am
circulating the proposal for decision to the parties for their review and comment
Dated at Montpelier Vermont this rrtl day of QrIltt 2017a0AndreaHearing Officer
Docket No 8667 Page 11
VII Corumrssron Drscussrox
On August 22017 the Department filed a letter stating that it supports the issuance of an
Order by the Commission that adopts the proposal for decision in full
Also on August 22017 VGS filed comments on the proposal for decision requesting
that Finding 16 be modified as follows (additional text in italics) If RNG supply exceeds
customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary
flow any remaining RNG attribute inventory amounts through the PGA or through a rate case ifVGS was under traditional cost of service regulation (subject to [Commission] approval)
VGS asserts that [a]bsent such specific language it is possible that VGS would be unable [to]
defer such costs for future recovery and that removal of that component introduces uncertainty
about the potential procedural mechanisms available for cost recovery in the last resort VGS
states that with the Commissions consideraacutetion of this request it does not request oral argument
No other comments were filed on the proposal for decision
The Hearing Officer recommended that the Commission find that determinations
regarding recovery of costs associated with the RNG program will be made in the context of
future proceedings regarding VGSs rates We agree with this recommendation VGS should
have an opportunity to request rate recovery for excess RNG supply However this proceeding
is not the proper time for such a determination Accordingly Finding 16 is hereby modified as
follows If RNG supply exceeds customer demand VGS would first seek to sell the excess
RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any
remaining RNG attribute inventory amounts through the PGA or through arate case as part of
its cost of service if the PGA is no longer in effect atthat timeWe emphasize the importance of the successful implementation of the RNG program in
helping to meet the States renewable energy policy objectives The annual report on the
implementation of the RNG program will serve as a valuable tool to assess that progress In this
proceeding CLF has raised policy considerations that should serve to guide these future reviews
of the RNG program For example CLF has raised concerns regarding the effectiveness of the
voluntary nature of the program In assessing its program we expect VGS to revisit and report
on the feasibility of incorporating RNG as a portion of its supply mix in the future It is
important for VGSs RNG program to be sustainable and continue to evolve ensuring significant
DocketNo8667 Page 12
contributions toward meeting the States renewable energy goals and reducing the consumption
of fossil fuel Accordingly it is critical that the annual report and the three-year comprehensive
review address not only the effectiveness of the program but also its affordability and the
feasibility of other policy options to advance the production and use of RNG in Vermont
Docket No 8667 Page 13
VIII Onunn
Ir rs Hennsy oRDERED ADJUDGED AND DECRnnn by the Public Utility Commission of the
State of Vermont that
1 The findings conclusions and recommendations of the Hearing Officer are
adopted and the Renewable Natural Gas (RNG) program to be implemented by Vermont Gas
SystemsInc (VGS) is approved
2 When VGS has procured RNG supply in amounts reasonably estimated to be
sufficient for estimated customer demand it shall file a formal tariff including proposed rates for
sale of RNG The tariff shall be reviewedpursuantto the procedures of 30 VSA ccedilccedil225226
and227 and sales under the program shall begin after Commission approval of the tariff
3 VGS shall develop and file for Commission approval a separate Renewable
Vehicle Fuel Tariff to serve customers using RNG as a transportation fuel
4 VGS shall file a marketing plan for the RNG program consistent with the
requirements set forth above within one month of the issuance of this Order
5 VGS shall file an annual report consistent with the requirements set forth above
upon implementation of the RNG program
6 VGS shall file a comprehensive review of the performance of the program with
the Commission and the Department after three years of implementation This review will
include an environmental accounting protocol to quantiff the environmental benefits of the
progrfim
7 VGS shall review proposed RNG supply arrangements with the Department
Docket No 8667
Orprcp oF THE Crnm
Dated at Montpelier Vermont this day of+hb
Z Roisman
Cheney
Page 14
20t7
Puslrc Urrlnv
CovtriquestIssIoN
OP VERMONT
(
)))
)))
Fired otildeeglcL ( JotTAttest c
of the Commission
NorIcE To READERS This decision is subject to revision oftechnical errors Reqders are requested tonotify the Clerk of the Commission (by e-mail telephone or inwriting) or any appqrent errors in order that anynecessary corrections may be made (E-mail address pucclerkvermontgov)
Appeal of this decision to the Supreme Court of Vermont must befiledwith the Clerk of the Comnissionwithin thirty days Appeal will not stay the efect of thszlig Order absentfurther order by this Commission orappropriate actiacuteon by the Supreme Court of Vermont Motions for reconsideration or stay if any must be filed withthe Clerk of the Commissionwithin ten days of the date of this deciacutesion and Order
Exhibit 22 VGS RNG Tariff Rate Filing
Exhibit 23 PUC Approval of VGS RNG Rates
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Case No l8-03 13-TF
Petition of Vermont Gas Systems Inc fotapproval of a new tariff implementing theRenewable Natural Gas program
Order entered
OnonRAppnovINc Tiquestrurn
On January 302018 Vermont Gas Systems Inc (VGS) filed a petition for approval of
a new tariff implementing the Renewable Natural Gas (RNG) program approved by the
Vermont Public Utility Commission (Commission) in Docket No 8667 In that Docket the
Commission required VGS to file a tariff implementing the RNG program when it has procured
RNG supply in amounts reasonably estimated to be sufficient to meet customer demandl In
this Order the Commission approves the new tariff marketed under the name EcoGas with an
effective date of bills rendered on and after March 15 2018
VGS states that it has executed an RNG supply contract with deliveries scheduled for
2018 and that two additional contracts are being negotiated for deliveries beginningin2019
VGS is proposing to set its initial RNG adder at$ll749lCcf which represents a five-year
blended rate based on the three RNG supply arrangements VGS intends to account for the
difference between the cost of RNG supply and the RNG adder as a regulatory asset within gas
costs As additional lower-cost supply is added to the portfolio the regulatory asset balance will
be recovered from EcoGas participants with the goal of fully reducing the balance by the end of
five years Accordingly VGS states that the RNG program will be rate-neutral to VGS and its
non-RNG customers
On February 272018 the Vermont Department of Public Service (Department) filed a
letter recommending that the Commission approve the tariff without a hearing or further
investigation The Department states that the tariff filing and proposed accounting treatment
comply with Vermont rate-setting practices policies precedents and statutes
lslaotx
I Docket 8667 Order of 96117 at 13
Page2Case No 18-0313-TF
Based on the foregoing we hereby approve VGSs proposed RNG tariff to be effective
on a bills-rendered basis beginning on March 15 2018 Recovery of any regulatory asset
balance at the end of the fifth year would need to be approved by the Commission in a future
proceeding
So Omnnnn
Case No l8-0313-TF
8r- day of lruacuterLiquestiquest
Page 3
Dated at Montpelier Vermont this 2018
Roisman PueIrc Urlrrv
CoiriexcllriquestlssloN
Cheney
OF VERMONT
Sarah Hofmann
Onncp oF THE CLBRr
Filed huacuteveuroAacute- icirc dollAttest I
Clerk of the Commission
Notice to Readers This decision is subiect to revision oftechnical errors Readers are requested to notify
the Clerk of the Commission (by e-mail telephone or in writing) or qny qpparent errors in order that any
necessary corrections may be made (E-mail address pucclerkvermontgov)Appeal of this decisiacuteon to the Supreme Court of Yermont must be filed with the Clerk of the Commission
within 30 days Appeal will not stay the efect of this Order oslashbsent further order by this Commission or appropriate
action by the Supreme Court of Vermont Motionsthornr reconsideration or stay if any must befiledwith the Clerk ofthe Commissionwithin 28 doslashys of the date of this decision and Order
)))
))))
PUC Case No 18-0313-TF
Eileen SimollardesLauren HammerVermont Gas
85 Swift StreetSouth Burlington VT 05403
June E Tiemey CommissionerVermont Department of Public Service1 12 State StreetMontpelier VT 05620 -2601
Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
Exhibit 31 Accounting Procedures
Exhibit 31 Accounting for VGS Renewable Natural Gas (Ver-9202019)
1 Purchase of RNG Supply
RNG supply purchases are separated into the cost of the commodity and the cost of the renewable attribute The commodity portion is expensed to gas costs in the delivery month while the renewable attribute is booked to an inventory account referenced herein as the ldquoRenewable Inventory Accountrdquo Like VGSrsquo existing storage inventory accounting the Renewable Inventory Account will track both the dollar value of the renewable attribute and the renewable attribute Mcfs Renewable attribute dollar values are record to ldquo16410050 Inventory RNG Storagerdquo while Mcf values are recorded in the gas cost model maintained by accounting In the month VGS purchases the renewable attribute it is accrued in a book model and goes in to 16410150 Inventory RNG Accrued then moves to the 16410050 in a final model the following month for final
RNG may be purchased at different locations and using varying pricing structures While the accounting for RNG does not vary with the purchase location or price the determination of the value of the renewable attribute will vary depending on whether or not the supply pricing expressly values the renewable attribute as an adder or it is embedded in a fixed price Examples of each are shown below The accounting of RNG supply is intended to separate the cost of the renewable attribute from the cost of the commodity The examples below are not all inclusive of what may occur but intended to show the accounting procedures used to separate the renewable attribute from the commodity and specify ownership of each aspect
In all cases the commodity cost portion - which is the total cost of the RNG purchased excluding the renewable attribute - will be expensed in the delivery month as a cost of gas
Example 1 ndash The fixed price of RNG includes both the commodity and the renewable attribute
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The total cost of the RNG supply purchased during the month is calculated by Accounting within the gas cost model as follows
MMBtu Purchased (as validated in step 2) $ MMBtu purchase price (as provided in a supply confirmation provided by gas supply)
4 For purposes of booking the renewable attribute to inventory it is necessary to calculate the RNG cost per Mcf The RNG cost Mcf is calculated using the total cost of RNG supply as calculated in step 3 divided by the Mcf in step 1
5 The renewable attribute price per Mcf is calculated as follows
RNG cost per Mcf as determined in step 4 ndashplus ldquoother componentsrdquo as calculated pursuant to Attachment A ndash minus ldquoAverage Commodity Costrdquo as calculated pursuant to Attachment A The ldquoother componentsrdquo added to the RNG cost per Mcf will vary depending on where the RNG supply was delivered but in each case will be identified in the calculation shown on Attachment A
6 The renewable attribute price per Mcf the total RNG Mcf delivered is recorded in the Inventory RNG Storage account
7 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
Example 2 - RNG purchased at a renewable attribute price plus a daily or monthly index
Where the pricing of RNG specifically separates the commodity from the renewable attribute the renewable attribute price will be what is recorded in the Renewable Inventory Account
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The renewable attribute price per Mcf the total RNG Mcf delivered as determined in step 1 is recorded in the Renewable Inventory Account
4 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
2 Recalculating the RNG Adder
The RNG Adder paid by customers will be recalculated anytime the Natural Gas charge portion of rates changes The Manager of Gas SupplyGas control is responsible for recalculating the RNG Adder The calculation will be verified and approved by the Vice President ndash Regulatory Affairs The determination of the RNG Adder will be pursuant to the methodology shown in Attachment A The Regulatory Department will prepare the amended RNG Adder tariff for filing with the PUC Upon PUC approval of the RNG Adder the Regulatory Department will prepare a memorandum advising Accounting and Gas Supply of the new RNG Adder as approved
3 Customer purchases VGS Renewable Natural Gas
The RNG Adder at the percent selected by the customer will be applied to the entire monthrsquos usage on the customersrsquo next bill For customers utilizing the S-RNG adder the entire volume elected with be on the customersrsquo next bill The S-RNG Adder nor the RNG Adder and percentage selected will not be prorated based on enrollment or termination date
Customers may terminate or modify their RNG selection upon 3 dayrsquos notice to VGS The termination or modification will be effective on the customerrsquos next monthly bill
The customerrsquos usage for the month will be multiplied by the percentage and the approved RNG Adder For customers utilizing the S-RNG adder the volume elected will be multiplied by the approved RNG adder This amount will then be recorded to SAP accounts 4010015-40010021 depending on which rate class the customer is in The RNG Adder is the same regardless of which rate class a customer is in At the end of the month a report is run by billing from the customer information system that shows total usage and which percentage of RNG the customer has signed up for to calculate the number of MCFrsquos of renewable attribute sold during the billing period Billing also provides a report of the volumes sold through the S-RNG Tarriff The Inventory RNG Storage account maintained within the gas cost model by Accounting is reduced by these Mcf The MCFrsquos are then multiplied by the RNG Adder in effect for the billing month and an entry is made to remove that dollar amount from the Inventory RNG Storage account and into the monthly cost of gas The intent of this transaction is to ensure that cost of the renewable attribute is reflected in the cost of gas in the month it is purchased by the customer This results in a matching of the renewable attribute revenue and expense
The RNG Adder revenue and renewable attributes removed from storage will be included in the gas cost deferral calculation However because there is a matching of the renewable attribute revenue and expense the impact on the deferral calculation will be zero
The calculation of unbilled revenues will exclude RNG as a customer can cancel their participation prior to their next bill
In the event Vermont Gas issues a credit to a customer related to the RNG program the value of the renewable attribute credited and the associated Mcf will not be applied to the Renewable Inventory Account
4 Controls
A spreadsheet is maintained by accounting that shows the MCFrsquos and dollar values of the Renewable Inventory Account This is reconciled monthly by the accounting team and will be reviewed by the Manager Gas SupplyGas Control
Accounting will validate that the amount removed from the Renewable Inventory Account matches the RNG Adder revenue Any discrepancies will be reviewed and corrected
A report will be run for each bill cycle that shows any changes to the RNG percentages selected this will include customers opting to withdraw from the RNG program The customer care team will validate any changes against customer confirmation paperwork
5 Renewable Inventory Account Reconciliation and Forecast
The PUC Order approving the RNG program contains provisions describing how RNG supply and demand imbalances will be addressed These provisions and how VGS will track and comply with them are as discussed in this section The PUC Order approving the RNG Program provides that if the available RNG supply during the previous 12 months is less than the amount purchased by customers VGS may use the funds collected to purchase carbon offsets (Finding 13) If carbon offset are not available VGS will contribute the RNG program revenues to the Clean Energy Development Fund or issue prorated credits to affected customers (Finding 15) The Order also provides that in the event RNG supply exceeds customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any remaining RNG attribute inventory amounts through the PGA or through a rate case as part of its cost of service if the s PGA is no longer in effect at that time (Finding 16 as modified) Finding 11 provides that VGS will use a ldquotrue-uprdquo period of up to 12 months in order to balance the difference between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply) Taken together these provisions require VGS to evaluate the imbalance after 12-months and then true-up the imbalance over the next twelve months To provide a forecast of the supplydemand imbalance quarterly the billing area will run a report showing the expected RNG volumes based on current customer commitments by month for the next 12-months Current customers commitments will be calculated based on the previous 12 months of usage multiplied by the RNG percentage currently signed up for The marketing department will provide their forecast of new RNG sales for the next 12-months Both will be provided to the Manager Gas SupplyGas Control The Manager Gas SupplyGas Control will compare the forecasted RNG sales known and expected to RNG supply commitments and provide a 24-month forecast of the supplydemand balance The supplydemand balance will be reviewed at the risk management meeting The strategy for addressing the imbalance consistent with the PUC order will be determined by the risk management committee
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
Docket No 8667 Page2
program establishes a framework for VGS to offer its customers the option to purchase RNG for
as a portion of their usage RNG is produced from materials such as agricultural waste manure
municipal waste plant material or compost and is also referred to as bio-methane In this
proposal for decision I recommend that the Commission approve the proposed RNG program
and require VGS to make compliance filings as set forth herein
il PnocnrunnlHrsroRY
On October 232015 VGS figraveled a petition for approval for its RNG program including
prefiled testimony and exhibits of Thomas Murray
On January 192016I held a prehearing conference and on January 252016I issued
an Order establishing a schedule
On February 122016 VGS filed a revised RNG Plan
On March 102016I held a workshop to discuss the proposed program
On March 152016I issued an Order revising the schedule
On March 222016 Conservation Law Foundation (CLF) and Lincoln Renewable
Natural Gas LLC (Lincoln) filed motions to intervene in this proceeding
On April 12016 VGS filed supplemental testimony and exhibits
On April 82016I issued an Order granting CLFs and Lincolns intervention requests
On July 72016 the Vermont Department of Public Service (Department) CLF and
Lincoln filed testimony
On August 82016 Lincoln filed supplemental testimony
A technical hearing was hthornld on September 22016
On September 30 20|6VGS filed a draft proposal for decision supported by the
Department In addition CLF filed a brief on the same date Reply briefs were filed by VGS
and CLF on October 142016
III Posnroxs oF THE PlRrlns
VGS
VGS requests approval of its proposed RNG program for the sale of RNG to customers
on a voluntary basis VGS claims that its proposal contains reasonable provisions to align its
RNG purchases with the amounts sold to its customers appropriate mechanisms to address over-
Docket No 8667 Page 3
or under-supply of RNG and verification requirements to ensure that sales in fact consist of
RNG VGS maintains that the RNG program is an appropriate first step in stimulating RNG
producer supply and customer demand and is oamply supported by Vermonts experience of
measured implementation of electric renewable pricing programs2 VGS argues that the
program is responsive to the Commissions condition in its Order in Docket 79701o develop a
proposal to promote bio-methane project development3
Department of Public Service
Although the Department did not file a brief or reply brief it did present witness
testimony and indicated its support for the draft proposal for decision filed by VGS The
Department recommends that VGS review all proposed RNG supply arrangements with the
Department (in addition to seeking 30 VSA $ 248 approval where required) and suggests that
in the event of an undersupply of RNG VGS obtain carbon offsets in an amount equivalent to
the unused customer contributions The Department recommends that the RNG program be
reviewed at the end of three years at which time the protocol regarding the purchase of offsets
would be revisited
C ons ervation Law Foundation
CLF urges that the Commission reject the RNG program and instead adopt an RNG
content standard similar to the electric renewable portfolio standarda CLF maintains that the
expected annual sales volume is not apace that is consistent with Vermonts legislative and
planning targets for meeting energy needs with renewable energy or for reducing greenhouse gas
emissionss CLF claims that the proposed voluntary tariff falls short of being a program or
strategy that promotes the increased use of RNG resources or supply or fosters bio-methane
projects in Addison county6
2 VGS reply brief aI23 In Docket 7970the Commission considered the petition of VGS for a certificate of public good (CPG) pursuant
to 30 VSA $ 248 authorizing the construction of the Addison Natural Gas Pipeline In an Order issued on
December 232013 the Commission granted the CPG As a condition of approval the Commission required VGSin consultation with the Department to file a petition with the [Commission] proposing a program to promote bio-methane project development Docket 7970 Order of l2l23ll3 at 147
a CLF brief at 12s CLF brief at 36 CLF brief at 4
Docket No 8667 Page 4
Lincoln
Lincoln maintains that itis essential to promote development of agricultural-based bio-
methane supply in VermontT Lincoln states that the Commission is not in a position to
adequately address VGSs proposed RNG program until negotiations for sale of itsoutput
involving VGS and Middlebury College are completes
IV Punrrc CounnnNrs
The Commission received three letters of support for VGSs RNG program On March 10
2016 the Chittenden County Transportation Authority filed comments indicating that it intends to
explore the possibility of utilizing RNG to cover a portion of the energy needs for its fleet of 70
buses On March 182016 Champlain College filed comments noting that it is interested in using
RNG for a portion of its energy needs that are currently met with conventional natural gas On
March 282016 Casella Waste Systems made a filing with the Commission stating its intention
to explore using RNG to meet some of its energy needs for its fleet of vehicles
V trrutrxcs
Based on the evidence of record I hereby report the following findings and
recommendations to the Commission in accordance with 30 VSA $ 8(c)
1 RNG is produced from raw materials such as agricultural waste manure municipal
waste plant material or food waste Decomposition or digestion of these materials produces
raw methane which is then cleaned or upgraded to bio-methane in order to meet the receiving
pipelines gas quality specifications prior to injection into an existing pipeline system Thomas
Murray VGS (Murray) supp pf at3
2 VGS is exploring options to purchase RNG supply from Lincoln and from landfill gas
projects located outside Vermont that would be received through the Trans-CanadaPipeline
(TCPL) system Murray supp pf at 8-9
7 Daniel Smith Lincoln Renewable Natural Gas LLC (Smith) supp pf at L8 On August 152016 Lincoln filed a motion to continue this proceeding for a period of not less than 60 days statingthat the continuance would allow [it] VGS and Middlebury College to complete discussions as to VGSsinvolvement in the RNG supply in Vermont and allow the record in this case to be properly developed VGS and
the Department opposed the request for continuance On August 222016I issued an Order denying Lincolnsrequest and determined that Lincoln did not demonstrate good cause to postpone the technical hearing
Docket No 8667 Page 5
3 Under the program retail customers would voluntarily purchase RNG in amounts equal to
l0oo25yo50o or 100 of their total monthly requirements at specified prices per Ccf as an
adder to other retail charges Customers could terminate RNG purchases upon providing three
days of advance notice to VGS Murray supp pf at l-2 exhs Pet-VGS-l and Pet-VGS-3
4 Intemrptible customers will have the opportunity to participate in the RNG program
through VGSs existing Lock Price Program which currently provides for up to a two-year
commitment Murray supp pf at 5
5 VGS will develop and file for Commission approval a separate tariff for use of RNG as a
transportation fuel This tariff will allow VGS to take advantage of the sale of the associated
Renewable Identification Numbers (ooRINs) When RNG is used as a transportation fuel it is
eligible to receive RINs under the Federal Renewable Fuel Standard RINs can be resold on the
wholesale market and would be used to offset the price of RNG to transportation customers
receiving service under the tariff Joan E White
Department (White) pf at7tr912116 at 62-
63 (White) exh Pet-VGS-5 Response 4
6 VGS will also initiate a review of the RNG program by the Commission Department and
others after three years White pf at9tr912116 (Munay) at24
7 The adder price for each Ccf of RNG will be equal to the average RNG commodity cost to
VGS less the average commodity cost of natural gas VGS will adjust the adder price per Ccf on
a quarterly basis as part of its Purchased Gas Adjustment (PGA) filing Murray supp pf at 4
8 The proposed RNG program will include a tariff that is very similar in concept to the
Green Mountain Power Corporation (GMP) Cow Power tariff However Cow Power is based
on a fixed rate per kWh no matter what the cost of the renewable energy Murray supp pf at llVhite pf at 4
9 VGSs RNG tariff will be calculated quarterly based on actual RNG and natural gas costs
and will provide accurate price signals as to the price differential between natural gas and RNG
White pf at 4
10 Based on a survey conducted by VGS 85 of its customers are willingto pay l0oo
more for a renewable product VGS projects that customers could potentially consume over
500000 Mcf of RNG over the next five years Murray supp pf at 5
DocketNo8667 Page 6
11 VGS will use a true-up period of up to 12 months in order to balance the difference
between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply)
Murray supp pf at 9
12 There is a risk that due to the voluntary nature of the RNG program supply and demand
will be mismatched White pf at41 David G Hill CLF (Hi11) pf at 9
13 If the available RNG supply during the previous 12 months is less than the amount
purchased by VGS customers the RNG program provides that VGS may use funds collected to
purchase carbon offsets from an established carbon registry such as the American Carbon
Registry VGS will purchase an amount of carbon offsets equal to the amount of the revenue
resulting from the undersupply in order to result in a revenue-neutral program At the time of the
three-year implementation review VGS will propose an environmental accounting protocol in
order to quantify the environmental benefits of the program and to evaluate the financial risk of
purchasing carbon offsets in an amount equivalent to the environmental benefits of unsold RNG
due to undersupply Murray supp pf at 6 l0 exh Pet-VGS-s Responses 1
14 The development and standardization of RNG attributes is in its infancy as compared to
the existing markets for the environmental attributes used in the electric industry (renewable
energy credits or (RECs)) Murray supp pf at 12
15 If carbon offsets are not available VGS will contribute the RNG program revenues to the
Clean Energy Development Fund or issue prorated credits to affected customers Exh Pet-
VGS-S Responses 3
16 If RNG supply exceeds customer demand VGS would seek to sell the excess RNG at
wholesale Murray supp pf at 10
17 VGS will provide proposed RNG supply contracts to the Department prior to execution
It will also consult with the Department before making decisions that could dramatically impact
price or the integrity of the RNG program Exh Pet-VGS-S Responses 2 White pf at 5
18 The estimated cost of RNG supply ranges from $l2lMcf to $25lMcf The cost of natural
gas is less than $3Mcf Murray supp pf at 8-9
19 VGS will implement an RNG Quality Assurance Plan establishing a testing and
monitoring process to ensure that RNG injected (via in-state RNG producers) into the VGS
system is pipeline quality and meets the specifications of the TCPL transportation tariff for bio-
methane gas quality Murray supp pf at 14 exh Pet-VGS-4
Docket No 8667 PageT
20 VGS will file an annual report on the RNG program with the Commission and the
Department containing the following information
1 Number of subscribers by customer class
2 Sales volume by customer class
3 Sales revenues
4 Any sales or purchases of carbon offsets
5 Supplyconsumption matching portfolio including any shortfall or excess
supply of RNG
6 True-up schedule for any imbalances
7 RNG supply verification
8 Quantification of the impact of any excess RNG costs flowing through the
PGA if VGS remains under altemative regulation
9 Accounting of any carbon ofszligets or other incentives
10 Status of any contracts for RNG including plans to acquire new supply
contracts
I 1 Revenue from Renewable Identification Number (RlN) sales and impact
on the transport tariff as well as any projections about the RIN market that are
available to VGS and
12 Complete reports and environmental verifications by an independent
verifier
Murray supp pf at 11 exh Pet-VGS-3 White pf at 8-9 tr912116 at23-24 (Munay)
21 Except as described below concerning RlN-eligible RNG VGS will annually verify that
the RNG was produced by a renewable gas production facility that VGS is the exclusive oryner
of any environmental attributes associated with RNG it sells under the program that it acquired
the RNG from its transferor and sold itatretail and that neither the RNG nor any renewable
attribute associated with the RNG has been sold twice at any point between RNG production and
sale to VGS whether by sales into carbon offset markets or otherwise This verification will be
based on certifications by VGSs suppliers and by an independent third party retained by VGS
for this purpose Exh Pet-VGS-3 exh Pet-VGS-s Response 5 White pf at 8
Docket No 8667 Page I
22 For RlN-eligible RNG used as vehicle fuel verification will be addressed in detail in the
future as part of VGSs proposed Renewable Vehicle Fuel Tariff Exh Pet VGS-5 Response 4
rr912116 at 65 (White)
23 There are few natural gas utilities currently offering RNG at retail VGS modeled its
RNG program after the program designed by FortisBC a local distribution company in British
Columbia Canada VGS also had discussions with SoCalGas in Southern California Both of
these companies are leaders in developing RNG offerings and fostering RNG supply resources
Murray supp pf at 7
24 VGS will file with the Commission and Department a marketing plan containing the
following elements
l An evaluation element that includes concrete metrics such as sales
volume targets and enrollment targets
2 Identification of target market segment(s)
3 Development of materials and language for customer-marketing efforts
that explain the RNG program in plain language easily understandable to the
average customer
4 An online bill calculator
5 An implementation plan that identifies specific activities and a timetable
and
6 Abudget
Exh Pet-VGS-5 White pf at 10 Tr912116 at22-23 (Munay)
25 VGS and the Department represent that the RNG progriquestun is responsive to the
Commissions condition in its Order in Docket 7970 rcquiring VGS to develop a proposal to
promote bio-methane project development Murray supp pf al 13-14tr912116 at 63 (Vhite)
26 VGS asserts that the RNG program represents appropriate progress toward the Vermont
Comprehensive Energy Plan (CEP) goal to meet90o of Vermonts energy needs through
renewable sources by 2050 Murray supp pf at 12-13
VI DlscussroN iexclxu Coxclustox
Vith this proposal for decision I recommend that the Commission approve the RNG
program in accordance with the findings described above and based upon the evidence in the
Docket No 8667 Page 9
record In Docket 7970 the Commission required VGS in consultation with the Department to
file a petition with the [Commission] proposing a program to promote bio-methane project
development It is reasonable to expectthat aprogram meant to stimulate development of a
specific energy source would look to stimulate demand for that resource by offering an
opportunity for customers to purchase supply from RNG producers
The RNG program proposed by VGS and supported by the Department seeks to offer
ratepayers the option to purchase renewable energy as part of their individual energy-use
portfolio Furthermore the program includes a provision requiring that VGS develop a detailed
marketing plan that will serve to educate customers on the availability costs and benefits of
such resources which could lead to increased demand for the product
VGS intends to take advantage of the existing market for RINs associated with RNG used
as transportation fuel by proposing a Renewable Vehicle Fuel Tariff As described above in the
Public Comments section the Chittenden County Transportation Authority and Casella Vaste
Systems are interested in exploring the use of RNG to fuel their vehicle fleets which
demonstrates that there is existing customer demand for this product
Unlike the markets relating to RNG supply used for transportation fuel or renewable
electric generation and the associated trading and verification of RECs the RNG market is in its
infancy At this time it would not be appropriate to expect VGS to implement an RNG program
utilizing an RNG content standard similar to the electric renewable portfolio standard as
recommended by CLF because the equivalent standards and processes do not exist However
the RNG program represents a meaningful first step in encouraging customer interest in
purchasing RNG at retail thereby stimulating supply of RNG into the market and is consistent
with the Commissions condition requiring VGS to develop a proposal to promote bio-methane
project development
VGSs RNG program includes appropriate mechanisms for periodic reporting and
verification of program activities as well as an opportunity to comprehensively review the
program after three years of implementation Furthermore determinations regarding recovery of
costs associated with the RNG program will be made in the context of future proceedings
regarding VGSs rates The RNG program should evolve with the RNG markets in the near-term
and over the course of the next several years which will allow progress towards achievement of
Vermonts 2050 CEP renewable energy goals
Docket No 8667 Page 10
Because not all parties to this proceeding have waived their rights under 3 VSA $ 811
to file written comments or present oral argument with respect to this proposal for decision I am
circulating the proposal for decision to the parties for their review and comment
Dated at Montpelier Vermont this rrtl day of QrIltt 2017a0AndreaHearing Officer
Docket No 8667 Page 11
VII Corumrssron Drscussrox
On August 22017 the Department filed a letter stating that it supports the issuance of an
Order by the Commission that adopts the proposal for decision in full
Also on August 22017 VGS filed comments on the proposal for decision requesting
that Finding 16 be modified as follows (additional text in italics) If RNG supply exceeds
customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary
flow any remaining RNG attribute inventory amounts through the PGA or through a rate case ifVGS was under traditional cost of service regulation (subject to [Commission] approval)
VGS asserts that [a]bsent such specific language it is possible that VGS would be unable [to]
defer such costs for future recovery and that removal of that component introduces uncertainty
about the potential procedural mechanisms available for cost recovery in the last resort VGS
states that with the Commissions consideraacutetion of this request it does not request oral argument
No other comments were filed on the proposal for decision
The Hearing Officer recommended that the Commission find that determinations
regarding recovery of costs associated with the RNG program will be made in the context of
future proceedings regarding VGSs rates We agree with this recommendation VGS should
have an opportunity to request rate recovery for excess RNG supply However this proceeding
is not the proper time for such a determination Accordingly Finding 16 is hereby modified as
follows If RNG supply exceeds customer demand VGS would first seek to sell the excess
RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any
remaining RNG attribute inventory amounts through the PGA or through arate case as part of
its cost of service if the PGA is no longer in effect atthat timeWe emphasize the importance of the successful implementation of the RNG program in
helping to meet the States renewable energy policy objectives The annual report on the
implementation of the RNG program will serve as a valuable tool to assess that progress In this
proceeding CLF has raised policy considerations that should serve to guide these future reviews
of the RNG program For example CLF has raised concerns regarding the effectiveness of the
voluntary nature of the program In assessing its program we expect VGS to revisit and report
on the feasibility of incorporating RNG as a portion of its supply mix in the future It is
important for VGSs RNG program to be sustainable and continue to evolve ensuring significant
DocketNo8667 Page 12
contributions toward meeting the States renewable energy goals and reducing the consumption
of fossil fuel Accordingly it is critical that the annual report and the three-year comprehensive
review address not only the effectiveness of the program but also its affordability and the
feasibility of other policy options to advance the production and use of RNG in Vermont
Docket No 8667 Page 13
VIII Onunn
Ir rs Hennsy oRDERED ADJUDGED AND DECRnnn by the Public Utility Commission of the
State of Vermont that
1 The findings conclusions and recommendations of the Hearing Officer are
adopted and the Renewable Natural Gas (RNG) program to be implemented by Vermont Gas
SystemsInc (VGS) is approved
2 When VGS has procured RNG supply in amounts reasonably estimated to be
sufficient for estimated customer demand it shall file a formal tariff including proposed rates for
sale of RNG The tariff shall be reviewedpursuantto the procedures of 30 VSA ccedilccedil225226
and227 and sales under the program shall begin after Commission approval of the tariff
3 VGS shall develop and file for Commission approval a separate Renewable
Vehicle Fuel Tariff to serve customers using RNG as a transportation fuel
4 VGS shall file a marketing plan for the RNG program consistent with the
requirements set forth above within one month of the issuance of this Order
5 VGS shall file an annual report consistent with the requirements set forth above
upon implementation of the RNG program
6 VGS shall file a comprehensive review of the performance of the program with
the Commission and the Department after three years of implementation This review will
include an environmental accounting protocol to quantiff the environmental benefits of the
progrfim
7 VGS shall review proposed RNG supply arrangements with the Department
Docket No 8667
Orprcp oF THE Crnm
Dated at Montpelier Vermont this day of+hb
Z Roisman
Cheney
Page 14
20t7
Puslrc Urrlnv
CovtriquestIssIoN
OP VERMONT
(
)))
)))
Fired otildeeglcL ( JotTAttest c
of the Commission
NorIcE To READERS This decision is subject to revision oftechnical errors Reqders are requested tonotify the Clerk of the Commission (by e-mail telephone or inwriting) or any appqrent errors in order that anynecessary corrections may be made (E-mail address pucclerkvermontgov)
Appeal of this decision to the Supreme Court of Vermont must befiledwith the Clerk of the Comnissionwithin thirty days Appeal will not stay the efect of thszlig Order absentfurther order by this Commission orappropriate actiacuteon by the Supreme Court of Vermont Motions for reconsideration or stay if any must be filed withthe Clerk of the Commissionwithin ten days of the date of this deciacutesion and Order
Exhibit 22 VGS RNG Tariff Rate Filing
Exhibit 23 PUC Approval of VGS RNG Rates
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Case No l8-03 13-TF
Petition of Vermont Gas Systems Inc fotapproval of a new tariff implementing theRenewable Natural Gas program
Order entered
OnonRAppnovINc Tiquestrurn
On January 302018 Vermont Gas Systems Inc (VGS) filed a petition for approval of
a new tariff implementing the Renewable Natural Gas (RNG) program approved by the
Vermont Public Utility Commission (Commission) in Docket No 8667 In that Docket the
Commission required VGS to file a tariff implementing the RNG program when it has procured
RNG supply in amounts reasonably estimated to be sufficient to meet customer demandl In
this Order the Commission approves the new tariff marketed under the name EcoGas with an
effective date of bills rendered on and after March 15 2018
VGS states that it has executed an RNG supply contract with deliveries scheduled for
2018 and that two additional contracts are being negotiated for deliveries beginningin2019
VGS is proposing to set its initial RNG adder at$ll749lCcf which represents a five-year
blended rate based on the three RNG supply arrangements VGS intends to account for the
difference between the cost of RNG supply and the RNG adder as a regulatory asset within gas
costs As additional lower-cost supply is added to the portfolio the regulatory asset balance will
be recovered from EcoGas participants with the goal of fully reducing the balance by the end of
five years Accordingly VGS states that the RNG program will be rate-neutral to VGS and its
non-RNG customers
On February 272018 the Vermont Department of Public Service (Department) filed a
letter recommending that the Commission approve the tariff without a hearing or further
investigation The Department states that the tariff filing and proposed accounting treatment
comply with Vermont rate-setting practices policies precedents and statutes
lslaotx
I Docket 8667 Order of 96117 at 13
Page2Case No 18-0313-TF
Based on the foregoing we hereby approve VGSs proposed RNG tariff to be effective
on a bills-rendered basis beginning on March 15 2018 Recovery of any regulatory asset
balance at the end of the fifth year would need to be approved by the Commission in a future
proceeding
So Omnnnn
Case No l8-0313-TF
8r- day of lruacuterLiquestiquest
Page 3
Dated at Montpelier Vermont this 2018
Roisman PueIrc Urlrrv
CoiriexcllriquestlssloN
Cheney
OF VERMONT
Sarah Hofmann
Onncp oF THE CLBRr
Filed huacuteveuroAacute- icirc dollAttest I
Clerk of the Commission
Notice to Readers This decision is subiect to revision oftechnical errors Readers are requested to notify
the Clerk of the Commission (by e-mail telephone or in writing) or qny qpparent errors in order that any
necessary corrections may be made (E-mail address pucclerkvermontgov)Appeal of this decisiacuteon to the Supreme Court of Yermont must be filed with the Clerk of the Commission
within 30 days Appeal will not stay the efect of this Order oslashbsent further order by this Commission or appropriate
action by the Supreme Court of Vermont Motionsthornr reconsideration or stay if any must befiledwith the Clerk ofthe Commissionwithin 28 doslashys of the date of this decision and Order
)))
))))
PUC Case No 18-0313-TF
Eileen SimollardesLauren HammerVermont Gas
85 Swift StreetSouth Burlington VT 05403
June E Tiemey CommissionerVermont Department of Public Service1 12 State StreetMontpelier VT 05620 -2601
Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
Exhibit 31 Accounting Procedures
Exhibit 31 Accounting for VGS Renewable Natural Gas (Ver-9202019)
1 Purchase of RNG Supply
RNG supply purchases are separated into the cost of the commodity and the cost of the renewable attribute The commodity portion is expensed to gas costs in the delivery month while the renewable attribute is booked to an inventory account referenced herein as the ldquoRenewable Inventory Accountrdquo Like VGSrsquo existing storage inventory accounting the Renewable Inventory Account will track both the dollar value of the renewable attribute and the renewable attribute Mcfs Renewable attribute dollar values are record to ldquo16410050 Inventory RNG Storagerdquo while Mcf values are recorded in the gas cost model maintained by accounting In the month VGS purchases the renewable attribute it is accrued in a book model and goes in to 16410150 Inventory RNG Accrued then moves to the 16410050 in a final model the following month for final
RNG may be purchased at different locations and using varying pricing structures While the accounting for RNG does not vary with the purchase location or price the determination of the value of the renewable attribute will vary depending on whether or not the supply pricing expressly values the renewable attribute as an adder or it is embedded in a fixed price Examples of each are shown below The accounting of RNG supply is intended to separate the cost of the renewable attribute from the cost of the commodity The examples below are not all inclusive of what may occur but intended to show the accounting procedures used to separate the renewable attribute from the commodity and specify ownership of each aspect
In all cases the commodity cost portion - which is the total cost of the RNG purchased excluding the renewable attribute - will be expensed in the delivery month as a cost of gas
Example 1 ndash The fixed price of RNG includes both the commodity and the renewable attribute
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The total cost of the RNG supply purchased during the month is calculated by Accounting within the gas cost model as follows
MMBtu Purchased (as validated in step 2) $ MMBtu purchase price (as provided in a supply confirmation provided by gas supply)
4 For purposes of booking the renewable attribute to inventory it is necessary to calculate the RNG cost per Mcf The RNG cost Mcf is calculated using the total cost of RNG supply as calculated in step 3 divided by the Mcf in step 1
5 The renewable attribute price per Mcf is calculated as follows
RNG cost per Mcf as determined in step 4 ndashplus ldquoother componentsrdquo as calculated pursuant to Attachment A ndash minus ldquoAverage Commodity Costrdquo as calculated pursuant to Attachment A The ldquoother componentsrdquo added to the RNG cost per Mcf will vary depending on where the RNG supply was delivered but in each case will be identified in the calculation shown on Attachment A
6 The renewable attribute price per Mcf the total RNG Mcf delivered is recorded in the Inventory RNG Storage account
7 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
Example 2 - RNG purchased at a renewable attribute price plus a daily or monthly index
Where the pricing of RNG specifically separates the commodity from the renewable attribute the renewable attribute price will be what is recorded in the Renewable Inventory Account
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The renewable attribute price per Mcf the total RNG Mcf delivered as determined in step 1 is recorded in the Renewable Inventory Account
4 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
2 Recalculating the RNG Adder
The RNG Adder paid by customers will be recalculated anytime the Natural Gas charge portion of rates changes The Manager of Gas SupplyGas control is responsible for recalculating the RNG Adder The calculation will be verified and approved by the Vice President ndash Regulatory Affairs The determination of the RNG Adder will be pursuant to the methodology shown in Attachment A The Regulatory Department will prepare the amended RNG Adder tariff for filing with the PUC Upon PUC approval of the RNG Adder the Regulatory Department will prepare a memorandum advising Accounting and Gas Supply of the new RNG Adder as approved
3 Customer purchases VGS Renewable Natural Gas
The RNG Adder at the percent selected by the customer will be applied to the entire monthrsquos usage on the customersrsquo next bill For customers utilizing the S-RNG adder the entire volume elected with be on the customersrsquo next bill The S-RNG Adder nor the RNG Adder and percentage selected will not be prorated based on enrollment or termination date
Customers may terminate or modify their RNG selection upon 3 dayrsquos notice to VGS The termination or modification will be effective on the customerrsquos next monthly bill
The customerrsquos usage for the month will be multiplied by the percentage and the approved RNG Adder For customers utilizing the S-RNG adder the volume elected will be multiplied by the approved RNG adder This amount will then be recorded to SAP accounts 4010015-40010021 depending on which rate class the customer is in The RNG Adder is the same regardless of which rate class a customer is in At the end of the month a report is run by billing from the customer information system that shows total usage and which percentage of RNG the customer has signed up for to calculate the number of MCFrsquos of renewable attribute sold during the billing period Billing also provides a report of the volumes sold through the S-RNG Tarriff The Inventory RNG Storage account maintained within the gas cost model by Accounting is reduced by these Mcf The MCFrsquos are then multiplied by the RNG Adder in effect for the billing month and an entry is made to remove that dollar amount from the Inventory RNG Storage account and into the monthly cost of gas The intent of this transaction is to ensure that cost of the renewable attribute is reflected in the cost of gas in the month it is purchased by the customer This results in a matching of the renewable attribute revenue and expense
The RNG Adder revenue and renewable attributes removed from storage will be included in the gas cost deferral calculation However because there is a matching of the renewable attribute revenue and expense the impact on the deferral calculation will be zero
The calculation of unbilled revenues will exclude RNG as a customer can cancel their participation prior to their next bill
In the event Vermont Gas issues a credit to a customer related to the RNG program the value of the renewable attribute credited and the associated Mcf will not be applied to the Renewable Inventory Account
4 Controls
A spreadsheet is maintained by accounting that shows the MCFrsquos and dollar values of the Renewable Inventory Account This is reconciled monthly by the accounting team and will be reviewed by the Manager Gas SupplyGas Control
Accounting will validate that the amount removed from the Renewable Inventory Account matches the RNG Adder revenue Any discrepancies will be reviewed and corrected
A report will be run for each bill cycle that shows any changes to the RNG percentages selected this will include customers opting to withdraw from the RNG program The customer care team will validate any changes against customer confirmation paperwork
5 Renewable Inventory Account Reconciliation and Forecast
The PUC Order approving the RNG program contains provisions describing how RNG supply and demand imbalances will be addressed These provisions and how VGS will track and comply with them are as discussed in this section The PUC Order approving the RNG Program provides that if the available RNG supply during the previous 12 months is less than the amount purchased by customers VGS may use the funds collected to purchase carbon offsets (Finding 13) If carbon offset are not available VGS will contribute the RNG program revenues to the Clean Energy Development Fund or issue prorated credits to affected customers (Finding 15) The Order also provides that in the event RNG supply exceeds customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any remaining RNG attribute inventory amounts through the PGA or through a rate case as part of its cost of service if the s PGA is no longer in effect at that time (Finding 16 as modified) Finding 11 provides that VGS will use a ldquotrue-uprdquo period of up to 12 months in order to balance the difference between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply) Taken together these provisions require VGS to evaluate the imbalance after 12-months and then true-up the imbalance over the next twelve months To provide a forecast of the supplydemand imbalance quarterly the billing area will run a report showing the expected RNG volumes based on current customer commitments by month for the next 12-months Current customers commitments will be calculated based on the previous 12 months of usage multiplied by the RNG percentage currently signed up for The marketing department will provide their forecast of new RNG sales for the next 12-months Both will be provided to the Manager Gas SupplyGas Control The Manager Gas SupplyGas Control will compare the forecasted RNG sales known and expected to RNG supply commitments and provide a 24-month forecast of the supplydemand balance The supplydemand balance will be reviewed at the risk management meeting The strategy for addressing the imbalance consistent with the PUC order will be determined by the risk management committee
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
Docket No 8667 Page 3
or under-supply of RNG and verification requirements to ensure that sales in fact consist of
RNG VGS maintains that the RNG program is an appropriate first step in stimulating RNG
producer supply and customer demand and is oamply supported by Vermonts experience of
measured implementation of electric renewable pricing programs2 VGS argues that the
program is responsive to the Commissions condition in its Order in Docket 79701o develop a
proposal to promote bio-methane project development3
Department of Public Service
Although the Department did not file a brief or reply brief it did present witness
testimony and indicated its support for the draft proposal for decision filed by VGS The
Department recommends that VGS review all proposed RNG supply arrangements with the
Department (in addition to seeking 30 VSA $ 248 approval where required) and suggests that
in the event of an undersupply of RNG VGS obtain carbon offsets in an amount equivalent to
the unused customer contributions The Department recommends that the RNG program be
reviewed at the end of three years at which time the protocol regarding the purchase of offsets
would be revisited
C ons ervation Law Foundation
CLF urges that the Commission reject the RNG program and instead adopt an RNG
content standard similar to the electric renewable portfolio standarda CLF maintains that the
expected annual sales volume is not apace that is consistent with Vermonts legislative and
planning targets for meeting energy needs with renewable energy or for reducing greenhouse gas
emissionss CLF claims that the proposed voluntary tariff falls short of being a program or
strategy that promotes the increased use of RNG resources or supply or fosters bio-methane
projects in Addison county6
2 VGS reply brief aI23 In Docket 7970the Commission considered the petition of VGS for a certificate of public good (CPG) pursuant
to 30 VSA $ 248 authorizing the construction of the Addison Natural Gas Pipeline In an Order issued on
December 232013 the Commission granted the CPG As a condition of approval the Commission required VGSin consultation with the Department to file a petition with the [Commission] proposing a program to promote bio-methane project development Docket 7970 Order of l2l23ll3 at 147
a CLF brief at 12s CLF brief at 36 CLF brief at 4
Docket No 8667 Page 4
Lincoln
Lincoln maintains that itis essential to promote development of agricultural-based bio-
methane supply in VermontT Lincoln states that the Commission is not in a position to
adequately address VGSs proposed RNG program until negotiations for sale of itsoutput
involving VGS and Middlebury College are completes
IV Punrrc CounnnNrs
The Commission received three letters of support for VGSs RNG program On March 10
2016 the Chittenden County Transportation Authority filed comments indicating that it intends to
explore the possibility of utilizing RNG to cover a portion of the energy needs for its fleet of 70
buses On March 182016 Champlain College filed comments noting that it is interested in using
RNG for a portion of its energy needs that are currently met with conventional natural gas On
March 282016 Casella Waste Systems made a filing with the Commission stating its intention
to explore using RNG to meet some of its energy needs for its fleet of vehicles
V trrutrxcs
Based on the evidence of record I hereby report the following findings and
recommendations to the Commission in accordance with 30 VSA $ 8(c)
1 RNG is produced from raw materials such as agricultural waste manure municipal
waste plant material or food waste Decomposition or digestion of these materials produces
raw methane which is then cleaned or upgraded to bio-methane in order to meet the receiving
pipelines gas quality specifications prior to injection into an existing pipeline system Thomas
Murray VGS (Murray) supp pf at3
2 VGS is exploring options to purchase RNG supply from Lincoln and from landfill gas
projects located outside Vermont that would be received through the Trans-CanadaPipeline
(TCPL) system Murray supp pf at 8-9
7 Daniel Smith Lincoln Renewable Natural Gas LLC (Smith) supp pf at L8 On August 152016 Lincoln filed a motion to continue this proceeding for a period of not less than 60 days statingthat the continuance would allow [it] VGS and Middlebury College to complete discussions as to VGSsinvolvement in the RNG supply in Vermont and allow the record in this case to be properly developed VGS and
the Department opposed the request for continuance On August 222016I issued an Order denying Lincolnsrequest and determined that Lincoln did not demonstrate good cause to postpone the technical hearing
Docket No 8667 Page 5
3 Under the program retail customers would voluntarily purchase RNG in amounts equal to
l0oo25yo50o or 100 of their total monthly requirements at specified prices per Ccf as an
adder to other retail charges Customers could terminate RNG purchases upon providing three
days of advance notice to VGS Murray supp pf at l-2 exhs Pet-VGS-l and Pet-VGS-3
4 Intemrptible customers will have the opportunity to participate in the RNG program
through VGSs existing Lock Price Program which currently provides for up to a two-year
commitment Murray supp pf at 5
5 VGS will develop and file for Commission approval a separate tariff for use of RNG as a
transportation fuel This tariff will allow VGS to take advantage of the sale of the associated
Renewable Identification Numbers (ooRINs) When RNG is used as a transportation fuel it is
eligible to receive RINs under the Federal Renewable Fuel Standard RINs can be resold on the
wholesale market and would be used to offset the price of RNG to transportation customers
receiving service under the tariff Joan E White
Department (White) pf at7tr912116 at 62-
63 (White) exh Pet-VGS-5 Response 4
6 VGS will also initiate a review of the RNG program by the Commission Department and
others after three years White pf at9tr912116 (Munay) at24
7 The adder price for each Ccf of RNG will be equal to the average RNG commodity cost to
VGS less the average commodity cost of natural gas VGS will adjust the adder price per Ccf on
a quarterly basis as part of its Purchased Gas Adjustment (PGA) filing Murray supp pf at 4
8 The proposed RNG program will include a tariff that is very similar in concept to the
Green Mountain Power Corporation (GMP) Cow Power tariff However Cow Power is based
on a fixed rate per kWh no matter what the cost of the renewable energy Murray supp pf at llVhite pf at 4
9 VGSs RNG tariff will be calculated quarterly based on actual RNG and natural gas costs
and will provide accurate price signals as to the price differential between natural gas and RNG
White pf at 4
10 Based on a survey conducted by VGS 85 of its customers are willingto pay l0oo
more for a renewable product VGS projects that customers could potentially consume over
500000 Mcf of RNG over the next five years Murray supp pf at 5
DocketNo8667 Page 6
11 VGS will use a true-up period of up to 12 months in order to balance the difference
between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply)
Murray supp pf at 9
12 There is a risk that due to the voluntary nature of the RNG program supply and demand
will be mismatched White pf at41 David G Hill CLF (Hi11) pf at 9
13 If the available RNG supply during the previous 12 months is less than the amount
purchased by VGS customers the RNG program provides that VGS may use funds collected to
purchase carbon offsets from an established carbon registry such as the American Carbon
Registry VGS will purchase an amount of carbon offsets equal to the amount of the revenue
resulting from the undersupply in order to result in a revenue-neutral program At the time of the
three-year implementation review VGS will propose an environmental accounting protocol in
order to quantify the environmental benefits of the program and to evaluate the financial risk of
purchasing carbon offsets in an amount equivalent to the environmental benefits of unsold RNG
due to undersupply Murray supp pf at 6 l0 exh Pet-VGS-s Responses 1
14 The development and standardization of RNG attributes is in its infancy as compared to
the existing markets for the environmental attributes used in the electric industry (renewable
energy credits or (RECs)) Murray supp pf at 12
15 If carbon offsets are not available VGS will contribute the RNG program revenues to the
Clean Energy Development Fund or issue prorated credits to affected customers Exh Pet-
VGS-S Responses 3
16 If RNG supply exceeds customer demand VGS would seek to sell the excess RNG at
wholesale Murray supp pf at 10
17 VGS will provide proposed RNG supply contracts to the Department prior to execution
It will also consult with the Department before making decisions that could dramatically impact
price or the integrity of the RNG program Exh Pet-VGS-S Responses 2 White pf at 5
18 The estimated cost of RNG supply ranges from $l2lMcf to $25lMcf The cost of natural
gas is less than $3Mcf Murray supp pf at 8-9
19 VGS will implement an RNG Quality Assurance Plan establishing a testing and
monitoring process to ensure that RNG injected (via in-state RNG producers) into the VGS
system is pipeline quality and meets the specifications of the TCPL transportation tariff for bio-
methane gas quality Murray supp pf at 14 exh Pet-VGS-4
Docket No 8667 PageT
20 VGS will file an annual report on the RNG program with the Commission and the
Department containing the following information
1 Number of subscribers by customer class
2 Sales volume by customer class
3 Sales revenues
4 Any sales or purchases of carbon offsets
5 Supplyconsumption matching portfolio including any shortfall or excess
supply of RNG
6 True-up schedule for any imbalances
7 RNG supply verification
8 Quantification of the impact of any excess RNG costs flowing through the
PGA if VGS remains under altemative regulation
9 Accounting of any carbon ofszligets or other incentives
10 Status of any contracts for RNG including plans to acquire new supply
contracts
I 1 Revenue from Renewable Identification Number (RlN) sales and impact
on the transport tariff as well as any projections about the RIN market that are
available to VGS and
12 Complete reports and environmental verifications by an independent
verifier
Murray supp pf at 11 exh Pet-VGS-3 White pf at 8-9 tr912116 at23-24 (Munay)
21 Except as described below concerning RlN-eligible RNG VGS will annually verify that
the RNG was produced by a renewable gas production facility that VGS is the exclusive oryner
of any environmental attributes associated with RNG it sells under the program that it acquired
the RNG from its transferor and sold itatretail and that neither the RNG nor any renewable
attribute associated with the RNG has been sold twice at any point between RNG production and
sale to VGS whether by sales into carbon offset markets or otherwise This verification will be
based on certifications by VGSs suppliers and by an independent third party retained by VGS
for this purpose Exh Pet-VGS-3 exh Pet-VGS-s Response 5 White pf at 8
Docket No 8667 Page I
22 For RlN-eligible RNG used as vehicle fuel verification will be addressed in detail in the
future as part of VGSs proposed Renewable Vehicle Fuel Tariff Exh Pet VGS-5 Response 4
rr912116 at 65 (White)
23 There are few natural gas utilities currently offering RNG at retail VGS modeled its
RNG program after the program designed by FortisBC a local distribution company in British
Columbia Canada VGS also had discussions with SoCalGas in Southern California Both of
these companies are leaders in developing RNG offerings and fostering RNG supply resources
Murray supp pf at 7
24 VGS will file with the Commission and Department a marketing plan containing the
following elements
l An evaluation element that includes concrete metrics such as sales
volume targets and enrollment targets
2 Identification of target market segment(s)
3 Development of materials and language for customer-marketing efforts
that explain the RNG program in plain language easily understandable to the
average customer
4 An online bill calculator
5 An implementation plan that identifies specific activities and a timetable
and
6 Abudget
Exh Pet-VGS-5 White pf at 10 Tr912116 at22-23 (Munay)
25 VGS and the Department represent that the RNG progriquestun is responsive to the
Commissions condition in its Order in Docket 7970 rcquiring VGS to develop a proposal to
promote bio-methane project development Murray supp pf al 13-14tr912116 at 63 (Vhite)
26 VGS asserts that the RNG program represents appropriate progress toward the Vermont
Comprehensive Energy Plan (CEP) goal to meet90o of Vermonts energy needs through
renewable sources by 2050 Murray supp pf at 12-13
VI DlscussroN iexclxu Coxclustox
Vith this proposal for decision I recommend that the Commission approve the RNG
program in accordance with the findings described above and based upon the evidence in the
Docket No 8667 Page 9
record In Docket 7970 the Commission required VGS in consultation with the Department to
file a petition with the [Commission] proposing a program to promote bio-methane project
development It is reasonable to expectthat aprogram meant to stimulate development of a
specific energy source would look to stimulate demand for that resource by offering an
opportunity for customers to purchase supply from RNG producers
The RNG program proposed by VGS and supported by the Department seeks to offer
ratepayers the option to purchase renewable energy as part of their individual energy-use
portfolio Furthermore the program includes a provision requiring that VGS develop a detailed
marketing plan that will serve to educate customers on the availability costs and benefits of
such resources which could lead to increased demand for the product
VGS intends to take advantage of the existing market for RINs associated with RNG used
as transportation fuel by proposing a Renewable Vehicle Fuel Tariff As described above in the
Public Comments section the Chittenden County Transportation Authority and Casella Vaste
Systems are interested in exploring the use of RNG to fuel their vehicle fleets which
demonstrates that there is existing customer demand for this product
Unlike the markets relating to RNG supply used for transportation fuel or renewable
electric generation and the associated trading and verification of RECs the RNG market is in its
infancy At this time it would not be appropriate to expect VGS to implement an RNG program
utilizing an RNG content standard similar to the electric renewable portfolio standard as
recommended by CLF because the equivalent standards and processes do not exist However
the RNG program represents a meaningful first step in encouraging customer interest in
purchasing RNG at retail thereby stimulating supply of RNG into the market and is consistent
with the Commissions condition requiring VGS to develop a proposal to promote bio-methane
project development
VGSs RNG program includes appropriate mechanisms for periodic reporting and
verification of program activities as well as an opportunity to comprehensively review the
program after three years of implementation Furthermore determinations regarding recovery of
costs associated with the RNG program will be made in the context of future proceedings
regarding VGSs rates The RNG program should evolve with the RNG markets in the near-term
and over the course of the next several years which will allow progress towards achievement of
Vermonts 2050 CEP renewable energy goals
Docket No 8667 Page 10
Because not all parties to this proceeding have waived their rights under 3 VSA $ 811
to file written comments or present oral argument with respect to this proposal for decision I am
circulating the proposal for decision to the parties for their review and comment
Dated at Montpelier Vermont this rrtl day of QrIltt 2017a0AndreaHearing Officer
Docket No 8667 Page 11
VII Corumrssron Drscussrox
On August 22017 the Department filed a letter stating that it supports the issuance of an
Order by the Commission that adopts the proposal for decision in full
Also on August 22017 VGS filed comments on the proposal for decision requesting
that Finding 16 be modified as follows (additional text in italics) If RNG supply exceeds
customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary
flow any remaining RNG attribute inventory amounts through the PGA or through a rate case ifVGS was under traditional cost of service regulation (subject to [Commission] approval)
VGS asserts that [a]bsent such specific language it is possible that VGS would be unable [to]
defer such costs for future recovery and that removal of that component introduces uncertainty
about the potential procedural mechanisms available for cost recovery in the last resort VGS
states that with the Commissions consideraacutetion of this request it does not request oral argument
No other comments were filed on the proposal for decision
The Hearing Officer recommended that the Commission find that determinations
regarding recovery of costs associated with the RNG program will be made in the context of
future proceedings regarding VGSs rates We agree with this recommendation VGS should
have an opportunity to request rate recovery for excess RNG supply However this proceeding
is not the proper time for such a determination Accordingly Finding 16 is hereby modified as
follows If RNG supply exceeds customer demand VGS would first seek to sell the excess
RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any
remaining RNG attribute inventory amounts through the PGA or through arate case as part of
its cost of service if the PGA is no longer in effect atthat timeWe emphasize the importance of the successful implementation of the RNG program in
helping to meet the States renewable energy policy objectives The annual report on the
implementation of the RNG program will serve as a valuable tool to assess that progress In this
proceeding CLF has raised policy considerations that should serve to guide these future reviews
of the RNG program For example CLF has raised concerns regarding the effectiveness of the
voluntary nature of the program In assessing its program we expect VGS to revisit and report
on the feasibility of incorporating RNG as a portion of its supply mix in the future It is
important for VGSs RNG program to be sustainable and continue to evolve ensuring significant
DocketNo8667 Page 12
contributions toward meeting the States renewable energy goals and reducing the consumption
of fossil fuel Accordingly it is critical that the annual report and the three-year comprehensive
review address not only the effectiveness of the program but also its affordability and the
feasibility of other policy options to advance the production and use of RNG in Vermont
Docket No 8667 Page 13
VIII Onunn
Ir rs Hennsy oRDERED ADJUDGED AND DECRnnn by the Public Utility Commission of the
State of Vermont that
1 The findings conclusions and recommendations of the Hearing Officer are
adopted and the Renewable Natural Gas (RNG) program to be implemented by Vermont Gas
SystemsInc (VGS) is approved
2 When VGS has procured RNG supply in amounts reasonably estimated to be
sufficient for estimated customer demand it shall file a formal tariff including proposed rates for
sale of RNG The tariff shall be reviewedpursuantto the procedures of 30 VSA ccedilccedil225226
and227 and sales under the program shall begin after Commission approval of the tariff
3 VGS shall develop and file for Commission approval a separate Renewable
Vehicle Fuel Tariff to serve customers using RNG as a transportation fuel
4 VGS shall file a marketing plan for the RNG program consistent with the
requirements set forth above within one month of the issuance of this Order
5 VGS shall file an annual report consistent with the requirements set forth above
upon implementation of the RNG program
6 VGS shall file a comprehensive review of the performance of the program with
the Commission and the Department after three years of implementation This review will
include an environmental accounting protocol to quantiff the environmental benefits of the
progrfim
7 VGS shall review proposed RNG supply arrangements with the Department
Docket No 8667
Orprcp oF THE Crnm
Dated at Montpelier Vermont this day of+hb
Z Roisman
Cheney
Page 14
20t7
Puslrc Urrlnv
CovtriquestIssIoN
OP VERMONT
(
)))
)))
Fired otildeeglcL ( JotTAttest c
of the Commission
NorIcE To READERS This decision is subject to revision oftechnical errors Reqders are requested tonotify the Clerk of the Commission (by e-mail telephone or inwriting) or any appqrent errors in order that anynecessary corrections may be made (E-mail address pucclerkvermontgov)
Appeal of this decision to the Supreme Court of Vermont must befiledwith the Clerk of the Comnissionwithin thirty days Appeal will not stay the efect of thszlig Order absentfurther order by this Commission orappropriate actiacuteon by the Supreme Court of Vermont Motions for reconsideration or stay if any must be filed withthe Clerk of the Commissionwithin ten days of the date of this deciacutesion and Order
Exhibit 22 VGS RNG Tariff Rate Filing
Exhibit 23 PUC Approval of VGS RNG Rates
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Case No l8-03 13-TF
Petition of Vermont Gas Systems Inc fotapproval of a new tariff implementing theRenewable Natural Gas program
Order entered
OnonRAppnovINc Tiquestrurn
On January 302018 Vermont Gas Systems Inc (VGS) filed a petition for approval of
a new tariff implementing the Renewable Natural Gas (RNG) program approved by the
Vermont Public Utility Commission (Commission) in Docket No 8667 In that Docket the
Commission required VGS to file a tariff implementing the RNG program when it has procured
RNG supply in amounts reasonably estimated to be sufficient to meet customer demandl In
this Order the Commission approves the new tariff marketed under the name EcoGas with an
effective date of bills rendered on and after March 15 2018
VGS states that it has executed an RNG supply contract with deliveries scheduled for
2018 and that two additional contracts are being negotiated for deliveries beginningin2019
VGS is proposing to set its initial RNG adder at$ll749lCcf which represents a five-year
blended rate based on the three RNG supply arrangements VGS intends to account for the
difference between the cost of RNG supply and the RNG adder as a regulatory asset within gas
costs As additional lower-cost supply is added to the portfolio the regulatory asset balance will
be recovered from EcoGas participants with the goal of fully reducing the balance by the end of
five years Accordingly VGS states that the RNG program will be rate-neutral to VGS and its
non-RNG customers
On February 272018 the Vermont Department of Public Service (Department) filed a
letter recommending that the Commission approve the tariff without a hearing or further
investigation The Department states that the tariff filing and proposed accounting treatment
comply with Vermont rate-setting practices policies precedents and statutes
lslaotx
I Docket 8667 Order of 96117 at 13
Page2Case No 18-0313-TF
Based on the foregoing we hereby approve VGSs proposed RNG tariff to be effective
on a bills-rendered basis beginning on March 15 2018 Recovery of any regulatory asset
balance at the end of the fifth year would need to be approved by the Commission in a future
proceeding
So Omnnnn
Case No l8-0313-TF
8r- day of lruacuterLiquestiquest
Page 3
Dated at Montpelier Vermont this 2018
Roisman PueIrc Urlrrv
CoiriexcllriquestlssloN
Cheney
OF VERMONT
Sarah Hofmann
Onncp oF THE CLBRr
Filed huacuteveuroAacute- icirc dollAttest I
Clerk of the Commission
Notice to Readers This decision is subiect to revision oftechnical errors Readers are requested to notify
the Clerk of the Commission (by e-mail telephone or in writing) or qny qpparent errors in order that any
necessary corrections may be made (E-mail address pucclerkvermontgov)Appeal of this decisiacuteon to the Supreme Court of Yermont must be filed with the Clerk of the Commission
within 30 days Appeal will not stay the efect of this Order oslashbsent further order by this Commission or appropriate
action by the Supreme Court of Vermont Motionsthornr reconsideration or stay if any must befiledwith the Clerk ofthe Commissionwithin 28 doslashys of the date of this decision and Order
)))
))))
PUC Case No 18-0313-TF
Eileen SimollardesLauren HammerVermont Gas
85 Swift StreetSouth Burlington VT 05403
June E Tiemey CommissionerVermont Department of Public Service1 12 State StreetMontpelier VT 05620 -2601
Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
Exhibit 31 Accounting Procedures
Exhibit 31 Accounting for VGS Renewable Natural Gas (Ver-9202019)
1 Purchase of RNG Supply
RNG supply purchases are separated into the cost of the commodity and the cost of the renewable attribute The commodity portion is expensed to gas costs in the delivery month while the renewable attribute is booked to an inventory account referenced herein as the ldquoRenewable Inventory Accountrdquo Like VGSrsquo existing storage inventory accounting the Renewable Inventory Account will track both the dollar value of the renewable attribute and the renewable attribute Mcfs Renewable attribute dollar values are record to ldquo16410050 Inventory RNG Storagerdquo while Mcf values are recorded in the gas cost model maintained by accounting In the month VGS purchases the renewable attribute it is accrued in a book model and goes in to 16410150 Inventory RNG Accrued then moves to the 16410050 in a final model the following month for final
RNG may be purchased at different locations and using varying pricing structures While the accounting for RNG does not vary with the purchase location or price the determination of the value of the renewable attribute will vary depending on whether or not the supply pricing expressly values the renewable attribute as an adder or it is embedded in a fixed price Examples of each are shown below The accounting of RNG supply is intended to separate the cost of the renewable attribute from the cost of the commodity The examples below are not all inclusive of what may occur but intended to show the accounting procedures used to separate the renewable attribute from the commodity and specify ownership of each aspect
In all cases the commodity cost portion - which is the total cost of the RNG purchased excluding the renewable attribute - will be expensed in the delivery month as a cost of gas
Example 1 ndash The fixed price of RNG includes both the commodity and the renewable attribute
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The total cost of the RNG supply purchased during the month is calculated by Accounting within the gas cost model as follows
MMBtu Purchased (as validated in step 2) $ MMBtu purchase price (as provided in a supply confirmation provided by gas supply)
4 For purposes of booking the renewable attribute to inventory it is necessary to calculate the RNG cost per Mcf The RNG cost Mcf is calculated using the total cost of RNG supply as calculated in step 3 divided by the Mcf in step 1
5 The renewable attribute price per Mcf is calculated as follows
RNG cost per Mcf as determined in step 4 ndashplus ldquoother componentsrdquo as calculated pursuant to Attachment A ndash minus ldquoAverage Commodity Costrdquo as calculated pursuant to Attachment A The ldquoother componentsrdquo added to the RNG cost per Mcf will vary depending on where the RNG supply was delivered but in each case will be identified in the calculation shown on Attachment A
6 The renewable attribute price per Mcf the total RNG Mcf delivered is recorded in the Inventory RNG Storage account
7 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
Example 2 - RNG purchased at a renewable attribute price plus a daily or monthly index
Where the pricing of RNG specifically separates the commodity from the renewable attribute the renewable attribute price will be what is recorded in the Renewable Inventory Account
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The renewable attribute price per Mcf the total RNG Mcf delivered as determined in step 1 is recorded in the Renewable Inventory Account
4 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
2 Recalculating the RNG Adder
The RNG Adder paid by customers will be recalculated anytime the Natural Gas charge portion of rates changes The Manager of Gas SupplyGas control is responsible for recalculating the RNG Adder The calculation will be verified and approved by the Vice President ndash Regulatory Affairs The determination of the RNG Adder will be pursuant to the methodology shown in Attachment A The Regulatory Department will prepare the amended RNG Adder tariff for filing with the PUC Upon PUC approval of the RNG Adder the Regulatory Department will prepare a memorandum advising Accounting and Gas Supply of the new RNG Adder as approved
3 Customer purchases VGS Renewable Natural Gas
The RNG Adder at the percent selected by the customer will be applied to the entire monthrsquos usage on the customersrsquo next bill For customers utilizing the S-RNG adder the entire volume elected with be on the customersrsquo next bill The S-RNG Adder nor the RNG Adder and percentage selected will not be prorated based on enrollment or termination date
Customers may terminate or modify their RNG selection upon 3 dayrsquos notice to VGS The termination or modification will be effective on the customerrsquos next monthly bill
The customerrsquos usage for the month will be multiplied by the percentage and the approved RNG Adder For customers utilizing the S-RNG adder the volume elected will be multiplied by the approved RNG adder This amount will then be recorded to SAP accounts 4010015-40010021 depending on which rate class the customer is in The RNG Adder is the same regardless of which rate class a customer is in At the end of the month a report is run by billing from the customer information system that shows total usage and which percentage of RNG the customer has signed up for to calculate the number of MCFrsquos of renewable attribute sold during the billing period Billing also provides a report of the volumes sold through the S-RNG Tarriff The Inventory RNG Storage account maintained within the gas cost model by Accounting is reduced by these Mcf The MCFrsquos are then multiplied by the RNG Adder in effect for the billing month and an entry is made to remove that dollar amount from the Inventory RNG Storage account and into the monthly cost of gas The intent of this transaction is to ensure that cost of the renewable attribute is reflected in the cost of gas in the month it is purchased by the customer This results in a matching of the renewable attribute revenue and expense
The RNG Adder revenue and renewable attributes removed from storage will be included in the gas cost deferral calculation However because there is a matching of the renewable attribute revenue and expense the impact on the deferral calculation will be zero
The calculation of unbilled revenues will exclude RNG as a customer can cancel their participation prior to their next bill
In the event Vermont Gas issues a credit to a customer related to the RNG program the value of the renewable attribute credited and the associated Mcf will not be applied to the Renewable Inventory Account
4 Controls
A spreadsheet is maintained by accounting that shows the MCFrsquos and dollar values of the Renewable Inventory Account This is reconciled monthly by the accounting team and will be reviewed by the Manager Gas SupplyGas Control
Accounting will validate that the amount removed from the Renewable Inventory Account matches the RNG Adder revenue Any discrepancies will be reviewed and corrected
A report will be run for each bill cycle that shows any changes to the RNG percentages selected this will include customers opting to withdraw from the RNG program The customer care team will validate any changes against customer confirmation paperwork
5 Renewable Inventory Account Reconciliation and Forecast
The PUC Order approving the RNG program contains provisions describing how RNG supply and demand imbalances will be addressed These provisions and how VGS will track and comply with them are as discussed in this section The PUC Order approving the RNG Program provides that if the available RNG supply during the previous 12 months is less than the amount purchased by customers VGS may use the funds collected to purchase carbon offsets (Finding 13) If carbon offset are not available VGS will contribute the RNG program revenues to the Clean Energy Development Fund or issue prorated credits to affected customers (Finding 15) The Order also provides that in the event RNG supply exceeds customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any remaining RNG attribute inventory amounts through the PGA or through a rate case as part of its cost of service if the s PGA is no longer in effect at that time (Finding 16 as modified) Finding 11 provides that VGS will use a ldquotrue-uprdquo period of up to 12 months in order to balance the difference between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply) Taken together these provisions require VGS to evaluate the imbalance after 12-months and then true-up the imbalance over the next twelve months To provide a forecast of the supplydemand imbalance quarterly the billing area will run a report showing the expected RNG volumes based on current customer commitments by month for the next 12-months Current customers commitments will be calculated based on the previous 12 months of usage multiplied by the RNG percentage currently signed up for The marketing department will provide their forecast of new RNG sales for the next 12-months Both will be provided to the Manager Gas SupplyGas Control The Manager Gas SupplyGas Control will compare the forecasted RNG sales known and expected to RNG supply commitments and provide a 24-month forecast of the supplydemand balance The supplydemand balance will be reviewed at the risk management meeting The strategy for addressing the imbalance consistent with the PUC order will be determined by the risk management committee
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
Docket No 8667 Page 4
Lincoln
Lincoln maintains that itis essential to promote development of agricultural-based bio-
methane supply in VermontT Lincoln states that the Commission is not in a position to
adequately address VGSs proposed RNG program until negotiations for sale of itsoutput
involving VGS and Middlebury College are completes
IV Punrrc CounnnNrs
The Commission received three letters of support for VGSs RNG program On March 10
2016 the Chittenden County Transportation Authority filed comments indicating that it intends to
explore the possibility of utilizing RNG to cover a portion of the energy needs for its fleet of 70
buses On March 182016 Champlain College filed comments noting that it is interested in using
RNG for a portion of its energy needs that are currently met with conventional natural gas On
March 282016 Casella Waste Systems made a filing with the Commission stating its intention
to explore using RNG to meet some of its energy needs for its fleet of vehicles
V trrutrxcs
Based on the evidence of record I hereby report the following findings and
recommendations to the Commission in accordance with 30 VSA $ 8(c)
1 RNG is produced from raw materials such as agricultural waste manure municipal
waste plant material or food waste Decomposition or digestion of these materials produces
raw methane which is then cleaned or upgraded to bio-methane in order to meet the receiving
pipelines gas quality specifications prior to injection into an existing pipeline system Thomas
Murray VGS (Murray) supp pf at3
2 VGS is exploring options to purchase RNG supply from Lincoln and from landfill gas
projects located outside Vermont that would be received through the Trans-CanadaPipeline
(TCPL) system Murray supp pf at 8-9
7 Daniel Smith Lincoln Renewable Natural Gas LLC (Smith) supp pf at L8 On August 152016 Lincoln filed a motion to continue this proceeding for a period of not less than 60 days statingthat the continuance would allow [it] VGS and Middlebury College to complete discussions as to VGSsinvolvement in the RNG supply in Vermont and allow the record in this case to be properly developed VGS and
the Department opposed the request for continuance On August 222016I issued an Order denying Lincolnsrequest and determined that Lincoln did not demonstrate good cause to postpone the technical hearing
Docket No 8667 Page 5
3 Under the program retail customers would voluntarily purchase RNG in amounts equal to
l0oo25yo50o or 100 of their total monthly requirements at specified prices per Ccf as an
adder to other retail charges Customers could terminate RNG purchases upon providing three
days of advance notice to VGS Murray supp pf at l-2 exhs Pet-VGS-l and Pet-VGS-3
4 Intemrptible customers will have the opportunity to participate in the RNG program
through VGSs existing Lock Price Program which currently provides for up to a two-year
commitment Murray supp pf at 5
5 VGS will develop and file for Commission approval a separate tariff for use of RNG as a
transportation fuel This tariff will allow VGS to take advantage of the sale of the associated
Renewable Identification Numbers (ooRINs) When RNG is used as a transportation fuel it is
eligible to receive RINs under the Federal Renewable Fuel Standard RINs can be resold on the
wholesale market and would be used to offset the price of RNG to transportation customers
receiving service under the tariff Joan E White
Department (White) pf at7tr912116 at 62-
63 (White) exh Pet-VGS-5 Response 4
6 VGS will also initiate a review of the RNG program by the Commission Department and
others after three years White pf at9tr912116 (Munay) at24
7 The adder price for each Ccf of RNG will be equal to the average RNG commodity cost to
VGS less the average commodity cost of natural gas VGS will adjust the adder price per Ccf on
a quarterly basis as part of its Purchased Gas Adjustment (PGA) filing Murray supp pf at 4
8 The proposed RNG program will include a tariff that is very similar in concept to the
Green Mountain Power Corporation (GMP) Cow Power tariff However Cow Power is based
on a fixed rate per kWh no matter what the cost of the renewable energy Murray supp pf at llVhite pf at 4
9 VGSs RNG tariff will be calculated quarterly based on actual RNG and natural gas costs
and will provide accurate price signals as to the price differential between natural gas and RNG
White pf at 4
10 Based on a survey conducted by VGS 85 of its customers are willingto pay l0oo
more for a renewable product VGS projects that customers could potentially consume over
500000 Mcf of RNG over the next five years Murray supp pf at 5
DocketNo8667 Page 6
11 VGS will use a true-up period of up to 12 months in order to balance the difference
between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply)
Murray supp pf at 9
12 There is a risk that due to the voluntary nature of the RNG program supply and demand
will be mismatched White pf at41 David G Hill CLF (Hi11) pf at 9
13 If the available RNG supply during the previous 12 months is less than the amount
purchased by VGS customers the RNG program provides that VGS may use funds collected to
purchase carbon offsets from an established carbon registry such as the American Carbon
Registry VGS will purchase an amount of carbon offsets equal to the amount of the revenue
resulting from the undersupply in order to result in a revenue-neutral program At the time of the
three-year implementation review VGS will propose an environmental accounting protocol in
order to quantify the environmental benefits of the program and to evaluate the financial risk of
purchasing carbon offsets in an amount equivalent to the environmental benefits of unsold RNG
due to undersupply Murray supp pf at 6 l0 exh Pet-VGS-s Responses 1
14 The development and standardization of RNG attributes is in its infancy as compared to
the existing markets for the environmental attributes used in the electric industry (renewable
energy credits or (RECs)) Murray supp pf at 12
15 If carbon offsets are not available VGS will contribute the RNG program revenues to the
Clean Energy Development Fund or issue prorated credits to affected customers Exh Pet-
VGS-S Responses 3
16 If RNG supply exceeds customer demand VGS would seek to sell the excess RNG at
wholesale Murray supp pf at 10
17 VGS will provide proposed RNG supply contracts to the Department prior to execution
It will also consult with the Department before making decisions that could dramatically impact
price or the integrity of the RNG program Exh Pet-VGS-S Responses 2 White pf at 5
18 The estimated cost of RNG supply ranges from $l2lMcf to $25lMcf The cost of natural
gas is less than $3Mcf Murray supp pf at 8-9
19 VGS will implement an RNG Quality Assurance Plan establishing a testing and
monitoring process to ensure that RNG injected (via in-state RNG producers) into the VGS
system is pipeline quality and meets the specifications of the TCPL transportation tariff for bio-
methane gas quality Murray supp pf at 14 exh Pet-VGS-4
Docket No 8667 PageT
20 VGS will file an annual report on the RNG program with the Commission and the
Department containing the following information
1 Number of subscribers by customer class
2 Sales volume by customer class
3 Sales revenues
4 Any sales or purchases of carbon offsets
5 Supplyconsumption matching portfolio including any shortfall or excess
supply of RNG
6 True-up schedule for any imbalances
7 RNG supply verification
8 Quantification of the impact of any excess RNG costs flowing through the
PGA if VGS remains under altemative regulation
9 Accounting of any carbon ofszligets or other incentives
10 Status of any contracts for RNG including plans to acquire new supply
contracts
I 1 Revenue from Renewable Identification Number (RlN) sales and impact
on the transport tariff as well as any projections about the RIN market that are
available to VGS and
12 Complete reports and environmental verifications by an independent
verifier
Murray supp pf at 11 exh Pet-VGS-3 White pf at 8-9 tr912116 at23-24 (Munay)
21 Except as described below concerning RlN-eligible RNG VGS will annually verify that
the RNG was produced by a renewable gas production facility that VGS is the exclusive oryner
of any environmental attributes associated with RNG it sells under the program that it acquired
the RNG from its transferor and sold itatretail and that neither the RNG nor any renewable
attribute associated with the RNG has been sold twice at any point between RNG production and
sale to VGS whether by sales into carbon offset markets or otherwise This verification will be
based on certifications by VGSs suppliers and by an independent third party retained by VGS
for this purpose Exh Pet-VGS-3 exh Pet-VGS-s Response 5 White pf at 8
Docket No 8667 Page I
22 For RlN-eligible RNG used as vehicle fuel verification will be addressed in detail in the
future as part of VGSs proposed Renewable Vehicle Fuel Tariff Exh Pet VGS-5 Response 4
rr912116 at 65 (White)
23 There are few natural gas utilities currently offering RNG at retail VGS modeled its
RNG program after the program designed by FortisBC a local distribution company in British
Columbia Canada VGS also had discussions with SoCalGas in Southern California Both of
these companies are leaders in developing RNG offerings and fostering RNG supply resources
Murray supp pf at 7
24 VGS will file with the Commission and Department a marketing plan containing the
following elements
l An evaluation element that includes concrete metrics such as sales
volume targets and enrollment targets
2 Identification of target market segment(s)
3 Development of materials and language for customer-marketing efforts
that explain the RNG program in plain language easily understandable to the
average customer
4 An online bill calculator
5 An implementation plan that identifies specific activities and a timetable
and
6 Abudget
Exh Pet-VGS-5 White pf at 10 Tr912116 at22-23 (Munay)
25 VGS and the Department represent that the RNG progriquestun is responsive to the
Commissions condition in its Order in Docket 7970 rcquiring VGS to develop a proposal to
promote bio-methane project development Murray supp pf al 13-14tr912116 at 63 (Vhite)
26 VGS asserts that the RNG program represents appropriate progress toward the Vermont
Comprehensive Energy Plan (CEP) goal to meet90o of Vermonts energy needs through
renewable sources by 2050 Murray supp pf at 12-13
VI DlscussroN iexclxu Coxclustox
Vith this proposal for decision I recommend that the Commission approve the RNG
program in accordance with the findings described above and based upon the evidence in the
Docket No 8667 Page 9
record In Docket 7970 the Commission required VGS in consultation with the Department to
file a petition with the [Commission] proposing a program to promote bio-methane project
development It is reasonable to expectthat aprogram meant to stimulate development of a
specific energy source would look to stimulate demand for that resource by offering an
opportunity for customers to purchase supply from RNG producers
The RNG program proposed by VGS and supported by the Department seeks to offer
ratepayers the option to purchase renewable energy as part of their individual energy-use
portfolio Furthermore the program includes a provision requiring that VGS develop a detailed
marketing plan that will serve to educate customers on the availability costs and benefits of
such resources which could lead to increased demand for the product
VGS intends to take advantage of the existing market for RINs associated with RNG used
as transportation fuel by proposing a Renewable Vehicle Fuel Tariff As described above in the
Public Comments section the Chittenden County Transportation Authority and Casella Vaste
Systems are interested in exploring the use of RNG to fuel their vehicle fleets which
demonstrates that there is existing customer demand for this product
Unlike the markets relating to RNG supply used for transportation fuel or renewable
electric generation and the associated trading and verification of RECs the RNG market is in its
infancy At this time it would not be appropriate to expect VGS to implement an RNG program
utilizing an RNG content standard similar to the electric renewable portfolio standard as
recommended by CLF because the equivalent standards and processes do not exist However
the RNG program represents a meaningful first step in encouraging customer interest in
purchasing RNG at retail thereby stimulating supply of RNG into the market and is consistent
with the Commissions condition requiring VGS to develop a proposal to promote bio-methane
project development
VGSs RNG program includes appropriate mechanisms for periodic reporting and
verification of program activities as well as an opportunity to comprehensively review the
program after three years of implementation Furthermore determinations regarding recovery of
costs associated with the RNG program will be made in the context of future proceedings
regarding VGSs rates The RNG program should evolve with the RNG markets in the near-term
and over the course of the next several years which will allow progress towards achievement of
Vermonts 2050 CEP renewable energy goals
Docket No 8667 Page 10
Because not all parties to this proceeding have waived their rights under 3 VSA $ 811
to file written comments or present oral argument with respect to this proposal for decision I am
circulating the proposal for decision to the parties for their review and comment
Dated at Montpelier Vermont this rrtl day of QrIltt 2017a0AndreaHearing Officer
Docket No 8667 Page 11
VII Corumrssron Drscussrox
On August 22017 the Department filed a letter stating that it supports the issuance of an
Order by the Commission that adopts the proposal for decision in full
Also on August 22017 VGS filed comments on the proposal for decision requesting
that Finding 16 be modified as follows (additional text in italics) If RNG supply exceeds
customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary
flow any remaining RNG attribute inventory amounts through the PGA or through a rate case ifVGS was under traditional cost of service regulation (subject to [Commission] approval)
VGS asserts that [a]bsent such specific language it is possible that VGS would be unable [to]
defer such costs for future recovery and that removal of that component introduces uncertainty
about the potential procedural mechanisms available for cost recovery in the last resort VGS
states that with the Commissions consideraacutetion of this request it does not request oral argument
No other comments were filed on the proposal for decision
The Hearing Officer recommended that the Commission find that determinations
regarding recovery of costs associated with the RNG program will be made in the context of
future proceedings regarding VGSs rates We agree with this recommendation VGS should
have an opportunity to request rate recovery for excess RNG supply However this proceeding
is not the proper time for such a determination Accordingly Finding 16 is hereby modified as
follows If RNG supply exceeds customer demand VGS would first seek to sell the excess
RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any
remaining RNG attribute inventory amounts through the PGA or through arate case as part of
its cost of service if the PGA is no longer in effect atthat timeWe emphasize the importance of the successful implementation of the RNG program in
helping to meet the States renewable energy policy objectives The annual report on the
implementation of the RNG program will serve as a valuable tool to assess that progress In this
proceeding CLF has raised policy considerations that should serve to guide these future reviews
of the RNG program For example CLF has raised concerns regarding the effectiveness of the
voluntary nature of the program In assessing its program we expect VGS to revisit and report
on the feasibility of incorporating RNG as a portion of its supply mix in the future It is
important for VGSs RNG program to be sustainable and continue to evolve ensuring significant
DocketNo8667 Page 12
contributions toward meeting the States renewable energy goals and reducing the consumption
of fossil fuel Accordingly it is critical that the annual report and the three-year comprehensive
review address not only the effectiveness of the program but also its affordability and the
feasibility of other policy options to advance the production and use of RNG in Vermont
Docket No 8667 Page 13
VIII Onunn
Ir rs Hennsy oRDERED ADJUDGED AND DECRnnn by the Public Utility Commission of the
State of Vermont that
1 The findings conclusions and recommendations of the Hearing Officer are
adopted and the Renewable Natural Gas (RNG) program to be implemented by Vermont Gas
SystemsInc (VGS) is approved
2 When VGS has procured RNG supply in amounts reasonably estimated to be
sufficient for estimated customer demand it shall file a formal tariff including proposed rates for
sale of RNG The tariff shall be reviewedpursuantto the procedures of 30 VSA ccedilccedil225226
and227 and sales under the program shall begin after Commission approval of the tariff
3 VGS shall develop and file for Commission approval a separate Renewable
Vehicle Fuel Tariff to serve customers using RNG as a transportation fuel
4 VGS shall file a marketing plan for the RNG program consistent with the
requirements set forth above within one month of the issuance of this Order
5 VGS shall file an annual report consistent with the requirements set forth above
upon implementation of the RNG program
6 VGS shall file a comprehensive review of the performance of the program with
the Commission and the Department after three years of implementation This review will
include an environmental accounting protocol to quantiff the environmental benefits of the
progrfim
7 VGS shall review proposed RNG supply arrangements with the Department
Docket No 8667
Orprcp oF THE Crnm
Dated at Montpelier Vermont this day of+hb
Z Roisman
Cheney
Page 14
20t7
Puslrc Urrlnv
CovtriquestIssIoN
OP VERMONT
(
)))
)))
Fired otildeeglcL ( JotTAttest c
of the Commission
NorIcE To READERS This decision is subject to revision oftechnical errors Reqders are requested tonotify the Clerk of the Commission (by e-mail telephone or inwriting) or any appqrent errors in order that anynecessary corrections may be made (E-mail address pucclerkvermontgov)
Appeal of this decision to the Supreme Court of Vermont must befiledwith the Clerk of the Comnissionwithin thirty days Appeal will not stay the efect of thszlig Order absentfurther order by this Commission orappropriate actiacuteon by the Supreme Court of Vermont Motions for reconsideration or stay if any must be filed withthe Clerk of the Commissionwithin ten days of the date of this deciacutesion and Order
Exhibit 22 VGS RNG Tariff Rate Filing
Exhibit 23 PUC Approval of VGS RNG Rates
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Case No l8-03 13-TF
Petition of Vermont Gas Systems Inc fotapproval of a new tariff implementing theRenewable Natural Gas program
Order entered
OnonRAppnovINc Tiquestrurn
On January 302018 Vermont Gas Systems Inc (VGS) filed a petition for approval of
a new tariff implementing the Renewable Natural Gas (RNG) program approved by the
Vermont Public Utility Commission (Commission) in Docket No 8667 In that Docket the
Commission required VGS to file a tariff implementing the RNG program when it has procured
RNG supply in amounts reasonably estimated to be sufficient to meet customer demandl In
this Order the Commission approves the new tariff marketed under the name EcoGas with an
effective date of bills rendered on and after March 15 2018
VGS states that it has executed an RNG supply contract with deliveries scheduled for
2018 and that two additional contracts are being negotiated for deliveries beginningin2019
VGS is proposing to set its initial RNG adder at$ll749lCcf which represents a five-year
blended rate based on the three RNG supply arrangements VGS intends to account for the
difference between the cost of RNG supply and the RNG adder as a regulatory asset within gas
costs As additional lower-cost supply is added to the portfolio the regulatory asset balance will
be recovered from EcoGas participants with the goal of fully reducing the balance by the end of
five years Accordingly VGS states that the RNG program will be rate-neutral to VGS and its
non-RNG customers
On February 272018 the Vermont Department of Public Service (Department) filed a
letter recommending that the Commission approve the tariff without a hearing or further
investigation The Department states that the tariff filing and proposed accounting treatment
comply with Vermont rate-setting practices policies precedents and statutes
lslaotx
I Docket 8667 Order of 96117 at 13
Page2Case No 18-0313-TF
Based on the foregoing we hereby approve VGSs proposed RNG tariff to be effective
on a bills-rendered basis beginning on March 15 2018 Recovery of any regulatory asset
balance at the end of the fifth year would need to be approved by the Commission in a future
proceeding
So Omnnnn
Case No l8-0313-TF
8r- day of lruacuterLiquestiquest
Page 3
Dated at Montpelier Vermont this 2018
Roisman PueIrc Urlrrv
CoiriexcllriquestlssloN
Cheney
OF VERMONT
Sarah Hofmann
Onncp oF THE CLBRr
Filed huacuteveuroAacute- icirc dollAttest I
Clerk of the Commission
Notice to Readers This decision is subiect to revision oftechnical errors Readers are requested to notify
the Clerk of the Commission (by e-mail telephone or in writing) or qny qpparent errors in order that any
necessary corrections may be made (E-mail address pucclerkvermontgov)Appeal of this decisiacuteon to the Supreme Court of Yermont must be filed with the Clerk of the Commission
within 30 days Appeal will not stay the efect of this Order oslashbsent further order by this Commission or appropriate
action by the Supreme Court of Vermont Motionsthornr reconsideration or stay if any must befiledwith the Clerk ofthe Commissionwithin 28 doslashys of the date of this decision and Order
)))
))))
PUC Case No 18-0313-TF
Eileen SimollardesLauren HammerVermont Gas
85 Swift StreetSouth Burlington VT 05403
June E Tiemey CommissionerVermont Department of Public Service1 12 State StreetMontpelier VT 05620 -2601
Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
Exhibit 31 Accounting Procedures
Exhibit 31 Accounting for VGS Renewable Natural Gas (Ver-9202019)
1 Purchase of RNG Supply
RNG supply purchases are separated into the cost of the commodity and the cost of the renewable attribute The commodity portion is expensed to gas costs in the delivery month while the renewable attribute is booked to an inventory account referenced herein as the ldquoRenewable Inventory Accountrdquo Like VGSrsquo existing storage inventory accounting the Renewable Inventory Account will track both the dollar value of the renewable attribute and the renewable attribute Mcfs Renewable attribute dollar values are record to ldquo16410050 Inventory RNG Storagerdquo while Mcf values are recorded in the gas cost model maintained by accounting In the month VGS purchases the renewable attribute it is accrued in a book model and goes in to 16410150 Inventory RNG Accrued then moves to the 16410050 in a final model the following month for final
RNG may be purchased at different locations and using varying pricing structures While the accounting for RNG does not vary with the purchase location or price the determination of the value of the renewable attribute will vary depending on whether or not the supply pricing expressly values the renewable attribute as an adder or it is embedded in a fixed price Examples of each are shown below The accounting of RNG supply is intended to separate the cost of the renewable attribute from the cost of the commodity The examples below are not all inclusive of what may occur but intended to show the accounting procedures used to separate the renewable attribute from the commodity and specify ownership of each aspect
In all cases the commodity cost portion - which is the total cost of the RNG purchased excluding the renewable attribute - will be expensed in the delivery month as a cost of gas
Example 1 ndash The fixed price of RNG includes both the commodity and the renewable attribute
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The total cost of the RNG supply purchased during the month is calculated by Accounting within the gas cost model as follows
MMBtu Purchased (as validated in step 2) $ MMBtu purchase price (as provided in a supply confirmation provided by gas supply)
4 For purposes of booking the renewable attribute to inventory it is necessary to calculate the RNG cost per Mcf The RNG cost Mcf is calculated using the total cost of RNG supply as calculated in step 3 divided by the Mcf in step 1
5 The renewable attribute price per Mcf is calculated as follows
RNG cost per Mcf as determined in step 4 ndashplus ldquoother componentsrdquo as calculated pursuant to Attachment A ndash minus ldquoAverage Commodity Costrdquo as calculated pursuant to Attachment A The ldquoother componentsrdquo added to the RNG cost per Mcf will vary depending on where the RNG supply was delivered but in each case will be identified in the calculation shown on Attachment A
6 The renewable attribute price per Mcf the total RNG Mcf delivered is recorded in the Inventory RNG Storage account
7 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
Example 2 - RNG purchased at a renewable attribute price plus a daily or monthly index
Where the pricing of RNG specifically separates the commodity from the renewable attribute the renewable attribute price will be what is recorded in the Renewable Inventory Account
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The renewable attribute price per Mcf the total RNG Mcf delivered as determined in step 1 is recorded in the Renewable Inventory Account
4 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
2 Recalculating the RNG Adder
The RNG Adder paid by customers will be recalculated anytime the Natural Gas charge portion of rates changes The Manager of Gas SupplyGas control is responsible for recalculating the RNG Adder The calculation will be verified and approved by the Vice President ndash Regulatory Affairs The determination of the RNG Adder will be pursuant to the methodology shown in Attachment A The Regulatory Department will prepare the amended RNG Adder tariff for filing with the PUC Upon PUC approval of the RNG Adder the Regulatory Department will prepare a memorandum advising Accounting and Gas Supply of the new RNG Adder as approved
3 Customer purchases VGS Renewable Natural Gas
The RNG Adder at the percent selected by the customer will be applied to the entire monthrsquos usage on the customersrsquo next bill For customers utilizing the S-RNG adder the entire volume elected with be on the customersrsquo next bill The S-RNG Adder nor the RNG Adder and percentage selected will not be prorated based on enrollment or termination date
Customers may terminate or modify their RNG selection upon 3 dayrsquos notice to VGS The termination or modification will be effective on the customerrsquos next monthly bill
The customerrsquos usage for the month will be multiplied by the percentage and the approved RNG Adder For customers utilizing the S-RNG adder the volume elected will be multiplied by the approved RNG adder This amount will then be recorded to SAP accounts 4010015-40010021 depending on which rate class the customer is in The RNG Adder is the same regardless of which rate class a customer is in At the end of the month a report is run by billing from the customer information system that shows total usage and which percentage of RNG the customer has signed up for to calculate the number of MCFrsquos of renewable attribute sold during the billing period Billing also provides a report of the volumes sold through the S-RNG Tarriff The Inventory RNG Storage account maintained within the gas cost model by Accounting is reduced by these Mcf The MCFrsquos are then multiplied by the RNG Adder in effect for the billing month and an entry is made to remove that dollar amount from the Inventory RNG Storage account and into the monthly cost of gas The intent of this transaction is to ensure that cost of the renewable attribute is reflected in the cost of gas in the month it is purchased by the customer This results in a matching of the renewable attribute revenue and expense
The RNG Adder revenue and renewable attributes removed from storage will be included in the gas cost deferral calculation However because there is a matching of the renewable attribute revenue and expense the impact on the deferral calculation will be zero
The calculation of unbilled revenues will exclude RNG as a customer can cancel their participation prior to their next bill
In the event Vermont Gas issues a credit to a customer related to the RNG program the value of the renewable attribute credited and the associated Mcf will not be applied to the Renewable Inventory Account
4 Controls
A spreadsheet is maintained by accounting that shows the MCFrsquos and dollar values of the Renewable Inventory Account This is reconciled monthly by the accounting team and will be reviewed by the Manager Gas SupplyGas Control
Accounting will validate that the amount removed from the Renewable Inventory Account matches the RNG Adder revenue Any discrepancies will be reviewed and corrected
A report will be run for each bill cycle that shows any changes to the RNG percentages selected this will include customers opting to withdraw from the RNG program The customer care team will validate any changes against customer confirmation paperwork
5 Renewable Inventory Account Reconciliation and Forecast
The PUC Order approving the RNG program contains provisions describing how RNG supply and demand imbalances will be addressed These provisions and how VGS will track and comply with them are as discussed in this section The PUC Order approving the RNG Program provides that if the available RNG supply during the previous 12 months is less than the amount purchased by customers VGS may use the funds collected to purchase carbon offsets (Finding 13) If carbon offset are not available VGS will contribute the RNG program revenues to the Clean Energy Development Fund or issue prorated credits to affected customers (Finding 15) The Order also provides that in the event RNG supply exceeds customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any remaining RNG attribute inventory amounts through the PGA or through a rate case as part of its cost of service if the s PGA is no longer in effect at that time (Finding 16 as modified) Finding 11 provides that VGS will use a ldquotrue-uprdquo period of up to 12 months in order to balance the difference between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply) Taken together these provisions require VGS to evaluate the imbalance after 12-months and then true-up the imbalance over the next twelve months To provide a forecast of the supplydemand imbalance quarterly the billing area will run a report showing the expected RNG volumes based on current customer commitments by month for the next 12-months Current customers commitments will be calculated based on the previous 12 months of usage multiplied by the RNG percentage currently signed up for The marketing department will provide their forecast of new RNG sales for the next 12-months Both will be provided to the Manager Gas SupplyGas Control The Manager Gas SupplyGas Control will compare the forecasted RNG sales known and expected to RNG supply commitments and provide a 24-month forecast of the supplydemand balance The supplydemand balance will be reviewed at the risk management meeting The strategy for addressing the imbalance consistent with the PUC order will be determined by the risk management committee
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
Docket No 8667 Page 5
3 Under the program retail customers would voluntarily purchase RNG in amounts equal to
l0oo25yo50o or 100 of their total monthly requirements at specified prices per Ccf as an
adder to other retail charges Customers could terminate RNG purchases upon providing three
days of advance notice to VGS Murray supp pf at l-2 exhs Pet-VGS-l and Pet-VGS-3
4 Intemrptible customers will have the opportunity to participate in the RNG program
through VGSs existing Lock Price Program which currently provides for up to a two-year
commitment Murray supp pf at 5
5 VGS will develop and file for Commission approval a separate tariff for use of RNG as a
transportation fuel This tariff will allow VGS to take advantage of the sale of the associated
Renewable Identification Numbers (ooRINs) When RNG is used as a transportation fuel it is
eligible to receive RINs under the Federal Renewable Fuel Standard RINs can be resold on the
wholesale market and would be used to offset the price of RNG to transportation customers
receiving service under the tariff Joan E White
Department (White) pf at7tr912116 at 62-
63 (White) exh Pet-VGS-5 Response 4
6 VGS will also initiate a review of the RNG program by the Commission Department and
others after three years White pf at9tr912116 (Munay) at24
7 The adder price for each Ccf of RNG will be equal to the average RNG commodity cost to
VGS less the average commodity cost of natural gas VGS will adjust the adder price per Ccf on
a quarterly basis as part of its Purchased Gas Adjustment (PGA) filing Murray supp pf at 4
8 The proposed RNG program will include a tariff that is very similar in concept to the
Green Mountain Power Corporation (GMP) Cow Power tariff However Cow Power is based
on a fixed rate per kWh no matter what the cost of the renewable energy Murray supp pf at llVhite pf at 4
9 VGSs RNG tariff will be calculated quarterly based on actual RNG and natural gas costs
and will provide accurate price signals as to the price differential between natural gas and RNG
White pf at 4
10 Based on a survey conducted by VGS 85 of its customers are willingto pay l0oo
more for a renewable product VGS projects that customers could potentially consume over
500000 Mcf of RNG over the next five years Murray supp pf at 5
DocketNo8667 Page 6
11 VGS will use a true-up period of up to 12 months in order to balance the difference
between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply)
Murray supp pf at 9
12 There is a risk that due to the voluntary nature of the RNG program supply and demand
will be mismatched White pf at41 David G Hill CLF (Hi11) pf at 9
13 If the available RNG supply during the previous 12 months is less than the amount
purchased by VGS customers the RNG program provides that VGS may use funds collected to
purchase carbon offsets from an established carbon registry such as the American Carbon
Registry VGS will purchase an amount of carbon offsets equal to the amount of the revenue
resulting from the undersupply in order to result in a revenue-neutral program At the time of the
three-year implementation review VGS will propose an environmental accounting protocol in
order to quantify the environmental benefits of the program and to evaluate the financial risk of
purchasing carbon offsets in an amount equivalent to the environmental benefits of unsold RNG
due to undersupply Murray supp pf at 6 l0 exh Pet-VGS-s Responses 1
14 The development and standardization of RNG attributes is in its infancy as compared to
the existing markets for the environmental attributes used in the electric industry (renewable
energy credits or (RECs)) Murray supp pf at 12
15 If carbon offsets are not available VGS will contribute the RNG program revenues to the
Clean Energy Development Fund or issue prorated credits to affected customers Exh Pet-
VGS-S Responses 3
16 If RNG supply exceeds customer demand VGS would seek to sell the excess RNG at
wholesale Murray supp pf at 10
17 VGS will provide proposed RNG supply contracts to the Department prior to execution
It will also consult with the Department before making decisions that could dramatically impact
price or the integrity of the RNG program Exh Pet-VGS-S Responses 2 White pf at 5
18 The estimated cost of RNG supply ranges from $l2lMcf to $25lMcf The cost of natural
gas is less than $3Mcf Murray supp pf at 8-9
19 VGS will implement an RNG Quality Assurance Plan establishing a testing and
monitoring process to ensure that RNG injected (via in-state RNG producers) into the VGS
system is pipeline quality and meets the specifications of the TCPL transportation tariff for bio-
methane gas quality Murray supp pf at 14 exh Pet-VGS-4
Docket No 8667 PageT
20 VGS will file an annual report on the RNG program with the Commission and the
Department containing the following information
1 Number of subscribers by customer class
2 Sales volume by customer class
3 Sales revenues
4 Any sales or purchases of carbon offsets
5 Supplyconsumption matching portfolio including any shortfall or excess
supply of RNG
6 True-up schedule for any imbalances
7 RNG supply verification
8 Quantification of the impact of any excess RNG costs flowing through the
PGA if VGS remains under altemative regulation
9 Accounting of any carbon ofszligets or other incentives
10 Status of any contracts for RNG including plans to acquire new supply
contracts
I 1 Revenue from Renewable Identification Number (RlN) sales and impact
on the transport tariff as well as any projections about the RIN market that are
available to VGS and
12 Complete reports and environmental verifications by an independent
verifier
Murray supp pf at 11 exh Pet-VGS-3 White pf at 8-9 tr912116 at23-24 (Munay)
21 Except as described below concerning RlN-eligible RNG VGS will annually verify that
the RNG was produced by a renewable gas production facility that VGS is the exclusive oryner
of any environmental attributes associated with RNG it sells under the program that it acquired
the RNG from its transferor and sold itatretail and that neither the RNG nor any renewable
attribute associated with the RNG has been sold twice at any point between RNG production and
sale to VGS whether by sales into carbon offset markets or otherwise This verification will be
based on certifications by VGSs suppliers and by an independent third party retained by VGS
for this purpose Exh Pet-VGS-3 exh Pet-VGS-s Response 5 White pf at 8
Docket No 8667 Page I
22 For RlN-eligible RNG used as vehicle fuel verification will be addressed in detail in the
future as part of VGSs proposed Renewable Vehicle Fuel Tariff Exh Pet VGS-5 Response 4
rr912116 at 65 (White)
23 There are few natural gas utilities currently offering RNG at retail VGS modeled its
RNG program after the program designed by FortisBC a local distribution company in British
Columbia Canada VGS also had discussions with SoCalGas in Southern California Both of
these companies are leaders in developing RNG offerings and fostering RNG supply resources
Murray supp pf at 7
24 VGS will file with the Commission and Department a marketing plan containing the
following elements
l An evaluation element that includes concrete metrics such as sales
volume targets and enrollment targets
2 Identification of target market segment(s)
3 Development of materials and language for customer-marketing efforts
that explain the RNG program in plain language easily understandable to the
average customer
4 An online bill calculator
5 An implementation plan that identifies specific activities and a timetable
and
6 Abudget
Exh Pet-VGS-5 White pf at 10 Tr912116 at22-23 (Munay)
25 VGS and the Department represent that the RNG progriquestun is responsive to the
Commissions condition in its Order in Docket 7970 rcquiring VGS to develop a proposal to
promote bio-methane project development Murray supp pf al 13-14tr912116 at 63 (Vhite)
26 VGS asserts that the RNG program represents appropriate progress toward the Vermont
Comprehensive Energy Plan (CEP) goal to meet90o of Vermonts energy needs through
renewable sources by 2050 Murray supp pf at 12-13
VI DlscussroN iexclxu Coxclustox
Vith this proposal for decision I recommend that the Commission approve the RNG
program in accordance with the findings described above and based upon the evidence in the
Docket No 8667 Page 9
record In Docket 7970 the Commission required VGS in consultation with the Department to
file a petition with the [Commission] proposing a program to promote bio-methane project
development It is reasonable to expectthat aprogram meant to stimulate development of a
specific energy source would look to stimulate demand for that resource by offering an
opportunity for customers to purchase supply from RNG producers
The RNG program proposed by VGS and supported by the Department seeks to offer
ratepayers the option to purchase renewable energy as part of their individual energy-use
portfolio Furthermore the program includes a provision requiring that VGS develop a detailed
marketing plan that will serve to educate customers on the availability costs and benefits of
such resources which could lead to increased demand for the product
VGS intends to take advantage of the existing market for RINs associated with RNG used
as transportation fuel by proposing a Renewable Vehicle Fuel Tariff As described above in the
Public Comments section the Chittenden County Transportation Authority and Casella Vaste
Systems are interested in exploring the use of RNG to fuel their vehicle fleets which
demonstrates that there is existing customer demand for this product
Unlike the markets relating to RNG supply used for transportation fuel or renewable
electric generation and the associated trading and verification of RECs the RNG market is in its
infancy At this time it would not be appropriate to expect VGS to implement an RNG program
utilizing an RNG content standard similar to the electric renewable portfolio standard as
recommended by CLF because the equivalent standards and processes do not exist However
the RNG program represents a meaningful first step in encouraging customer interest in
purchasing RNG at retail thereby stimulating supply of RNG into the market and is consistent
with the Commissions condition requiring VGS to develop a proposal to promote bio-methane
project development
VGSs RNG program includes appropriate mechanisms for periodic reporting and
verification of program activities as well as an opportunity to comprehensively review the
program after three years of implementation Furthermore determinations regarding recovery of
costs associated with the RNG program will be made in the context of future proceedings
regarding VGSs rates The RNG program should evolve with the RNG markets in the near-term
and over the course of the next several years which will allow progress towards achievement of
Vermonts 2050 CEP renewable energy goals
Docket No 8667 Page 10
Because not all parties to this proceeding have waived their rights under 3 VSA $ 811
to file written comments or present oral argument with respect to this proposal for decision I am
circulating the proposal for decision to the parties for their review and comment
Dated at Montpelier Vermont this rrtl day of QrIltt 2017a0AndreaHearing Officer
Docket No 8667 Page 11
VII Corumrssron Drscussrox
On August 22017 the Department filed a letter stating that it supports the issuance of an
Order by the Commission that adopts the proposal for decision in full
Also on August 22017 VGS filed comments on the proposal for decision requesting
that Finding 16 be modified as follows (additional text in italics) If RNG supply exceeds
customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary
flow any remaining RNG attribute inventory amounts through the PGA or through a rate case ifVGS was under traditional cost of service regulation (subject to [Commission] approval)
VGS asserts that [a]bsent such specific language it is possible that VGS would be unable [to]
defer such costs for future recovery and that removal of that component introduces uncertainty
about the potential procedural mechanisms available for cost recovery in the last resort VGS
states that with the Commissions consideraacutetion of this request it does not request oral argument
No other comments were filed on the proposal for decision
The Hearing Officer recommended that the Commission find that determinations
regarding recovery of costs associated with the RNG program will be made in the context of
future proceedings regarding VGSs rates We agree with this recommendation VGS should
have an opportunity to request rate recovery for excess RNG supply However this proceeding
is not the proper time for such a determination Accordingly Finding 16 is hereby modified as
follows If RNG supply exceeds customer demand VGS would first seek to sell the excess
RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any
remaining RNG attribute inventory amounts through the PGA or through arate case as part of
its cost of service if the PGA is no longer in effect atthat timeWe emphasize the importance of the successful implementation of the RNG program in
helping to meet the States renewable energy policy objectives The annual report on the
implementation of the RNG program will serve as a valuable tool to assess that progress In this
proceeding CLF has raised policy considerations that should serve to guide these future reviews
of the RNG program For example CLF has raised concerns regarding the effectiveness of the
voluntary nature of the program In assessing its program we expect VGS to revisit and report
on the feasibility of incorporating RNG as a portion of its supply mix in the future It is
important for VGSs RNG program to be sustainable and continue to evolve ensuring significant
DocketNo8667 Page 12
contributions toward meeting the States renewable energy goals and reducing the consumption
of fossil fuel Accordingly it is critical that the annual report and the three-year comprehensive
review address not only the effectiveness of the program but also its affordability and the
feasibility of other policy options to advance the production and use of RNG in Vermont
Docket No 8667 Page 13
VIII Onunn
Ir rs Hennsy oRDERED ADJUDGED AND DECRnnn by the Public Utility Commission of the
State of Vermont that
1 The findings conclusions and recommendations of the Hearing Officer are
adopted and the Renewable Natural Gas (RNG) program to be implemented by Vermont Gas
SystemsInc (VGS) is approved
2 When VGS has procured RNG supply in amounts reasonably estimated to be
sufficient for estimated customer demand it shall file a formal tariff including proposed rates for
sale of RNG The tariff shall be reviewedpursuantto the procedures of 30 VSA ccedilccedil225226
and227 and sales under the program shall begin after Commission approval of the tariff
3 VGS shall develop and file for Commission approval a separate Renewable
Vehicle Fuel Tariff to serve customers using RNG as a transportation fuel
4 VGS shall file a marketing plan for the RNG program consistent with the
requirements set forth above within one month of the issuance of this Order
5 VGS shall file an annual report consistent with the requirements set forth above
upon implementation of the RNG program
6 VGS shall file a comprehensive review of the performance of the program with
the Commission and the Department after three years of implementation This review will
include an environmental accounting protocol to quantiff the environmental benefits of the
progrfim
7 VGS shall review proposed RNG supply arrangements with the Department
Docket No 8667
Orprcp oF THE Crnm
Dated at Montpelier Vermont this day of+hb
Z Roisman
Cheney
Page 14
20t7
Puslrc Urrlnv
CovtriquestIssIoN
OP VERMONT
(
)))
)))
Fired otildeeglcL ( JotTAttest c
of the Commission
NorIcE To READERS This decision is subject to revision oftechnical errors Reqders are requested tonotify the Clerk of the Commission (by e-mail telephone or inwriting) or any appqrent errors in order that anynecessary corrections may be made (E-mail address pucclerkvermontgov)
Appeal of this decision to the Supreme Court of Vermont must befiledwith the Clerk of the Comnissionwithin thirty days Appeal will not stay the efect of thszlig Order absentfurther order by this Commission orappropriate actiacuteon by the Supreme Court of Vermont Motions for reconsideration or stay if any must be filed withthe Clerk of the Commissionwithin ten days of the date of this deciacutesion and Order
Exhibit 22 VGS RNG Tariff Rate Filing
Exhibit 23 PUC Approval of VGS RNG Rates
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Case No l8-03 13-TF
Petition of Vermont Gas Systems Inc fotapproval of a new tariff implementing theRenewable Natural Gas program
Order entered
OnonRAppnovINc Tiquestrurn
On January 302018 Vermont Gas Systems Inc (VGS) filed a petition for approval of
a new tariff implementing the Renewable Natural Gas (RNG) program approved by the
Vermont Public Utility Commission (Commission) in Docket No 8667 In that Docket the
Commission required VGS to file a tariff implementing the RNG program when it has procured
RNG supply in amounts reasonably estimated to be sufficient to meet customer demandl In
this Order the Commission approves the new tariff marketed under the name EcoGas with an
effective date of bills rendered on and after March 15 2018
VGS states that it has executed an RNG supply contract with deliveries scheduled for
2018 and that two additional contracts are being negotiated for deliveries beginningin2019
VGS is proposing to set its initial RNG adder at$ll749lCcf which represents a five-year
blended rate based on the three RNG supply arrangements VGS intends to account for the
difference between the cost of RNG supply and the RNG adder as a regulatory asset within gas
costs As additional lower-cost supply is added to the portfolio the regulatory asset balance will
be recovered from EcoGas participants with the goal of fully reducing the balance by the end of
five years Accordingly VGS states that the RNG program will be rate-neutral to VGS and its
non-RNG customers
On February 272018 the Vermont Department of Public Service (Department) filed a
letter recommending that the Commission approve the tariff without a hearing or further
investigation The Department states that the tariff filing and proposed accounting treatment
comply with Vermont rate-setting practices policies precedents and statutes
lslaotx
I Docket 8667 Order of 96117 at 13
Page2Case No 18-0313-TF
Based on the foregoing we hereby approve VGSs proposed RNG tariff to be effective
on a bills-rendered basis beginning on March 15 2018 Recovery of any regulatory asset
balance at the end of the fifth year would need to be approved by the Commission in a future
proceeding
So Omnnnn
Case No l8-0313-TF
8r- day of lruacuterLiquestiquest
Page 3
Dated at Montpelier Vermont this 2018
Roisman PueIrc Urlrrv
CoiriexcllriquestlssloN
Cheney
OF VERMONT
Sarah Hofmann
Onncp oF THE CLBRr
Filed huacuteveuroAacute- icirc dollAttest I
Clerk of the Commission
Notice to Readers This decision is subiect to revision oftechnical errors Readers are requested to notify
the Clerk of the Commission (by e-mail telephone or in writing) or qny qpparent errors in order that any
necessary corrections may be made (E-mail address pucclerkvermontgov)Appeal of this decisiacuteon to the Supreme Court of Yermont must be filed with the Clerk of the Commission
within 30 days Appeal will not stay the efect of this Order oslashbsent further order by this Commission or appropriate
action by the Supreme Court of Vermont Motionsthornr reconsideration or stay if any must befiledwith the Clerk ofthe Commissionwithin 28 doslashys of the date of this decision and Order
)))
))))
PUC Case No 18-0313-TF
Eileen SimollardesLauren HammerVermont Gas
85 Swift StreetSouth Burlington VT 05403
June E Tiemey CommissionerVermont Department of Public Service1 12 State StreetMontpelier VT 05620 -2601
Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
Exhibit 31 Accounting Procedures
Exhibit 31 Accounting for VGS Renewable Natural Gas (Ver-9202019)
1 Purchase of RNG Supply
RNG supply purchases are separated into the cost of the commodity and the cost of the renewable attribute The commodity portion is expensed to gas costs in the delivery month while the renewable attribute is booked to an inventory account referenced herein as the ldquoRenewable Inventory Accountrdquo Like VGSrsquo existing storage inventory accounting the Renewable Inventory Account will track both the dollar value of the renewable attribute and the renewable attribute Mcfs Renewable attribute dollar values are record to ldquo16410050 Inventory RNG Storagerdquo while Mcf values are recorded in the gas cost model maintained by accounting In the month VGS purchases the renewable attribute it is accrued in a book model and goes in to 16410150 Inventory RNG Accrued then moves to the 16410050 in a final model the following month for final
RNG may be purchased at different locations and using varying pricing structures While the accounting for RNG does not vary with the purchase location or price the determination of the value of the renewable attribute will vary depending on whether or not the supply pricing expressly values the renewable attribute as an adder or it is embedded in a fixed price Examples of each are shown below The accounting of RNG supply is intended to separate the cost of the renewable attribute from the cost of the commodity The examples below are not all inclusive of what may occur but intended to show the accounting procedures used to separate the renewable attribute from the commodity and specify ownership of each aspect
In all cases the commodity cost portion - which is the total cost of the RNG purchased excluding the renewable attribute - will be expensed in the delivery month as a cost of gas
Example 1 ndash The fixed price of RNG includes both the commodity and the renewable attribute
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The total cost of the RNG supply purchased during the month is calculated by Accounting within the gas cost model as follows
MMBtu Purchased (as validated in step 2) $ MMBtu purchase price (as provided in a supply confirmation provided by gas supply)
4 For purposes of booking the renewable attribute to inventory it is necessary to calculate the RNG cost per Mcf The RNG cost Mcf is calculated using the total cost of RNG supply as calculated in step 3 divided by the Mcf in step 1
5 The renewable attribute price per Mcf is calculated as follows
RNG cost per Mcf as determined in step 4 ndashplus ldquoother componentsrdquo as calculated pursuant to Attachment A ndash minus ldquoAverage Commodity Costrdquo as calculated pursuant to Attachment A The ldquoother componentsrdquo added to the RNG cost per Mcf will vary depending on where the RNG supply was delivered but in each case will be identified in the calculation shown on Attachment A
6 The renewable attribute price per Mcf the total RNG Mcf delivered is recorded in the Inventory RNG Storage account
7 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
Example 2 - RNG purchased at a renewable attribute price plus a daily or monthly index
Where the pricing of RNG specifically separates the commodity from the renewable attribute the renewable attribute price will be what is recorded in the Renewable Inventory Account
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The renewable attribute price per Mcf the total RNG Mcf delivered as determined in step 1 is recorded in the Renewable Inventory Account
4 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
2 Recalculating the RNG Adder
The RNG Adder paid by customers will be recalculated anytime the Natural Gas charge portion of rates changes The Manager of Gas SupplyGas control is responsible for recalculating the RNG Adder The calculation will be verified and approved by the Vice President ndash Regulatory Affairs The determination of the RNG Adder will be pursuant to the methodology shown in Attachment A The Regulatory Department will prepare the amended RNG Adder tariff for filing with the PUC Upon PUC approval of the RNG Adder the Regulatory Department will prepare a memorandum advising Accounting and Gas Supply of the new RNG Adder as approved
3 Customer purchases VGS Renewable Natural Gas
The RNG Adder at the percent selected by the customer will be applied to the entire monthrsquos usage on the customersrsquo next bill For customers utilizing the S-RNG adder the entire volume elected with be on the customersrsquo next bill The S-RNG Adder nor the RNG Adder and percentage selected will not be prorated based on enrollment or termination date
Customers may terminate or modify their RNG selection upon 3 dayrsquos notice to VGS The termination or modification will be effective on the customerrsquos next monthly bill
The customerrsquos usage for the month will be multiplied by the percentage and the approved RNG Adder For customers utilizing the S-RNG adder the volume elected will be multiplied by the approved RNG adder This amount will then be recorded to SAP accounts 4010015-40010021 depending on which rate class the customer is in The RNG Adder is the same regardless of which rate class a customer is in At the end of the month a report is run by billing from the customer information system that shows total usage and which percentage of RNG the customer has signed up for to calculate the number of MCFrsquos of renewable attribute sold during the billing period Billing also provides a report of the volumes sold through the S-RNG Tarriff The Inventory RNG Storage account maintained within the gas cost model by Accounting is reduced by these Mcf The MCFrsquos are then multiplied by the RNG Adder in effect for the billing month and an entry is made to remove that dollar amount from the Inventory RNG Storage account and into the monthly cost of gas The intent of this transaction is to ensure that cost of the renewable attribute is reflected in the cost of gas in the month it is purchased by the customer This results in a matching of the renewable attribute revenue and expense
The RNG Adder revenue and renewable attributes removed from storage will be included in the gas cost deferral calculation However because there is a matching of the renewable attribute revenue and expense the impact on the deferral calculation will be zero
The calculation of unbilled revenues will exclude RNG as a customer can cancel their participation prior to their next bill
In the event Vermont Gas issues a credit to a customer related to the RNG program the value of the renewable attribute credited and the associated Mcf will not be applied to the Renewable Inventory Account
4 Controls
A spreadsheet is maintained by accounting that shows the MCFrsquos and dollar values of the Renewable Inventory Account This is reconciled monthly by the accounting team and will be reviewed by the Manager Gas SupplyGas Control
Accounting will validate that the amount removed from the Renewable Inventory Account matches the RNG Adder revenue Any discrepancies will be reviewed and corrected
A report will be run for each bill cycle that shows any changes to the RNG percentages selected this will include customers opting to withdraw from the RNG program The customer care team will validate any changes against customer confirmation paperwork
5 Renewable Inventory Account Reconciliation and Forecast
The PUC Order approving the RNG program contains provisions describing how RNG supply and demand imbalances will be addressed These provisions and how VGS will track and comply with them are as discussed in this section The PUC Order approving the RNG Program provides that if the available RNG supply during the previous 12 months is less than the amount purchased by customers VGS may use the funds collected to purchase carbon offsets (Finding 13) If carbon offset are not available VGS will contribute the RNG program revenues to the Clean Energy Development Fund or issue prorated credits to affected customers (Finding 15) The Order also provides that in the event RNG supply exceeds customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any remaining RNG attribute inventory amounts through the PGA or through a rate case as part of its cost of service if the s PGA is no longer in effect at that time (Finding 16 as modified) Finding 11 provides that VGS will use a ldquotrue-uprdquo period of up to 12 months in order to balance the difference between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply) Taken together these provisions require VGS to evaluate the imbalance after 12-months and then true-up the imbalance over the next twelve months To provide a forecast of the supplydemand imbalance quarterly the billing area will run a report showing the expected RNG volumes based on current customer commitments by month for the next 12-months Current customers commitments will be calculated based on the previous 12 months of usage multiplied by the RNG percentage currently signed up for The marketing department will provide their forecast of new RNG sales for the next 12-months Both will be provided to the Manager Gas SupplyGas Control The Manager Gas SupplyGas Control will compare the forecasted RNG sales known and expected to RNG supply commitments and provide a 24-month forecast of the supplydemand balance The supplydemand balance will be reviewed at the risk management meeting The strategy for addressing the imbalance consistent with the PUC order will be determined by the risk management committee
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
DocketNo8667 Page 6
11 VGS will use a true-up period of up to 12 months in order to balance the difference
between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply)
Murray supp pf at 9
12 There is a risk that due to the voluntary nature of the RNG program supply and demand
will be mismatched White pf at41 David G Hill CLF (Hi11) pf at 9
13 If the available RNG supply during the previous 12 months is less than the amount
purchased by VGS customers the RNG program provides that VGS may use funds collected to
purchase carbon offsets from an established carbon registry such as the American Carbon
Registry VGS will purchase an amount of carbon offsets equal to the amount of the revenue
resulting from the undersupply in order to result in a revenue-neutral program At the time of the
three-year implementation review VGS will propose an environmental accounting protocol in
order to quantify the environmental benefits of the program and to evaluate the financial risk of
purchasing carbon offsets in an amount equivalent to the environmental benefits of unsold RNG
due to undersupply Murray supp pf at 6 l0 exh Pet-VGS-s Responses 1
14 The development and standardization of RNG attributes is in its infancy as compared to
the existing markets for the environmental attributes used in the electric industry (renewable
energy credits or (RECs)) Murray supp pf at 12
15 If carbon offsets are not available VGS will contribute the RNG program revenues to the
Clean Energy Development Fund or issue prorated credits to affected customers Exh Pet-
VGS-S Responses 3
16 If RNG supply exceeds customer demand VGS would seek to sell the excess RNG at
wholesale Murray supp pf at 10
17 VGS will provide proposed RNG supply contracts to the Department prior to execution
It will also consult with the Department before making decisions that could dramatically impact
price or the integrity of the RNG program Exh Pet-VGS-S Responses 2 White pf at 5
18 The estimated cost of RNG supply ranges from $l2lMcf to $25lMcf The cost of natural
gas is less than $3Mcf Murray supp pf at 8-9
19 VGS will implement an RNG Quality Assurance Plan establishing a testing and
monitoring process to ensure that RNG injected (via in-state RNG producers) into the VGS
system is pipeline quality and meets the specifications of the TCPL transportation tariff for bio-
methane gas quality Murray supp pf at 14 exh Pet-VGS-4
Docket No 8667 PageT
20 VGS will file an annual report on the RNG program with the Commission and the
Department containing the following information
1 Number of subscribers by customer class
2 Sales volume by customer class
3 Sales revenues
4 Any sales or purchases of carbon offsets
5 Supplyconsumption matching portfolio including any shortfall or excess
supply of RNG
6 True-up schedule for any imbalances
7 RNG supply verification
8 Quantification of the impact of any excess RNG costs flowing through the
PGA if VGS remains under altemative regulation
9 Accounting of any carbon ofszligets or other incentives
10 Status of any contracts for RNG including plans to acquire new supply
contracts
I 1 Revenue from Renewable Identification Number (RlN) sales and impact
on the transport tariff as well as any projections about the RIN market that are
available to VGS and
12 Complete reports and environmental verifications by an independent
verifier
Murray supp pf at 11 exh Pet-VGS-3 White pf at 8-9 tr912116 at23-24 (Munay)
21 Except as described below concerning RlN-eligible RNG VGS will annually verify that
the RNG was produced by a renewable gas production facility that VGS is the exclusive oryner
of any environmental attributes associated with RNG it sells under the program that it acquired
the RNG from its transferor and sold itatretail and that neither the RNG nor any renewable
attribute associated with the RNG has been sold twice at any point between RNG production and
sale to VGS whether by sales into carbon offset markets or otherwise This verification will be
based on certifications by VGSs suppliers and by an independent third party retained by VGS
for this purpose Exh Pet-VGS-3 exh Pet-VGS-s Response 5 White pf at 8
Docket No 8667 Page I
22 For RlN-eligible RNG used as vehicle fuel verification will be addressed in detail in the
future as part of VGSs proposed Renewable Vehicle Fuel Tariff Exh Pet VGS-5 Response 4
rr912116 at 65 (White)
23 There are few natural gas utilities currently offering RNG at retail VGS modeled its
RNG program after the program designed by FortisBC a local distribution company in British
Columbia Canada VGS also had discussions with SoCalGas in Southern California Both of
these companies are leaders in developing RNG offerings and fostering RNG supply resources
Murray supp pf at 7
24 VGS will file with the Commission and Department a marketing plan containing the
following elements
l An evaluation element that includes concrete metrics such as sales
volume targets and enrollment targets
2 Identification of target market segment(s)
3 Development of materials and language for customer-marketing efforts
that explain the RNG program in plain language easily understandable to the
average customer
4 An online bill calculator
5 An implementation plan that identifies specific activities and a timetable
and
6 Abudget
Exh Pet-VGS-5 White pf at 10 Tr912116 at22-23 (Munay)
25 VGS and the Department represent that the RNG progriquestun is responsive to the
Commissions condition in its Order in Docket 7970 rcquiring VGS to develop a proposal to
promote bio-methane project development Murray supp pf al 13-14tr912116 at 63 (Vhite)
26 VGS asserts that the RNG program represents appropriate progress toward the Vermont
Comprehensive Energy Plan (CEP) goal to meet90o of Vermonts energy needs through
renewable sources by 2050 Murray supp pf at 12-13
VI DlscussroN iexclxu Coxclustox
Vith this proposal for decision I recommend that the Commission approve the RNG
program in accordance with the findings described above and based upon the evidence in the
Docket No 8667 Page 9
record In Docket 7970 the Commission required VGS in consultation with the Department to
file a petition with the [Commission] proposing a program to promote bio-methane project
development It is reasonable to expectthat aprogram meant to stimulate development of a
specific energy source would look to stimulate demand for that resource by offering an
opportunity for customers to purchase supply from RNG producers
The RNG program proposed by VGS and supported by the Department seeks to offer
ratepayers the option to purchase renewable energy as part of their individual energy-use
portfolio Furthermore the program includes a provision requiring that VGS develop a detailed
marketing plan that will serve to educate customers on the availability costs and benefits of
such resources which could lead to increased demand for the product
VGS intends to take advantage of the existing market for RINs associated with RNG used
as transportation fuel by proposing a Renewable Vehicle Fuel Tariff As described above in the
Public Comments section the Chittenden County Transportation Authority and Casella Vaste
Systems are interested in exploring the use of RNG to fuel their vehicle fleets which
demonstrates that there is existing customer demand for this product
Unlike the markets relating to RNG supply used for transportation fuel or renewable
electric generation and the associated trading and verification of RECs the RNG market is in its
infancy At this time it would not be appropriate to expect VGS to implement an RNG program
utilizing an RNG content standard similar to the electric renewable portfolio standard as
recommended by CLF because the equivalent standards and processes do not exist However
the RNG program represents a meaningful first step in encouraging customer interest in
purchasing RNG at retail thereby stimulating supply of RNG into the market and is consistent
with the Commissions condition requiring VGS to develop a proposal to promote bio-methane
project development
VGSs RNG program includes appropriate mechanisms for periodic reporting and
verification of program activities as well as an opportunity to comprehensively review the
program after three years of implementation Furthermore determinations regarding recovery of
costs associated with the RNG program will be made in the context of future proceedings
regarding VGSs rates The RNG program should evolve with the RNG markets in the near-term
and over the course of the next several years which will allow progress towards achievement of
Vermonts 2050 CEP renewable energy goals
Docket No 8667 Page 10
Because not all parties to this proceeding have waived their rights under 3 VSA $ 811
to file written comments or present oral argument with respect to this proposal for decision I am
circulating the proposal for decision to the parties for their review and comment
Dated at Montpelier Vermont this rrtl day of QrIltt 2017a0AndreaHearing Officer
Docket No 8667 Page 11
VII Corumrssron Drscussrox
On August 22017 the Department filed a letter stating that it supports the issuance of an
Order by the Commission that adopts the proposal for decision in full
Also on August 22017 VGS filed comments on the proposal for decision requesting
that Finding 16 be modified as follows (additional text in italics) If RNG supply exceeds
customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary
flow any remaining RNG attribute inventory amounts through the PGA or through a rate case ifVGS was under traditional cost of service regulation (subject to [Commission] approval)
VGS asserts that [a]bsent such specific language it is possible that VGS would be unable [to]
defer such costs for future recovery and that removal of that component introduces uncertainty
about the potential procedural mechanisms available for cost recovery in the last resort VGS
states that with the Commissions consideraacutetion of this request it does not request oral argument
No other comments were filed on the proposal for decision
The Hearing Officer recommended that the Commission find that determinations
regarding recovery of costs associated with the RNG program will be made in the context of
future proceedings regarding VGSs rates We agree with this recommendation VGS should
have an opportunity to request rate recovery for excess RNG supply However this proceeding
is not the proper time for such a determination Accordingly Finding 16 is hereby modified as
follows If RNG supply exceeds customer demand VGS would first seek to sell the excess
RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any
remaining RNG attribute inventory amounts through the PGA or through arate case as part of
its cost of service if the PGA is no longer in effect atthat timeWe emphasize the importance of the successful implementation of the RNG program in
helping to meet the States renewable energy policy objectives The annual report on the
implementation of the RNG program will serve as a valuable tool to assess that progress In this
proceeding CLF has raised policy considerations that should serve to guide these future reviews
of the RNG program For example CLF has raised concerns regarding the effectiveness of the
voluntary nature of the program In assessing its program we expect VGS to revisit and report
on the feasibility of incorporating RNG as a portion of its supply mix in the future It is
important for VGSs RNG program to be sustainable and continue to evolve ensuring significant
DocketNo8667 Page 12
contributions toward meeting the States renewable energy goals and reducing the consumption
of fossil fuel Accordingly it is critical that the annual report and the three-year comprehensive
review address not only the effectiveness of the program but also its affordability and the
feasibility of other policy options to advance the production and use of RNG in Vermont
Docket No 8667 Page 13
VIII Onunn
Ir rs Hennsy oRDERED ADJUDGED AND DECRnnn by the Public Utility Commission of the
State of Vermont that
1 The findings conclusions and recommendations of the Hearing Officer are
adopted and the Renewable Natural Gas (RNG) program to be implemented by Vermont Gas
SystemsInc (VGS) is approved
2 When VGS has procured RNG supply in amounts reasonably estimated to be
sufficient for estimated customer demand it shall file a formal tariff including proposed rates for
sale of RNG The tariff shall be reviewedpursuantto the procedures of 30 VSA ccedilccedil225226
and227 and sales under the program shall begin after Commission approval of the tariff
3 VGS shall develop and file for Commission approval a separate Renewable
Vehicle Fuel Tariff to serve customers using RNG as a transportation fuel
4 VGS shall file a marketing plan for the RNG program consistent with the
requirements set forth above within one month of the issuance of this Order
5 VGS shall file an annual report consistent with the requirements set forth above
upon implementation of the RNG program
6 VGS shall file a comprehensive review of the performance of the program with
the Commission and the Department after three years of implementation This review will
include an environmental accounting protocol to quantiff the environmental benefits of the
progrfim
7 VGS shall review proposed RNG supply arrangements with the Department
Docket No 8667
Orprcp oF THE Crnm
Dated at Montpelier Vermont this day of+hb
Z Roisman
Cheney
Page 14
20t7
Puslrc Urrlnv
CovtriquestIssIoN
OP VERMONT
(
)))
)))
Fired otildeeglcL ( JotTAttest c
of the Commission
NorIcE To READERS This decision is subject to revision oftechnical errors Reqders are requested tonotify the Clerk of the Commission (by e-mail telephone or inwriting) or any appqrent errors in order that anynecessary corrections may be made (E-mail address pucclerkvermontgov)
Appeal of this decision to the Supreme Court of Vermont must befiledwith the Clerk of the Comnissionwithin thirty days Appeal will not stay the efect of thszlig Order absentfurther order by this Commission orappropriate actiacuteon by the Supreme Court of Vermont Motions for reconsideration or stay if any must be filed withthe Clerk of the Commissionwithin ten days of the date of this deciacutesion and Order
Exhibit 22 VGS RNG Tariff Rate Filing
Exhibit 23 PUC Approval of VGS RNG Rates
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Case No l8-03 13-TF
Petition of Vermont Gas Systems Inc fotapproval of a new tariff implementing theRenewable Natural Gas program
Order entered
OnonRAppnovINc Tiquestrurn
On January 302018 Vermont Gas Systems Inc (VGS) filed a petition for approval of
a new tariff implementing the Renewable Natural Gas (RNG) program approved by the
Vermont Public Utility Commission (Commission) in Docket No 8667 In that Docket the
Commission required VGS to file a tariff implementing the RNG program when it has procured
RNG supply in amounts reasonably estimated to be sufficient to meet customer demandl In
this Order the Commission approves the new tariff marketed under the name EcoGas with an
effective date of bills rendered on and after March 15 2018
VGS states that it has executed an RNG supply contract with deliveries scheduled for
2018 and that two additional contracts are being negotiated for deliveries beginningin2019
VGS is proposing to set its initial RNG adder at$ll749lCcf which represents a five-year
blended rate based on the three RNG supply arrangements VGS intends to account for the
difference between the cost of RNG supply and the RNG adder as a regulatory asset within gas
costs As additional lower-cost supply is added to the portfolio the regulatory asset balance will
be recovered from EcoGas participants with the goal of fully reducing the balance by the end of
five years Accordingly VGS states that the RNG program will be rate-neutral to VGS and its
non-RNG customers
On February 272018 the Vermont Department of Public Service (Department) filed a
letter recommending that the Commission approve the tariff without a hearing or further
investigation The Department states that the tariff filing and proposed accounting treatment
comply with Vermont rate-setting practices policies precedents and statutes
lslaotx
I Docket 8667 Order of 96117 at 13
Page2Case No 18-0313-TF
Based on the foregoing we hereby approve VGSs proposed RNG tariff to be effective
on a bills-rendered basis beginning on March 15 2018 Recovery of any regulatory asset
balance at the end of the fifth year would need to be approved by the Commission in a future
proceeding
So Omnnnn
Case No l8-0313-TF
8r- day of lruacuterLiquestiquest
Page 3
Dated at Montpelier Vermont this 2018
Roisman PueIrc Urlrrv
CoiriexcllriquestlssloN
Cheney
OF VERMONT
Sarah Hofmann
Onncp oF THE CLBRr
Filed huacuteveuroAacute- icirc dollAttest I
Clerk of the Commission
Notice to Readers This decision is subiect to revision oftechnical errors Readers are requested to notify
the Clerk of the Commission (by e-mail telephone or in writing) or qny qpparent errors in order that any
necessary corrections may be made (E-mail address pucclerkvermontgov)Appeal of this decisiacuteon to the Supreme Court of Yermont must be filed with the Clerk of the Commission
within 30 days Appeal will not stay the efect of this Order oslashbsent further order by this Commission or appropriate
action by the Supreme Court of Vermont Motionsthornr reconsideration or stay if any must befiledwith the Clerk ofthe Commissionwithin 28 doslashys of the date of this decision and Order
)))
))))
PUC Case No 18-0313-TF
Eileen SimollardesLauren HammerVermont Gas
85 Swift StreetSouth Burlington VT 05403
June E Tiemey CommissionerVermont Department of Public Service1 12 State StreetMontpelier VT 05620 -2601
Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
Exhibit 31 Accounting Procedures
Exhibit 31 Accounting for VGS Renewable Natural Gas (Ver-9202019)
1 Purchase of RNG Supply
RNG supply purchases are separated into the cost of the commodity and the cost of the renewable attribute The commodity portion is expensed to gas costs in the delivery month while the renewable attribute is booked to an inventory account referenced herein as the ldquoRenewable Inventory Accountrdquo Like VGSrsquo existing storage inventory accounting the Renewable Inventory Account will track both the dollar value of the renewable attribute and the renewable attribute Mcfs Renewable attribute dollar values are record to ldquo16410050 Inventory RNG Storagerdquo while Mcf values are recorded in the gas cost model maintained by accounting In the month VGS purchases the renewable attribute it is accrued in a book model and goes in to 16410150 Inventory RNG Accrued then moves to the 16410050 in a final model the following month for final
RNG may be purchased at different locations and using varying pricing structures While the accounting for RNG does not vary with the purchase location or price the determination of the value of the renewable attribute will vary depending on whether or not the supply pricing expressly values the renewable attribute as an adder or it is embedded in a fixed price Examples of each are shown below The accounting of RNG supply is intended to separate the cost of the renewable attribute from the cost of the commodity The examples below are not all inclusive of what may occur but intended to show the accounting procedures used to separate the renewable attribute from the commodity and specify ownership of each aspect
In all cases the commodity cost portion - which is the total cost of the RNG purchased excluding the renewable attribute - will be expensed in the delivery month as a cost of gas
Example 1 ndash The fixed price of RNG includes both the commodity and the renewable attribute
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The total cost of the RNG supply purchased during the month is calculated by Accounting within the gas cost model as follows
MMBtu Purchased (as validated in step 2) $ MMBtu purchase price (as provided in a supply confirmation provided by gas supply)
4 For purposes of booking the renewable attribute to inventory it is necessary to calculate the RNG cost per Mcf The RNG cost Mcf is calculated using the total cost of RNG supply as calculated in step 3 divided by the Mcf in step 1
5 The renewable attribute price per Mcf is calculated as follows
RNG cost per Mcf as determined in step 4 ndashplus ldquoother componentsrdquo as calculated pursuant to Attachment A ndash minus ldquoAverage Commodity Costrdquo as calculated pursuant to Attachment A The ldquoother componentsrdquo added to the RNG cost per Mcf will vary depending on where the RNG supply was delivered but in each case will be identified in the calculation shown on Attachment A
6 The renewable attribute price per Mcf the total RNG Mcf delivered is recorded in the Inventory RNG Storage account
7 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
Example 2 - RNG purchased at a renewable attribute price plus a daily or monthly index
Where the pricing of RNG specifically separates the commodity from the renewable attribute the renewable attribute price will be what is recorded in the Renewable Inventory Account
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The renewable attribute price per Mcf the total RNG Mcf delivered as determined in step 1 is recorded in the Renewable Inventory Account
4 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
2 Recalculating the RNG Adder
The RNG Adder paid by customers will be recalculated anytime the Natural Gas charge portion of rates changes The Manager of Gas SupplyGas control is responsible for recalculating the RNG Adder The calculation will be verified and approved by the Vice President ndash Regulatory Affairs The determination of the RNG Adder will be pursuant to the methodology shown in Attachment A The Regulatory Department will prepare the amended RNG Adder tariff for filing with the PUC Upon PUC approval of the RNG Adder the Regulatory Department will prepare a memorandum advising Accounting and Gas Supply of the new RNG Adder as approved
3 Customer purchases VGS Renewable Natural Gas
The RNG Adder at the percent selected by the customer will be applied to the entire monthrsquos usage on the customersrsquo next bill For customers utilizing the S-RNG adder the entire volume elected with be on the customersrsquo next bill The S-RNG Adder nor the RNG Adder and percentage selected will not be prorated based on enrollment or termination date
Customers may terminate or modify their RNG selection upon 3 dayrsquos notice to VGS The termination or modification will be effective on the customerrsquos next monthly bill
The customerrsquos usage for the month will be multiplied by the percentage and the approved RNG Adder For customers utilizing the S-RNG adder the volume elected will be multiplied by the approved RNG adder This amount will then be recorded to SAP accounts 4010015-40010021 depending on which rate class the customer is in The RNG Adder is the same regardless of which rate class a customer is in At the end of the month a report is run by billing from the customer information system that shows total usage and which percentage of RNG the customer has signed up for to calculate the number of MCFrsquos of renewable attribute sold during the billing period Billing also provides a report of the volumes sold through the S-RNG Tarriff The Inventory RNG Storage account maintained within the gas cost model by Accounting is reduced by these Mcf The MCFrsquos are then multiplied by the RNG Adder in effect for the billing month and an entry is made to remove that dollar amount from the Inventory RNG Storage account and into the monthly cost of gas The intent of this transaction is to ensure that cost of the renewable attribute is reflected in the cost of gas in the month it is purchased by the customer This results in a matching of the renewable attribute revenue and expense
The RNG Adder revenue and renewable attributes removed from storage will be included in the gas cost deferral calculation However because there is a matching of the renewable attribute revenue and expense the impact on the deferral calculation will be zero
The calculation of unbilled revenues will exclude RNG as a customer can cancel their participation prior to their next bill
In the event Vermont Gas issues a credit to a customer related to the RNG program the value of the renewable attribute credited and the associated Mcf will not be applied to the Renewable Inventory Account
4 Controls
A spreadsheet is maintained by accounting that shows the MCFrsquos and dollar values of the Renewable Inventory Account This is reconciled monthly by the accounting team and will be reviewed by the Manager Gas SupplyGas Control
Accounting will validate that the amount removed from the Renewable Inventory Account matches the RNG Adder revenue Any discrepancies will be reviewed and corrected
A report will be run for each bill cycle that shows any changes to the RNG percentages selected this will include customers opting to withdraw from the RNG program The customer care team will validate any changes against customer confirmation paperwork
5 Renewable Inventory Account Reconciliation and Forecast
The PUC Order approving the RNG program contains provisions describing how RNG supply and demand imbalances will be addressed These provisions and how VGS will track and comply with them are as discussed in this section The PUC Order approving the RNG Program provides that if the available RNG supply during the previous 12 months is less than the amount purchased by customers VGS may use the funds collected to purchase carbon offsets (Finding 13) If carbon offset are not available VGS will contribute the RNG program revenues to the Clean Energy Development Fund or issue prorated credits to affected customers (Finding 15) The Order also provides that in the event RNG supply exceeds customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any remaining RNG attribute inventory amounts through the PGA or through a rate case as part of its cost of service if the s PGA is no longer in effect at that time (Finding 16 as modified) Finding 11 provides that VGS will use a ldquotrue-uprdquo period of up to 12 months in order to balance the difference between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply) Taken together these provisions require VGS to evaluate the imbalance after 12-months and then true-up the imbalance over the next twelve months To provide a forecast of the supplydemand imbalance quarterly the billing area will run a report showing the expected RNG volumes based on current customer commitments by month for the next 12-months Current customers commitments will be calculated based on the previous 12 months of usage multiplied by the RNG percentage currently signed up for The marketing department will provide their forecast of new RNG sales for the next 12-months Both will be provided to the Manager Gas SupplyGas Control The Manager Gas SupplyGas Control will compare the forecasted RNG sales known and expected to RNG supply commitments and provide a 24-month forecast of the supplydemand balance The supplydemand balance will be reviewed at the risk management meeting The strategy for addressing the imbalance consistent with the PUC order will be determined by the risk management committee
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
Docket No 8667 PageT
20 VGS will file an annual report on the RNG program with the Commission and the
Department containing the following information
1 Number of subscribers by customer class
2 Sales volume by customer class
3 Sales revenues
4 Any sales or purchases of carbon offsets
5 Supplyconsumption matching portfolio including any shortfall or excess
supply of RNG
6 True-up schedule for any imbalances
7 RNG supply verification
8 Quantification of the impact of any excess RNG costs flowing through the
PGA if VGS remains under altemative regulation
9 Accounting of any carbon ofszligets or other incentives
10 Status of any contracts for RNG including plans to acquire new supply
contracts
I 1 Revenue from Renewable Identification Number (RlN) sales and impact
on the transport tariff as well as any projections about the RIN market that are
available to VGS and
12 Complete reports and environmental verifications by an independent
verifier
Murray supp pf at 11 exh Pet-VGS-3 White pf at 8-9 tr912116 at23-24 (Munay)
21 Except as described below concerning RlN-eligible RNG VGS will annually verify that
the RNG was produced by a renewable gas production facility that VGS is the exclusive oryner
of any environmental attributes associated with RNG it sells under the program that it acquired
the RNG from its transferor and sold itatretail and that neither the RNG nor any renewable
attribute associated with the RNG has been sold twice at any point between RNG production and
sale to VGS whether by sales into carbon offset markets or otherwise This verification will be
based on certifications by VGSs suppliers and by an independent third party retained by VGS
for this purpose Exh Pet-VGS-3 exh Pet-VGS-s Response 5 White pf at 8
Docket No 8667 Page I
22 For RlN-eligible RNG used as vehicle fuel verification will be addressed in detail in the
future as part of VGSs proposed Renewable Vehicle Fuel Tariff Exh Pet VGS-5 Response 4
rr912116 at 65 (White)
23 There are few natural gas utilities currently offering RNG at retail VGS modeled its
RNG program after the program designed by FortisBC a local distribution company in British
Columbia Canada VGS also had discussions with SoCalGas in Southern California Both of
these companies are leaders in developing RNG offerings and fostering RNG supply resources
Murray supp pf at 7
24 VGS will file with the Commission and Department a marketing plan containing the
following elements
l An evaluation element that includes concrete metrics such as sales
volume targets and enrollment targets
2 Identification of target market segment(s)
3 Development of materials and language for customer-marketing efforts
that explain the RNG program in plain language easily understandable to the
average customer
4 An online bill calculator
5 An implementation plan that identifies specific activities and a timetable
and
6 Abudget
Exh Pet-VGS-5 White pf at 10 Tr912116 at22-23 (Munay)
25 VGS and the Department represent that the RNG progriquestun is responsive to the
Commissions condition in its Order in Docket 7970 rcquiring VGS to develop a proposal to
promote bio-methane project development Murray supp pf al 13-14tr912116 at 63 (Vhite)
26 VGS asserts that the RNG program represents appropriate progress toward the Vermont
Comprehensive Energy Plan (CEP) goal to meet90o of Vermonts energy needs through
renewable sources by 2050 Murray supp pf at 12-13
VI DlscussroN iexclxu Coxclustox
Vith this proposal for decision I recommend that the Commission approve the RNG
program in accordance with the findings described above and based upon the evidence in the
Docket No 8667 Page 9
record In Docket 7970 the Commission required VGS in consultation with the Department to
file a petition with the [Commission] proposing a program to promote bio-methane project
development It is reasonable to expectthat aprogram meant to stimulate development of a
specific energy source would look to stimulate demand for that resource by offering an
opportunity for customers to purchase supply from RNG producers
The RNG program proposed by VGS and supported by the Department seeks to offer
ratepayers the option to purchase renewable energy as part of their individual energy-use
portfolio Furthermore the program includes a provision requiring that VGS develop a detailed
marketing plan that will serve to educate customers on the availability costs and benefits of
such resources which could lead to increased demand for the product
VGS intends to take advantage of the existing market for RINs associated with RNG used
as transportation fuel by proposing a Renewable Vehicle Fuel Tariff As described above in the
Public Comments section the Chittenden County Transportation Authority and Casella Vaste
Systems are interested in exploring the use of RNG to fuel their vehicle fleets which
demonstrates that there is existing customer demand for this product
Unlike the markets relating to RNG supply used for transportation fuel or renewable
electric generation and the associated trading and verification of RECs the RNG market is in its
infancy At this time it would not be appropriate to expect VGS to implement an RNG program
utilizing an RNG content standard similar to the electric renewable portfolio standard as
recommended by CLF because the equivalent standards and processes do not exist However
the RNG program represents a meaningful first step in encouraging customer interest in
purchasing RNG at retail thereby stimulating supply of RNG into the market and is consistent
with the Commissions condition requiring VGS to develop a proposal to promote bio-methane
project development
VGSs RNG program includes appropriate mechanisms for periodic reporting and
verification of program activities as well as an opportunity to comprehensively review the
program after three years of implementation Furthermore determinations regarding recovery of
costs associated with the RNG program will be made in the context of future proceedings
regarding VGSs rates The RNG program should evolve with the RNG markets in the near-term
and over the course of the next several years which will allow progress towards achievement of
Vermonts 2050 CEP renewable energy goals
Docket No 8667 Page 10
Because not all parties to this proceeding have waived their rights under 3 VSA $ 811
to file written comments or present oral argument with respect to this proposal for decision I am
circulating the proposal for decision to the parties for their review and comment
Dated at Montpelier Vermont this rrtl day of QrIltt 2017a0AndreaHearing Officer
Docket No 8667 Page 11
VII Corumrssron Drscussrox
On August 22017 the Department filed a letter stating that it supports the issuance of an
Order by the Commission that adopts the proposal for decision in full
Also on August 22017 VGS filed comments on the proposal for decision requesting
that Finding 16 be modified as follows (additional text in italics) If RNG supply exceeds
customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary
flow any remaining RNG attribute inventory amounts through the PGA or through a rate case ifVGS was under traditional cost of service regulation (subject to [Commission] approval)
VGS asserts that [a]bsent such specific language it is possible that VGS would be unable [to]
defer such costs for future recovery and that removal of that component introduces uncertainty
about the potential procedural mechanisms available for cost recovery in the last resort VGS
states that with the Commissions consideraacutetion of this request it does not request oral argument
No other comments were filed on the proposal for decision
The Hearing Officer recommended that the Commission find that determinations
regarding recovery of costs associated with the RNG program will be made in the context of
future proceedings regarding VGSs rates We agree with this recommendation VGS should
have an opportunity to request rate recovery for excess RNG supply However this proceeding
is not the proper time for such a determination Accordingly Finding 16 is hereby modified as
follows If RNG supply exceeds customer demand VGS would first seek to sell the excess
RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any
remaining RNG attribute inventory amounts through the PGA or through arate case as part of
its cost of service if the PGA is no longer in effect atthat timeWe emphasize the importance of the successful implementation of the RNG program in
helping to meet the States renewable energy policy objectives The annual report on the
implementation of the RNG program will serve as a valuable tool to assess that progress In this
proceeding CLF has raised policy considerations that should serve to guide these future reviews
of the RNG program For example CLF has raised concerns regarding the effectiveness of the
voluntary nature of the program In assessing its program we expect VGS to revisit and report
on the feasibility of incorporating RNG as a portion of its supply mix in the future It is
important for VGSs RNG program to be sustainable and continue to evolve ensuring significant
DocketNo8667 Page 12
contributions toward meeting the States renewable energy goals and reducing the consumption
of fossil fuel Accordingly it is critical that the annual report and the three-year comprehensive
review address not only the effectiveness of the program but also its affordability and the
feasibility of other policy options to advance the production and use of RNG in Vermont
Docket No 8667 Page 13
VIII Onunn
Ir rs Hennsy oRDERED ADJUDGED AND DECRnnn by the Public Utility Commission of the
State of Vermont that
1 The findings conclusions and recommendations of the Hearing Officer are
adopted and the Renewable Natural Gas (RNG) program to be implemented by Vermont Gas
SystemsInc (VGS) is approved
2 When VGS has procured RNG supply in amounts reasonably estimated to be
sufficient for estimated customer demand it shall file a formal tariff including proposed rates for
sale of RNG The tariff shall be reviewedpursuantto the procedures of 30 VSA ccedilccedil225226
and227 and sales under the program shall begin after Commission approval of the tariff
3 VGS shall develop and file for Commission approval a separate Renewable
Vehicle Fuel Tariff to serve customers using RNG as a transportation fuel
4 VGS shall file a marketing plan for the RNG program consistent with the
requirements set forth above within one month of the issuance of this Order
5 VGS shall file an annual report consistent with the requirements set forth above
upon implementation of the RNG program
6 VGS shall file a comprehensive review of the performance of the program with
the Commission and the Department after three years of implementation This review will
include an environmental accounting protocol to quantiff the environmental benefits of the
progrfim
7 VGS shall review proposed RNG supply arrangements with the Department
Docket No 8667
Orprcp oF THE Crnm
Dated at Montpelier Vermont this day of+hb
Z Roisman
Cheney
Page 14
20t7
Puslrc Urrlnv
CovtriquestIssIoN
OP VERMONT
(
)))
)))
Fired otildeeglcL ( JotTAttest c
of the Commission
NorIcE To READERS This decision is subject to revision oftechnical errors Reqders are requested tonotify the Clerk of the Commission (by e-mail telephone or inwriting) or any appqrent errors in order that anynecessary corrections may be made (E-mail address pucclerkvermontgov)
Appeal of this decision to the Supreme Court of Vermont must befiledwith the Clerk of the Comnissionwithin thirty days Appeal will not stay the efect of thszlig Order absentfurther order by this Commission orappropriate actiacuteon by the Supreme Court of Vermont Motions for reconsideration or stay if any must be filed withthe Clerk of the Commissionwithin ten days of the date of this deciacutesion and Order
Exhibit 22 VGS RNG Tariff Rate Filing
Exhibit 23 PUC Approval of VGS RNG Rates
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Case No l8-03 13-TF
Petition of Vermont Gas Systems Inc fotapproval of a new tariff implementing theRenewable Natural Gas program
Order entered
OnonRAppnovINc Tiquestrurn
On January 302018 Vermont Gas Systems Inc (VGS) filed a petition for approval of
a new tariff implementing the Renewable Natural Gas (RNG) program approved by the
Vermont Public Utility Commission (Commission) in Docket No 8667 In that Docket the
Commission required VGS to file a tariff implementing the RNG program when it has procured
RNG supply in amounts reasonably estimated to be sufficient to meet customer demandl In
this Order the Commission approves the new tariff marketed under the name EcoGas with an
effective date of bills rendered on and after March 15 2018
VGS states that it has executed an RNG supply contract with deliveries scheduled for
2018 and that two additional contracts are being negotiated for deliveries beginningin2019
VGS is proposing to set its initial RNG adder at$ll749lCcf which represents a five-year
blended rate based on the three RNG supply arrangements VGS intends to account for the
difference between the cost of RNG supply and the RNG adder as a regulatory asset within gas
costs As additional lower-cost supply is added to the portfolio the regulatory asset balance will
be recovered from EcoGas participants with the goal of fully reducing the balance by the end of
five years Accordingly VGS states that the RNG program will be rate-neutral to VGS and its
non-RNG customers
On February 272018 the Vermont Department of Public Service (Department) filed a
letter recommending that the Commission approve the tariff without a hearing or further
investigation The Department states that the tariff filing and proposed accounting treatment
comply with Vermont rate-setting practices policies precedents and statutes
lslaotx
I Docket 8667 Order of 96117 at 13
Page2Case No 18-0313-TF
Based on the foregoing we hereby approve VGSs proposed RNG tariff to be effective
on a bills-rendered basis beginning on March 15 2018 Recovery of any regulatory asset
balance at the end of the fifth year would need to be approved by the Commission in a future
proceeding
So Omnnnn
Case No l8-0313-TF
8r- day of lruacuterLiquestiquest
Page 3
Dated at Montpelier Vermont this 2018
Roisman PueIrc Urlrrv
CoiriexcllriquestlssloN
Cheney
OF VERMONT
Sarah Hofmann
Onncp oF THE CLBRr
Filed huacuteveuroAacute- icirc dollAttest I
Clerk of the Commission
Notice to Readers This decision is subiect to revision oftechnical errors Readers are requested to notify
the Clerk of the Commission (by e-mail telephone or in writing) or qny qpparent errors in order that any
necessary corrections may be made (E-mail address pucclerkvermontgov)Appeal of this decisiacuteon to the Supreme Court of Yermont must be filed with the Clerk of the Commission
within 30 days Appeal will not stay the efect of this Order oslashbsent further order by this Commission or appropriate
action by the Supreme Court of Vermont Motionsthornr reconsideration or stay if any must befiledwith the Clerk ofthe Commissionwithin 28 doslashys of the date of this decision and Order
)))
))))
PUC Case No 18-0313-TF
Eileen SimollardesLauren HammerVermont Gas
85 Swift StreetSouth Burlington VT 05403
June E Tiemey CommissionerVermont Department of Public Service1 12 State StreetMontpelier VT 05620 -2601
Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
Exhibit 31 Accounting Procedures
Exhibit 31 Accounting for VGS Renewable Natural Gas (Ver-9202019)
1 Purchase of RNG Supply
RNG supply purchases are separated into the cost of the commodity and the cost of the renewable attribute The commodity portion is expensed to gas costs in the delivery month while the renewable attribute is booked to an inventory account referenced herein as the ldquoRenewable Inventory Accountrdquo Like VGSrsquo existing storage inventory accounting the Renewable Inventory Account will track both the dollar value of the renewable attribute and the renewable attribute Mcfs Renewable attribute dollar values are record to ldquo16410050 Inventory RNG Storagerdquo while Mcf values are recorded in the gas cost model maintained by accounting In the month VGS purchases the renewable attribute it is accrued in a book model and goes in to 16410150 Inventory RNG Accrued then moves to the 16410050 in a final model the following month for final
RNG may be purchased at different locations and using varying pricing structures While the accounting for RNG does not vary with the purchase location or price the determination of the value of the renewable attribute will vary depending on whether or not the supply pricing expressly values the renewable attribute as an adder or it is embedded in a fixed price Examples of each are shown below The accounting of RNG supply is intended to separate the cost of the renewable attribute from the cost of the commodity The examples below are not all inclusive of what may occur but intended to show the accounting procedures used to separate the renewable attribute from the commodity and specify ownership of each aspect
In all cases the commodity cost portion - which is the total cost of the RNG purchased excluding the renewable attribute - will be expensed in the delivery month as a cost of gas
Example 1 ndash The fixed price of RNG includes both the commodity and the renewable attribute
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The total cost of the RNG supply purchased during the month is calculated by Accounting within the gas cost model as follows
MMBtu Purchased (as validated in step 2) $ MMBtu purchase price (as provided in a supply confirmation provided by gas supply)
4 For purposes of booking the renewable attribute to inventory it is necessary to calculate the RNG cost per Mcf The RNG cost Mcf is calculated using the total cost of RNG supply as calculated in step 3 divided by the Mcf in step 1
5 The renewable attribute price per Mcf is calculated as follows
RNG cost per Mcf as determined in step 4 ndashplus ldquoother componentsrdquo as calculated pursuant to Attachment A ndash minus ldquoAverage Commodity Costrdquo as calculated pursuant to Attachment A The ldquoother componentsrdquo added to the RNG cost per Mcf will vary depending on where the RNG supply was delivered but in each case will be identified in the calculation shown on Attachment A
6 The renewable attribute price per Mcf the total RNG Mcf delivered is recorded in the Inventory RNG Storage account
7 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
Example 2 - RNG purchased at a renewable attribute price plus a daily or monthly index
Where the pricing of RNG specifically separates the commodity from the renewable attribute the renewable attribute price will be what is recorded in the Renewable Inventory Account
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The renewable attribute price per Mcf the total RNG Mcf delivered as determined in step 1 is recorded in the Renewable Inventory Account
4 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
2 Recalculating the RNG Adder
The RNG Adder paid by customers will be recalculated anytime the Natural Gas charge portion of rates changes The Manager of Gas SupplyGas control is responsible for recalculating the RNG Adder The calculation will be verified and approved by the Vice President ndash Regulatory Affairs The determination of the RNG Adder will be pursuant to the methodology shown in Attachment A The Regulatory Department will prepare the amended RNG Adder tariff for filing with the PUC Upon PUC approval of the RNG Adder the Regulatory Department will prepare a memorandum advising Accounting and Gas Supply of the new RNG Adder as approved
3 Customer purchases VGS Renewable Natural Gas
The RNG Adder at the percent selected by the customer will be applied to the entire monthrsquos usage on the customersrsquo next bill For customers utilizing the S-RNG adder the entire volume elected with be on the customersrsquo next bill The S-RNG Adder nor the RNG Adder and percentage selected will not be prorated based on enrollment or termination date
Customers may terminate or modify their RNG selection upon 3 dayrsquos notice to VGS The termination or modification will be effective on the customerrsquos next monthly bill
The customerrsquos usage for the month will be multiplied by the percentage and the approved RNG Adder For customers utilizing the S-RNG adder the volume elected will be multiplied by the approved RNG adder This amount will then be recorded to SAP accounts 4010015-40010021 depending on which rate class the customer is in The RNG Adder is the same regardless of which rate class a customer is in At the end of the month a report is run by billing from the customer information system that shows total usage and which percentage of RNG the customer has signed up for to calculate the number of MCFrsquos of renewable attribute sold during the billing period Billing also provides a report of the volumes sold through the S-RNG Tarriff The Inventory RNG Storage account maintained within the gas cost model by Accounting is reduced by these Mcf The MCFrsquos are then multiplied by the RNG Adder in effect for the billing month and an entry is made to remove that dollar amount from the Inventory RNG Storage account and into the monthly cost of gas The intent of this transaction is to ensure that cost of the renewable attribute is reflected in the cost of gas in the month it is purchased by the customer This results in a matching of the renewable attribute revenue and expense
The RNG Adder revenue and renewable attributes removed from storage will be included in the gas cost deferral calculation However because there is a matching of the renewable attribute revenue and expense the impact on the deferral calculation will be zero
The calculation of unbilled revenues will exclude RNG as a customer can cancel their participation prior to their next bill
In the event Vermont Gas issues a credit to a customer related to the RNG program the value of the renewable attribute credited and the associated Mcf will not be applied to the Renewable Inventory Account
4 Controls
A spreadsheet is maintained by accounting that shows the MCFrsquos and dollar values of the Renewable Inventory Account This is reconciled monthly by the accounting team and will be reviewed by the Manager Gas SupplyGas Control
Accounting will validate that the amount removed from the Renewable Inventory Account matches the RNG Adder revenue Any discrepancies will be reviewed and corrected
A report will be run for each bill cycle that shows any changes to the RNG percentages selected this will include customers opting to withdraw from the RNG program The customer care team will validate any changes against customer confirmation paperwork
5 Renewable Inventory Account Reconciliation and Forecast
The PUC Order approving the RNG program contains provisions describing how RNG supply and demand imbalances will be addressed These provisions and how VGS will track and comply with them are as discussed in this section The PUC Order approving the RNG Program provides that if the available RNG supply during the previous 12 months is less than the amount purchased by customers VGS may use the funds collected to purchase carbon offsets (Finding 13) If carbon offset are not available VGS will contribute the RNG program revenues to the Clean Energy Development Fund or issue prorated credits to affected customers (Finding 15) The Order also provides that in the event RNG supply exceeds customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any remaining RNG attribute inventory amounts through the PGA or through a rate case as part of its cost of service if the s PGA is no longer in effect at that time (Finding 16 as modified) Finding 11 provides that VGS will use a ldquotrue-uprdquo period of up to 12 months in order to balance the difference between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply) Taken together these provisions require VGS to evaluate the imbalance after 12-months and then true-up the imbalance over the next twelve months To provide a forecast of the supplydemand imbalance quarterly the billing area will run a report showing the expected RNG volumes based on current customer commitments by month for the next 12-months Current customers commitments will be calculated based on the previous 12 months of usage multiplied by the RNG percentage currently signed up for The marketing department will provide their forecast of new RNG sales for the next 12-months Both will be provided to the Manager Gas SupplyGas Control The Manager Gas SupplyGas Control will compare the forecasted RNG sales known and expected to RNG supply commitments and provide a 24-month forecast of the supplydemand balance The supplydemand balance will be reviewed at the risk management meeting The strategy for addressing the imbalance consistent with the PUC order will be determined by the risk management committee
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
Docket No 8667 Page I
22 For RlN-eligible RNG used as vehicle fuel verification will be addressed in detail in the
future as part of VGSs proposed Renewable Vehicle Fuel Tariff Exh Pet VGS-5 Response 4
rr912116 at 65 (White)
23 There are few natural gas utilities currently offering RNG at retail VGS modeled its
RNG program after the program designed by FortisBC a local distribution company in British
Columbia Canada VGS also had discussions with SoCalGas in Southern California Both of
these companies are leaders in developing RNG offerings and fostering RNG supply resources
Murray supp pf at 7
24 VGS will file with the Commission and Department a marketing plan containing the
following elements
l An evaluation element that includes concrete metrics such as sales
volume targets and enrollment targets
2 Identification of target market segment(s)
3 Development of materials and language for customer-marketing efforts
that explain the RNG program in plain language easily understandable to the
average customer
4 An online bill calculator
5 An implementation plan that identifies specific activities and a timetable
and
6 Abudget
Exh Pet-VGS-5 White pf at 10 Tr912116 at22-23 (Munay)
25 VGS and the Department represent that the RNG progriquestun is responsive to the
Commissions condition in its Order in Docket 7970 rcquiring VGS to develop a proposal to
promote bio-methane project development Murray supp pf al 13-14tr912116 at 63 (Vhite)
26 VGS asserts that the RNG program represents appropriate progress toward the Vermont
Comprehensive Energy Plan (CEP) goal to meet90o of Vermonts energy needs through
renewable sources by 2050 Murray supp pf at 12-13
VI DlscussroN iexclxu Coxclustox
Vith this proposal for decision I recommend that the Commission approve the RNG
program in accordance with the findings described above and based upon the evidence in the
Docket No 8667 Page 9
record In Docket 7970 the Commission required VGS in consultation with the Department to
file a petition with the [Commission] proposing a program to promote bio-methane project
development It is reasonable to expectthat aprogram meant to stimulate development of a
specific energy source would look to stimulate demand for that resource by offering an
opportunity for customers to purchase supply from RNG producers
The RNG program proposed by VGS and supported by the Department seeks to offer
ratepayers the option to purchase renewable energy as part of their individual energy-use
portfolio Furthermore the program includes a provision requiring that VGS develop a detailed
marketing plan that will serve to educate customers on the availability costs and benefits of
such resources which could lead to increased demand for the product
VGS intends to take advantage of the existing market for RINs associated with RNG used
as transportation fuel by proposing a Renewable Vehicle Fuel Tariff As described above in the
Public Comments section the Chittenden County Transportation Authority and Casella Vaste
Systems are interested in exploring the use of RNG to fuel their vehicle fleets which
demonstrates that there is existing customer demand for this product
Unlike the markets relating to RNG supply used for transportation fuel or renewable
electric generation and the associated trading and verification of RECs the RNG market is in its
infancy At this time it would not be appropriate to expect VGS to implement an RNG program
utilizing an RNG content standard similar to the electric renewable portfolio standard as
recommended by CLF because the equivalent standards and processes do not exist However
the RNG program represents a meaningful first step in encouraging customer interest in
purchasing RNG at retail thereby stimulating supply of RNG into the market and is consistent
with the Commissions condition requiring VGS to develop a proposal to promote bio-methane
project development
VGSs RNG program includes appropriate mechanisms for periodic reporting and
verification of program activities as well as an opportunity to comprehensively review the
program after three years of implementation Furthermore determinations regarding recovery of
costs associated with the RNG program will be made in the context of future proceedings
regarding VGSs rates The RNG program should evolve with the RNG markets in the near-term
and over the course of the next several years which will allow progress towards achievement of
Vermonts 2050 CEP renewable energy goals
Docket No 8667 Page 10
Because not all parties to this proceeding have waived their rights under 3 VSA $ 811
to file written comments or present oral argument with respect to this proposal for decision I am
circulating the proposal for decision to the parties for their review and comment
Dated at Montpelier Vermont this rrtl day of QrIltt 2017a0AndreaHearing Officer
Docket No 8667 Page 11
VII Corumrssron Drscussrox
On August 22017 the Department filed a letter stating that it supports the issuance of an
Order by the Commission that adopts the proposal for decision in full
Also on August 22017 VGS filed comments on the proposal for decision requesting
that Finding 16 be modified as follows (additional text in italics) If RNG supply exceeds
customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary
flow any remaining RNG attribute inventory amounts through the PGA or through a rate case ifVGS was under traditional cost of service regulation (subject to [Commission] approval)
VGS asserts that [a]bsent such specific language it is possible that VGS would be unable [to]
defer such costs for future recovery and that removal of that component introduces uncertainty
about the potential procedural mechanisms available for cost recovery in the last resort VGS
states that with the Commissions consideraacutetion of this request it does not request oral argument
No other comments were filed on the proposal for decision
The Hearing Officer recommended that the Commission find that determinations
regarding recovery of costs associated with the RNG program will be made in the context of
future proceedings regarding VGSs rates We agree with this recommendation VGS should
have an opportunity to request rate recovery for excess RNG supply However this proceeding
is not the proper time for such a determination Accordingly Finding 16 is hereby modified as
follows If RNG supply exceeds customer demand VGS would first seek to sell the excess
RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any
remaining RNG attribute inventory amounts through the PGA or through arate case as part of
its cost of service if the PGA is no longer in effect atthat timeWe emphasize the importance of the successful implementation of the RNG program in
helping to meet the States renewable energy policy objectives The annual report on the
implementation of the RNG program will serve as a valuable tool to assess that progress In this
proceeding CLF has raised policy considerations that should serve to guide these future reviews
of the RNG program For example CLF has raised concerns regarding the effectiveness of the
voluntary nature of the program In assessing its program we expect VGS to revisit and report
on the feasibility of incorporating RNG as a portion of its supply mix in the future It is
important for VGSs RNG program to be sustainable and continue to evolve ensuring significant
DocketNo8667 Page 12
contributions toward meeting the States renewable energy goals and reducing the consumption
of fossil fuel Accordingly it is critical that the annual report and the three-year comprehensive
review address not only the effectiveness of the program but also its affordability and the
feasibility of other policy options to advance the production and use of RNG in Vermont
Docket No 8667 Page 13
VIII Onunn
Ir rs Hennsy oRDERED ADJUDGED AND DECRnnn by the Public Utility Commission of the
State of Vermont that
1 The findings conclusions and recommendations of the Hearing Officer are
adopted and the Renewable Natural Gas (RNG) program to be implemented by Vermont Gas
SystemsInc (VGS) is approved
2 When VGS has procured RNG supply in amounts reasonably estimated to be
sufficient for estimated customer demand it shall file a formal tariff including proposed rates for
sale of RNG The tariff shall be reviewedpursuantto the procedures of 30 VSA ccedilccedil225226
and227 and sales under the program shall begin after Commission approval of the tariff
3 VGS shall develop and file for Commission approval a separate Renewable
Vehicle Fuel Tariff to serve customers using RNG as a transportation fuel
4 VGS shall file a marketing plan for the RNG program consistent with the
requirements set forth above within one month of the issuance of this Order
5 VGS shall file an annual report consistent with the requirements set forth above
upon implementation of the RNG program
6 VGS shall file a comprehensive review of the performance of the program with
the Commission and the Department after three years of implementation This review will
include an environmental accounting protocol to quantiff the environmental benefits of the
progrfim
7 VGS shall review proposed RNG supply arrangements with the Department
Docket No 8667
Orprcp oF THE Crnm
Dated at Montpelier Vermont this day of+hb
Z Roisman
Cheney
Page 14
20t7
Puslrc Urrlnv
CovtriquestIssIoN
OP VERMONT
(
)))
)))
Fired otildeeglcL ( JotTAttest c
of the Commission
NorIcE To READERS This decision is subject to revision oftechnical errors Reqders are requested tonotify the Clerk of the Commission (by e-mail telephone or inwriting) or any appqrent errors in order that anynecessary corrections may be made (E-mail address pucclerkvermontgov)
Appeal of this decision to the Supreme Court of Vermont must befiledwith the Clerk of the Comnissionwithin thirty days Appeal will not stay the efect of thszlig Order absentfurther order by this Commission orappropriate actiacuteon by the Supreme Court of Vermont Motions for reconsideration or stay if any must be filed withthe Clerk of the Commissionwithin ten days of the date of this deciacutesion and Order
Exhibit 22 VGS RNG Tariff Rate Filing
Exhibit 23 PUC Approval of VGS RNG Rates
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Case No l8-03 13-TF
Petition of Vermont Gas Systems Inc fotapproval of a new tariff implementing theRenewable Natural Gas program
Order entered
OnonRAppnovINc Tiquestrurn
On January 302018 Vermont Gas Systems Inc (VGS) filed a petition for approval of
a new tariff implementing the Renewable Natural Gas (RNG) program approved by the
Vermont Public Utility Commission (Commission) in Docket No 8667 In that Docket the
Commission required VGS to file a tariff implementing the RNG program when it has procured
RNG supply in amounts reasonably estimated to be sufficient to meet customer demandl In
this Order the Commission approves the new tariff marketed under the name EcoGas with an
effective date of bills rendered on and after March 15 2018
VGS states that it has executed an RNG supply contract with deliveries scheduled for
2018 and that two additional contracts are being negotiated for deliveries beginningin2019
VGS is proposing to set its initial RNG adder at$ll749lCcf which represents a five-year
blended rate based on the three RNG supply arrangements VGS intends to account for the
difference between the cost of RNG supply and the RNG adder as a regulatory asset within gas
costs As additional lower-cost supply is added to the portfolio the regulatory asset balance will
be recovered from EcoGas participants with the goal of fully reducing the balance by the end of
five years Accordingly VGS states that the RNG program will be rate-neutral to VGS and its
non-RNG customers
On February 272018 the Vermont Department of Public Service (Department) filed a
letter recommending that the Commission approve the tariff without a hearing or further
investigation The Department states that the tariff filing and proposed accounting treatment
comply with Vermont rate-setting practices policies precedents and statutes
lslaotx
I Docket 8667 Order of 96117 at 13
Page2Case No 18-0313-TF
Based on the foregoing we hereby approve VGSs proposed RNG tariff to be effective
on a bills-rendered basis beginning on March 15 2018 Recovery of any regulatory asset
balance at the end of the fifth year would need to be approved by the Commission in a future
proceeding
So Omnnnn
Case No l8-0313-TF
8r- day of lruacuterLiquestiquest
Page 3
Dated at Montpelier Vermont this 2018
Roisman PueIrc Urlrrv
CoiriexcllriquestlssloN
Cheney
OF VERMONT
Sarah Hofmann
Onncp oF THE CLBRr
Filed huacuteveuroAacute- icirc dollAttest I
Clerk of the Commission
Notice to Readers This decision is subiect to revision oftechnical errors Readers are requested to notify
the Clerk of the Commission (by e-mail telephone or in writing) or qny qpparent errors in order that any
necessary corrections may be made (E-mail address pucclerkvermontgov)Appeal of this decisiacuteon to the Supreme Court of Yermont must be filed with the Clerk of the Commission
within 30 days Appeal will not stay the efect of this Order oslashbsent further order by this Commission or appropriate
action by the Supreme Court of Vermont Motionsthornr reconsideration or stay if any must befiledwith the Clerk ofthe Commissionwithin 28 doslashys of the date of this decision and Order
)))
))))
PUC Case No 18-0313-TF
Eileen SimollardesLauren HammerVermont Gas
85 Swift StreetSouth Burlington VT 05403
June E Tiemey CommissionerVermont Department of Public Service1 12 State StreetMontpelier VT 05620 -2601
Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
Exhibit 31 Accounting Procedures
Exhibit 31 Accounting for VGS Renewable Natural Gas (Ver-9202019)
1 Purchase of RNG Supply
RNG supply purchases are separated into the cost of the commodity and the cost of the renewable attribute The commodity portion is expensed to gas costs in the delivery month while the renewable attribute is booked to an inventory account referenced herein as the ldquoRenewable Inventory Accountrdquo Like VGSrsquo existing storage inventory accounting the Renewable Inventory Account will track both the dollar value of the renewable attribute and the renewable attribute Mcfs Renewable attribute dollar values are record to ldquo16410050 Inventory RNG Storagerdquo while Mcf values are recorded in the gas cost model maintained by accounting In the month VGS purchases the renewable attribute it is accrued in a book model and goes in to 16410150 Inventory RNG Accrued then moves to the 16410050 in a final model the following month for final
RNG may be purchased at different locations and using varying pricing structures While the accounting for RNG does not vary with the purchase location or price the determination of the value of the renewable attribute will vary depending on whether or not the supply pricing expressly values the renewable attribute as an adder or it is embedded in a fixed price Examples of each are shown below The accounting of RNG supply is intended to separate the cost of the renewable attribute from the cost of the commodity The examples below are not all inclusive of what may occur but intended to show the accounting procedures used to separate the renewable attribute from the commodity and specify ownership of each aspect
In all cases the commodity cost portion - which is the total cost of the RNG purchased excluding the renewable attribute - will be expensed in the delivery month as a cost of gas
Example 1 ndash The fixed price of RNG includes both the commodity and the renewable attribute
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The total cost of the RNG supply purchased during the month is calculated by Accounting within the gas cost model as follows
MMBtu Purchased (as validated in step 2) $ MMBtu purchase price (as provided in a supply confirmation provided by gas supply)
4 For purposes of booking the renewable attribute to inventory it is necessary to calculate the RNG cost per Mcf The RNG cost Mcf is calculated using the total cost of RNG supply as calculated in step 3 divided by the Mcf in step 1
5 The renewable attribute price per Mcf is calculated as follows
RNG cost per Mcf as determined in step 4 ndashplus ldquoother componentsrdquo as calculated pursuant to Attachment A ndash minus ldquoAverage Commodity Costrdquo as calculated pursuant to Attachment A The ldquoother componentsrdquo added to the RNG cost per Mcf will vary depending on where the RNG supply was delivered but in each case will be identified in the calculation shown on Attachment A
6 The renewable attribute price per Mcf the total RNG Mcf delivered is recorded in the Inventory RNG Storage account
7 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
Example 2 - RNG purchased at a renewable attribute price plus a daily or monthly index
Where the pricing of RNG specifically separates the commodity from the renewable attribute the renewable attribute price will be what is recorded in the Renewable Inventory Account
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The renewable attribute price per Mcf the total RNG Mcf delivered as determined in step 1 is recorded in the Renewable Inventory Account
4 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
2 Recalculating the RNG Adder
The RNG Adder paid by customers will be recalculated anytime the Natural Gas charge portion of rates changes The Manager of Gas SupplyGas control is responsible for recalculating the RNG Adder The calculation will be verified and approved by the Vice President ndash Regulatory Affairs The determination of the RNG Adder will be pursuant to the methodology shown in Attachment A The Regulatory Department will prepare the amended RNG Adder tariff for filing with the PUC Upon PUC approval of the RNG Adder the Regulatory Department will prepare a memorandum advising Accounting and Gas Supply of the new RNG Adder as approved
3 Customer purchases VGS Renewable Natural Gas
The RNG Adder at the percent selected by the customer will be applied to the entire monthrsquos usage on the customersrsquo next bill For customers utilizing the S-RNG adder the entire volume elected with be on the customersrsquo next bill The S-RNG Adder nor the RNG Adder and percentage selected will not be prorated based on enrollment or termination date
Customers may terminate or modify their RNG selection upon 3 dayrsquos notice to VGS The termination or modification will be effective on the customerrsquos next monthly bill
The customerrsquos usage for the month will be multiplied by the percentage and the approved RNG Adder For customers utilizing the S-RNG adder the volume elected will be multiplied by the approved RNG adder This amount will then be recorded to SAP accounts 4010015-40010021 depending on which rate class the customer is in The RNG Adder is the same regardless of which rate class a customer is in At the end of the month a report is run by billing from the customer information system that shows total usage and which percentage of RNG the customer has signed up for to calculate the number of MCFrsquos of renewable attribute sold during the billing period Billing also provides a report of the volumes sold through the S-RNG Tarriff The Inventory RNG Storage account maintained within the gas cost model by Accounting is reduced by these Mcf The MCFrsquos are then multiplied by the RNG Adder in effect for the billing month and an entry is made to remove that dollar amount from the Inventory RNG Storage account and into the monthly cost of gas The intent of this transaction is to ensure that cost of the renewable attribute is reflected in the cost of gas in the month it is purchased by the customer This results in a matching of the renewable attribute revenue and expense
The RNG Adder revenue and renewable attributes removed from storage will be included in the gas cost deferral calculation However because there is a matching of the renewable attribute revenue and expense the impact on the deferral calculation will be zero
The calculation of unbilled revenues will exclude RNG as a customer can cancel their participation prior to their next bill
In the event Vermont Gas issues a credit to a customer related to the RNG program the value of the renewable attribute credited and the associated Mcf will not be applied to the Renewable Inventory Account
4 Controls
A spreadsheet is maintained by accounting that shows the MCFrsquos and dollar values of the Renewable Inventory Account This is reconciled monthly by the accounting team and will be reviewed by the Manager Gas SupplyGas Control
Accounting will validate that the amount removed from the Renewable Inventory Account matches the RNG Adder revenue Any discrepancies will be reviewed and corrected
A report will be run for each bill cycle that shows any changes to the RNG percentages selected this will include customers opting to withdraw from the RNG program The customer care team will validate any changes against customer confirmation paperwork
5 Renewable Inventory Account Reconciliation and Forecast
The PUC Order approving the RNG program contains provisions describing how RNG supply and demand imbalances will be addressed These provisions and how VGS will track and comply with them are as discussed in this section The PUC Order approving the RNG Program provides that if the available RNG supply during the previous 12 months is less than the amount purchased by customers VGS may use the funds collected to purchase carbon offsets (Finding 13) If carbon offset are not available VGS will contribute the RNG program revenues to the Clean Energy Development Fund or issue prorated credits to affected customers (Finding 15) The Order also provides that in the event RNG supply exceeds customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any remaining RNG attribute inventory amounts through the PGA or through a rate case as part of its cost of service if the s PGA is no longer in effect at that time (Finding 16 as modified) Finding 11 provides that VGS will use a ldquotrue-uprdquo period of up to 12 months in order to balance the difference between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply) Taken together these provisions require VGS to evaluate the imbalance after 12-months and then true-up the imbalance over the next twelve months To provide a forecast of the supplydemand imbalance quarterly the billing area will run a report showing the expected RNG volumes based on current customer commitments by month for the next 12-months Current customers commitments will be calculated based on the previous 12 months of usage multiplied by the RNG percentage currently signed up for The marketing department will provide their forecast of new RNG sales for the next 12-months Both will be provided to the Manager Gas SupplyGas Control The Manager Gas SupplyGas Control will compare the forecasted RNG sales known and expected to RNG supply commitments and provide a 24-month forecast of the supplydemand balance The supplydemand balance will be reviewed at the risk management meeting The strategy for addressing the imbalance consistent with the PUC order will be determined by the risk management committee
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
Docket No 8667 Page 9
record In Docket 7970 the Commission required VGS in consultation with the Department to
file a petition with the [Commission] proposing a program to promote bio-methane project
development It is reasonable to expectthat aprogram meant to stimulate development of a
specific energy source would look to stimulate demand for that resource by offering an
opportunity for customers to purchase supply from RNG producers
The RNG program proposed by VGS and supported by the Department seeks to offer
ratepayers the option to purchase renewable energy as part of their individual energy-use
portfolio Furthermore the program includes a provision requiring that VGS develop a detailed
marketing plan that will serve to educate customers on the availability costs and benefits of
such resources which could lead to increased demand for the product
VGS intends to take advantage of the existing market for RINs associated with RNG used
as transportation fuel by proposing a Renewable Vehicle Fuel Tariff As described above in the
Public Comments section the Chittenden County Transportation Authority and Casella Vaste
Systems are interested in exploring the use of RNG to fuel their vehicle fleets which
demonstrates that there is existing customer demand for this product
Unlike the markets relating to RNG supply used for transportation fuel or renewable
electric generation and the associated trading and verification of RECs the RNG market is in its
infancy At this time it would not be appropriate to expect VGS to implement an RNG program
utilizing an RNG content standard similar to the electric renewable portfolio standard as
recommended by CLF because the equivalent standards and processes do not exist However
the RNG program represents a meaningful first step in encouraging customer interest in
purchasing RNG at retail thereby stimulating supply of RNG into the market and is consistent
with the Commissions condition requiring VGS to develop a proposal to promote bio-methane
project development
VGSs RNG program includes appropriate mechanisms for periodic reporting and
verification of program activities as well as an opportunity to comprehensively review the
program after three years of implementation Furthermore determinations regarding recovery of
costs associated with the RNG program will be made in the context of future proceedings
regarding VGSs rates The RNG program should evolve with the RNG markets in the near-term
and over the course of the next several years which will allow progress towards achievement of
Vermonts 2050 CEP renewable energy goals
Docket No 8667 Page 10
Because not all parties to this proceeding have waived their rights under 3 VSA $ 811
to file written comments or present oral argument with respect to this proposal for decision I am
circulating the proposal for decision to the parties for their review and comment
Dated at Montpelier Vermont this rrtl day of QrIltt 2017a0AndreaHearing Officer
Docket No 8667 Page 11
VII Corumrssron Drscussrox
On August 22017 the Department filed a letter stating that it supports the issuance of an
Order by the Commission that adopts the proposal for decision in full
Also on August 22017 VGS filed comments on the proposal for decision requesting
that Finding 16 be modified as follows (additional text in italics) If RNG supply exceeds
customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary
flow any remaining RNG attribute inventory amounts through the PGA or through a rate case ifVGS was under traditional cost of service regulation (subject to [Commission] approval)
VGS asserts that [a]bsent such specific language it is possible that VGS would be unable [to]
defer such costs for future recovery and that removal of that component introduces uncertainty
about the potential procedural mechanisms available for cost recovery in the last resort VGS
states that with the Commissions consideraacutetion of this request it does not request oral argument
No other comments were filed on the proposal for decision
The Hearing Officer recommended that the Commission find that determinations
regarding recovery of costs associated with the RNG program will be made in the context of
future proceedings regarding VGSs rates We agree with this recommendation VGS should
have an opportunity to request rate recovery for excess RNG supply However this proceeding
is not the proper time for such a determination Accordingly Finding 16 is hereby modified as
follows If RNG supply exceeds customer demand VGS would first seek to sell the excess
RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any
remaining RNG attribute inventory amounts through the PGA or through arate case as part of
its cost of service if the PGA is no longer in effect atthat timeWe emphasize the importance of the successful implementation of the RNG program in
helping to meet the States renewable energy policy objectives The annual report on the
implementation of the RNG program will serve as a valuable tool to assess that progress In this
proceeding CLF has raised policy considerations that should serve to guide these future reviews
of the RNG program For example CLF has raised concerns regarding the effectiveness of the
voluntary nature of the program In assessing its program we expect VGS to revisit and report
on the feasibility of incorporating RNG as a portion of its supply mix in the future It is
important for VGSs RNG program to be sustainable and continue to evolve ensuring significant
DocketNo8667 Page 12
contributions toward meeting the States renewable energy goals and reducing the consumption
of fossil fuel Accordingly it is critical that the annual report and the three-year comprehensive
review address not only the effectiveness of the program but also its affordability and the
feasibility of other policy options to advance the production and use of RNG in Vermont
Docket No 8667 Page 13
VIII Onunn
Ir rs Hennsy oRDERED ADJUDGED AND DECRnnn by the Public Utility Commission of the
State of Vermont that
1 The findings conclusions and recommendations of the Hearing Officer are
adopted and the Renewable Natural Gas (RNG) program to be implemented by Vermont Gas
SystemsInc (VGS) is approved
2 When VGS has procured RNG supply in amounts reasonably estimated to be
sufficient for estimated customer demand it shall file a formal tariff including proposed rates for
sale of RNG The tariff shall be reviewedpursuantto the procedures of 30 VSA ccedilccedil225226
and227 and sales under the program shall begin after Commission approval of the tariff
3 VGS shall develop and file for Commission approval a separate Renewable
Vehicle Fuel Tariff to serve customers using RNG as a transportation fuel
4 VGS shall file a marketing plan for the RNG program consistent with the
requirements set forth above within one month of the issuance of this Order
5 VGS shall file an annual report consistent with the requirements set forth above
upon implementation of the RNG program
6 VGS shall file a comprehensive review of the performance of the program with
the Commission and the Department after three years of implementation This review will
include an environmental accounting protocol to quantiff the environmental benefits of the
progrfim
7 VGS shall review proposed RNG supply arrangements with the Department
Docket No 8667
Orprcp oF THE Crnm
Dated at Montpelier Vermont this day of+hb
Z Roisman
Cheney
Page 14
20t7
Puslrc Urrlnv
CovtriquestIssIoN
OP VERMONT
(
)))
)))
Fired otildeeglcL ( JotTAttest c
of the Commission
NorIcE To READERS This decision is subject to revision oftechnical errors Reqders are requested tonotify the Clerk of the Commission (by e-mail telephone or inwriting) or any appqrent errors in order that anynecessary corrections may be made (E-mail address pucclerkvermontgov)
Appeal of this decision to the Supreme Court of Vermont must befiledwith the Clerk of the Comnissionwithin thirty days Appeal will not stay the efect of thszlig Order absentfurther order by this Commission orappropriate actiacuteon by the Supreme Court of Vermont Motions for reconsideration or stay if any must be filed withthe Clerk of the Commissionwithin ten days of the date of this deciacutesion and Order
Exhibit 22 VGS RNG Tariff Rate Filing
Exhibit 23 PUC Approval of VGS RNG Rates
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Case No l8-03 13-TF
Petition of Vermont Gas Systems Inc fotapproval of a new tariff implementing theRenewable Natural Gas program
Order entered
OnonRAppnovINc Tiquestrurn
On January 302018 Vermont Gas Systems Inc (VGS) filed a petition for approval of
a new tariff implementing the Renewable Natural Gas (RNG) program approved by the
Vermont Public Utility Commission (Commission) in Docket No 8667 In that Docket the
Commission required VGS to file a tariff implementing the RNG program when it has procured
RNG supply in amounts reasonably estimated to be sufficient to meet customer demandl In
this Order the Commission approves the new tariff marketed under the name EcoGas with an
effective date of bills rendered on and after March 15 2018
VGS states that it has executed an RNG supply contract with deliveries scheduled for
2018 and that two additional contracts are being negotiated for deliveries beginningin2019
VGS is proposing to set its initial RNG adder at$ll749lCcf which represents a five-year
blended rate based on the three RNG supply arrangements VGS intends to account for the
difference between the cost of RNG supply and the RNG adder as a regulatory asset within gas
costs As additional lower-cost supply is added to the portfolio the regulatory asset balance will
be recovered from EcoGas participants with the goal of fully reducing the balance by the end of
five years Accordingly VGS states that the RNG program will be rate-neutral to VGS and its
non-RNG customers
On February 272018 the Vermont Department of Public Service (Department) filed a
letter recommending that the Commission approve the tariff without a hearing or further
investigation The Department states that the tariff filing and proposed accounting treatment
comply with Vermont rate-setting practices policies precedents and statutes
lslaotx
I Docket 8667 Order of 96117 at 13
Page2Case No 18-0313-TF
Based on the foregoing we hereby approve VGSs proposed RNG tariff to be effective
on a bills-rendered basis beginning on March 15 2018 Recovery of any regulatory asset
balance at the end of the fifth year would need to be approved by the Commission in a future
proceeding
So Omnnnn
Case No l8-0313-TF
8r- day of lruacuterLiquestiquest
Page 3
Dated at Montpelier Vermont this 2018
Roisman PueIrc Urlrrv
CoiriexcllriquestlssloN
Cheney
OF VERMONT
Sarah Hofmann
Onncp oF THE CLBRr
Filed huacuteveuroAacute- icirc dollAttest I
Clerk of the Commission
Notice to Readers This decision is subiect to revision oftechnical errors Readers are requested to notify
the Clerk of the Commission (by e-mail telephone or in writing) or qny qpparent errors in order that any
necessary corrections may be made (E-mail address pucclerkvermontgov)Appeal of this decisiacuteon to the Supreme Court of Yermont must be filed with the Clerk of the Commission
within 30 days Appeal will not stay the efect of this Order oslashbsent further order by this Commission or appropriate
action by the Supreme Court of Vermont Motionsthornr reconsideration or stay if any must befiledwith the Clerk ofthe Commissionwithin 28 doslashys of the date of this decision and Order
)))
))))
PUC Case No 18-0313-TF
Eileen SimollardesLauren HammerVermont Gas
85 Swift StreetSouth Burlington VT 05403
June E Tiemey CommissionerVermont Department of Public Service1 12 State StreetMontpelier VT 05620 -2601
Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
Exhibit 31 Accounting Procedures
Exhibit 31 Accounting for VGS Renewable Natural Gas (Ver-9202019)
1 Purchase of RNG Supply
RNG supply purchases are separated into the cost of the commodity and the cost of the renewable attribute The commodity portion is expensed to gas costs in the delivery month while the renewable attribute is booked to an inventory account referenced herein as the ldquoRenewable Inventory Accountrdquo Like VGSrsquo existing storage inventory accounting the Renewable Inventory Account will track both the dollar value of the renewable attribute and the renewable attribute Mcfs Renewable attribute dollar values are record to ldquo16410050 Inventory RNG Storagerdquo while Mcf values are recorded in the gas cost model maintained by accounting In the month VGS purchases the renewable attribute it is accrued in a book model and goes in to 16410150 Inventory RNG Accrued then moves to the 16410050 in a final model the following month for final
RNG may be purchased at different locations and using varying pricing structures While the accounting for RNG does not vary with the purchase location or price the determination of the value of the renewable attribute will vary depending on whether or not the supply pricing expressly values the renewable attribute as an adder or it is embedded in a fixed price Examples of each are shown below The accounting of RNG supply is intended to separate the cost of the renewable attribute from the cost of the commodity The examples below are not all inclusive of what may occur but intended to show the accounting procedures used to separate the renewable attribute from the commodity and specify ownership of each aspect
In all cases the commodity cost portion - which is the total cost of the RNG purchased excluding the renewable attribute - will be expensed in the delivery month as a cost of gas
Example 1 ndash The fixed price of RNG includes both the commodity and the renewable attribute
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The total cost of the RNG supply purchased during the month is calculated by Accounting within the gas cost model as follows
MMBtu Purchased (as validated in step 2) $ MMBtu purchase price (as provided in a supply confirmation provided by gas supply)
4 For purposes of booking the renewable attribute to inventory it is necessary to calculate the RNG cost per Mcf The RNG cost Mcf is calculated using the total cost of RNG supply as calculated in step 3 divided by the Mcf in step 1
5 The renewable attribute price per Mcf is calculated as follows
RNG cost per Mcf as determined in step 4 ndashplus ldquoother componentsrdquo as calculated pursuant to Attachment A ndash minus ldquoAverage Commodity Costrdquo as calculated pursuant to Attachment A The ldquoother componentsrdquo added to the RNG cost per Mcf will vary depending on where the RNG supply was delivered but in each case will be identified in the calculation shown on Attachment A
6 The renewable attribute price per Mcf the total RNG Mcf delivered is recorded in the Inventory RNG Storage account
7 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
Example 2 - RNG purchased at a renewable attribute price plus a daily or monthly index
Where the pricing of RNG specifically separates the commodity from the renewable attribute the renewable attribute price will be what is recorded in the Renewable Inventory Account
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The renewable attribute price per Mcf the total RNG Mcf delivered as determined in step 1 is recorded in the Renewable Inventory Account
4 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
2 Recalculating the RNG Adder
The RNG Adder paid by customers will be recalculated anytime the Natural Gas charge portion of rates changes The Manager of Gas SupplyGas control is responsible for recalculating the RNG Adder The calculation will be verified and approved by the Vice President ndash Regulatory Affairs The determination of the RNG Adder will be pursuant to the methodology shown in Attachment A The Regulatory Department will prepare the amended RNG Adder tariff for filing with the PUC Upon PUC approval of the RNG Adder the Regulatory Department will prepare a memorandum advising Accounting and Gas Supply of the new RNG Adder as approved
3 Customer purchases VGS Renewable Natural Gas
The RNG Adder at the percent selected by the customer will be applied to the entire monthrsquos usage on the customersrsquo next bill For customers utilizing the S-RNG adder the entire volume elected with be on the customersrsquo next bill The S-RNG Adder nor the RNG Adder and percentage selected will not be prorated based on enrollment or termination date
Customers may terminate or modify their RNG selection upon 3 dayrsquos notice to VGS The termination or modification will be effective on the customerrsquos next monthly bill
The customerrsquos usage for the month will be multiplied by the percentage and the approved RNG Adder For customers utilizing the S-RNG adder the volume elected will be multiplied by the approved RNG adder This amount will then be recorded to SAP accounts 4010015-40010021 depending on which rate class the customer is in The RNG Adder is the same regardless of which rate class a customer is in At the end of the month a report is run by billing from the customer information system that shows total usage and which percentage of RNG the customer has signed up for to calculate the number of MCFrsquos of renewable attribute sold during the billing period Billing also provides a report of the volumes sold through the S-RNG Tarriff The Inventory RNG Storage account maintained within the gas cost model by Accounting is reduced by these Mcf The MCFrsquos are then multiplied by the RNG Adder in effect for the billing month and an entry is made to remove that dollar amount from the Inventory RNG Storage account and into the monthly cost of gas The intent of this transaction is to ensure that cost of the renewable attribute is reflected in the cost of gas in the month it is purchased by the customer This results in a matching of the renewable attribute revenue and expense
The RNG Adder revenue and renewable attributes removed from storage will be included in the gas cost deferral calculation However because there is a matching of the renewable attribute revenue and expense the impact on the deferral calculation will be zero
The calculation of unbilled revenues will exclude RNG as a customer can cancel their participation prior to their next bill
In the event Vermont Gas issues a credit to a customer related to the RNG program the value of the renewable attribute credited and the associated Mcf will not be applied to the Renewable Inventory Account
4 Controls
A spreadsheet is maintained by accounting that shows the MCFrsquos and dollar values of the Renewable Inventory Account This is reconciled monthly by the accounting team and will be reviewed by the Manager Gas SupplyGas Control
Accounting will validate that the amount removed from the Renewable Inventory Account matches the RNG Adder revenue Any discrepancies will be reviewed and corrected
A report will be run for each bill cycle that shows any changes to the RNG percentages selected this will include customers opting to withdraw from the RNG program The customer care team will validate any changes against customer confirmation paperwork
5 Renewable Inventory Account Reconciliation and Forecast
The PUC Order approving the RNG program contains provisions describing how RNG supply and demand imbalances will be addressed These provisions and how VGS will track and comply with them are as discussed in this section The PUC Order approving the RNG Program provides that if the available RNG supply during the previous 12 months is less than the amount purchased by customers VGS may use the funds collected to purchase carbon offsets (Finding 13) If carbon offset are not available VGS will contribute the RNG program revenues to the Clean Energy Development Fund or issue prorated credits to affected customers (Finding 15) The Order also provides that in the event RNG supply exceeds customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any remaining RNG attribute inventory amounts through the PGA or through a rate case as part of its cost of service if the s PGA is no longer in effect at that time (Finding 16 as modified) Finding 11 provides that VGS will use a ldquotrue-uprdquo period of up to 12 months in order to balance the difference between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply) Taken together these provisions require VGS to evaluate the imbalance after 12-months and then true-up the imbalance over the next twelve months To provide a forecast of the supplydemand imbalance quarterly the billing area will run a report showing the expected RNG volumes based on current customer commitments by month for the next 12-months Current customers commitments will be calculated based on the previous 12 months of usage multiplied by the RNG percentage currently signed up for The marketing department will provide their forecast of new RNG sales for the next 12-months Both will be provided to the Manager Gas SupplyGas Control The Manager Gas SupplyGas Control will compare the forecasted RNG sales known and expected to RNG supply commitments and provide a 24-month forecast of the supplydemand balance The supplydemand balance will be reviewed at the risk management meeting The strategy for addressing the imbalance consistent with the PUC order will be determined by the risk management committee
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
Docket No 8667 Page 10
Because not all parties to this proceeding have waived their rights under 3 VSA $ 811
to file written comments or present oral argument with respect to this proposal for decision I am
circulating the proposal for decision to the parties for their review and comment
Dated at Montpelier Vermont this rrtl day of QrIltt 2017a0AndreaHearing Officer
Docket No 8667 Page 11
VII Corumrssron Drscussrox
On August 22017 the Department filed a letter stating that it supports the issuance of an
Order by the Commission that adopts the proposal for decision in full
Also on August 22017 VGS filed comments on the proposal for decision requesting
that Finding 16 be modified as follows (additional text in italics) If RNG supply exceeds
customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary
flow any remaining RNG attribute inventory amounts through the PGA or through a rate case ifVGS was under traditional cost of service regulation (subject to [Commission] approval)
VGS asserts that [a]bsent such specific language it is possible that VGS would be unable [to]
defer such costs for future recovery and that removal of that component introduces uncertainty
about the potential procedural mechanisms available for cost recovery in the last resort VGS
states that with the Commissions consideraacutetion of this request it does not request oral argument
No other comments were filed on the proposal for decision
The Hearing Officer recommended that the Commission find that determinations
regarding recovery of costs associated with the RNG program will be made in the context of
future proceedings regarding VGSs rates We agree with this recommendation VGS should
have an opportunity to request rate recovery for excess RNG supply However this proceeding
is not the proper time for such a determination Accordingly Finding 16 is hereby modified as
follows If RNG supply exceeds customer demand VGS would first seek to sell the excess
RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any
remaining RNG attribute inventory amounts through the PGA or through arate case as part of
its cost of service if the PGA is no longer in effect atthat timeWe emphasize the importance of the successful implementation of the RNG program in
helping to meet the States renewable energy policy objectives The annual report on the
implementation of the RNG program will serve as a valuable tool to assess that progress In this
proceeding CLF has raised policy considerations that should serve to guide these future reviews
of the RNG program For example CLF has raised concerns regarding the effectiveness of the
voluntary nature of the program In assessing its program we expect VGS to revisit and report
on the feasibility of incorporating RNG as a portion of its supply mix in the future It is
important for VGSs RNG program to be sustainable and continue to evolve ensuring significant
DocketNo8667 Page 12
contributions toward meeting the States renewable energy goals and reducing the consumption
of fossil fuel Accordingly it is critical that the annual report and the three-year comprehensive
review address not only the effectiveness of the program but also its affordability and the
feasibility of other policy options to advance the production and use of RNG in Vermont
Docket No 8667 Page 13
VIII Onunn
Ir rs Hennsy oRDERED ADJUDGED AND DECRnnn by the Public Utility Commission of the
State of Vermont that
1 The findings conclusions and recommendations of the Hearing Officer are
adopted and the Renewable Natural Gas (RNG) program to be implemented by Vermont Gas
SystemsInc (VGS) is approved
2 When VGS has procured RNG supply in amounts reasonably estimated to be
sufficient for estimated customer demand it shall file a formal tariff including proposed rates for
sale of RNG The tariff shall be reviewedpursuantto the procedures of 30 VSA ccedilccedil225226
and227 and sales under the program shall begin after Commission approval of the tariff
3 VGS shall develop and file for Commission approval a separate Renewable
Vehicle Fuel Tariff to serve customers using RNG as a transportation fuel
4 VGS shall file a marketing plan for the RNG program consistent with the
requirements set forth above within one month of the issuance of this Order
5 VGS shall file an annual report consistent with the requirements set forth above
upon implementation of the RNG program
6 VGS shall file a comprehensive review of the performance of the program with
the Commission and the Department after three years of implementation This review will
include an environmental accounting protocol to quantiff the environmental benefits of the
progrfim
7 VGS shall review proposed RNG supply arrangements with the Department
Docket No 8667
Orprcp oF THE Crnm
Dated at Montpelier Vermont this day of+hb
Z Roisman
Cheney
Page 14
20t7
Puslrc Urrlnv
CovtriquestIssIoN
OP VERMONT
(
)))
)))
Fired otildeeglcL ( JotTAttest c
of the Commission
NorIcE To READERS This decision is subject to revision oftechnical errors Reqders are requested tonotify the Clerk of the Commission (by e-mail telephone or inwriting) or any appqrent errors in order that anynecessary corrections may be made (E-mail address pucclerkvermontgov)
Appeal of this decision to the Supreme Court of Vermont must befiledwith the Clerk of the Comnissionwithin thirty days Appeal will not stay the efect of thszlig Order absentfurther order by this Commission orappropriate actiacuteon by the Supreme Court of Vermont Motions for reconsideration or stay if any must be filed withthe Clerk of the Commissionwithin ten days of the date of this deciacutesion and Order
Exhibit 22 VGS RNG Tariff Rate Filing
Exhibit 23 PUC Approval of VGS RNG Rates
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Case No l8-03 13-TF
Petition of Vermont Gas Systems Inc fotapproval of a new tariff implementing theRenewable Natural Gas program
Order entered
OnonRAppnovINc Tiquestrurn
On January 302018 Vermont Gas Systems Inc (VGS) filed a petition for approval of
a new tariff implementing the Renewable Natural Gas (RNG) program approved by the
Vermont Public Utility Commission (Commission) in Docket No 8667 In that Docket the
Commission required VGS to file a tariff implementing the RNG program when it has procured
RNG supply in amounts reasonably estimated to be sufficient to meet customer demandl In
this Order the Commission approves the new tariff marketed under the name EcoGas with an
effective date of bills rendered on and after March 15 2018
VGS states that it has executed an RNG supply contract with deliveries scheduled for
2018 and that two additional contracts are being negotiated for deliveries beginningin2019
VGS is proposing to set its initial RNG adder at$ll749lCcf which represents a five-year
blended rate based on the three RNG supply arrangements VGS intends to account for the
difference between the cost of RNG supply and the RNG adder as a regulatory asset within gas
costs As additional lower-cost supply is added to the portfolio the regulatory asset balance will
be recovered from EcoGas participants with the goal of fully reducing the balance by the end of
five years Accordingly VGS states that the RNG program will be rate-neutral to VGS and its
non-RNG customers
On February 272018 the Vermont Department of Public Service (Department) filed a
letter recommending that the Commission approve the tariff without a hearing or further
investigation The Department states that the tariff filing and proposed accounting treatment
comply with Vermont rate-setting practices policies precedents and statutes
lslaotx
I Docket 8667 Order of 96117 at 13
Page2Case No 18-0313-TF
Based on the foregoing we hereby approve VGSs proposed RNG tariff to be effective
on a bills-rendered basis beginning on March 15 2018 Recovery of any regulatory asset
balance at the end of the fifth year would need to be approved by the Commission in a future
proceeding
So Omnnnn
Case No l8-0313-TF
8r- day of lruacuterLiquestiquest
Page 3
Dated at Montpelier Vermont this 2018
Roisman PueIrc Urlrrv
CoiriexcllriquestlssloN
Cheney
OF VERMONT
Sarah Hofmann
Onncp oF THE CLBRr
Filed huacuteveuroAacute- icirc dollAttest I
Clerk of the Commission
Notice to Readers This decision is subiect to revision oftechnical errors Readers are requested to notify
the Clerk of the Commission (by e-mail telephone or in writing) or qny qpparent errors in order that any
necessary corrections may be made (E-mail address pucclerkvermontgov)Appeal of this decisiacuteon to the Supreme Court of Yermont must be filed with the Clerk of the Commission
within 30 days Appeal will not stay the efect of this Order oslashbsent further order by this Commission or appropriate
action by the Supreme Court of Vermont Motionsthornr reconsideration or stay if any must befiledwith the Clerk ofthe Commissionwithin 28 doslashys of the date of this decision and Order
)))
))))
PUC Case No 18-0313-TF
Eileen SimollardesLauren HammerVermont Gas
85 Swift StreetSouth Burlington VT 05403
June E Tiemey CommissionerVermont Department of Public Service1 12 State StreetMontpelier VT 05620 -2601
Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
Exhibit 31 Accounting Procedures
Exhibit 31 Accounting for VGS Renewable Natural Gas (Ver-9202019)
1 Purchase of RNG Supply
RNG supply purchases are separated into the cost of the commodity and the cost of the renewable attribute The commodity portion is expensed to gas costs in the delivery month while the renewable attribute is booked to an inventory account referenced herein as the ldquoRenewable Inventory Accountrdquo Like VGSrsquo existing storage inventory accounting the Renewable Inventory Account will track both the dollar value of the renewable attribute and the renewable attribute Mcfs Renewable attribute dollar values are record to ldquo16410050 Inventory RNG Storagerdquo while Mcf values are recorded in the gas cost model maintained by accounting In the month VGS purchases the renewable attribute it is accrued in a book model and goes in to 16410150 Inventory RNG Accrued then moves to the 16410050 in a final model the following month for final
RNG may be purchased at different locations and using varying pricing structures While the accounting for RNG does not vary with the purchase location or price the determination of the value of the renewable attribute will vary depending on whether or not the supply pricing expressly values the renewable attribute as an adder or it is embedded in a fixed price Examples of each are shown below The accounting of RNG supply is intended to separate the cost of the renewable attribute from the cost of the commodity The examples below are not all inclusive of what may occur but intended to show the accounting procedures used to separate the renewable attribute from the commodity and specify ownership of each aspect
In all cases the commodity cost portion - which is the total cost of the RNG purchased excluding the renewable attribute - will be expensed in the delivery month as a cost of gas
Example 1 ndash The fixed price of RNG includes both the commodity and the renewable attribute
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The total cost of the RNG supply purchased during the month is calculated by Accounting within the gas cost model as follows
MMBtu Purchased (as validated in step 2) $ MMBtu purchase price (as provided in a supply confirmation provided by gas supply)
4 For purposes of booking the renewable attribute to inventory it is necessary to calculate the RNG cost per Mcf The RNG cost Mcf is calculated using the total cost of RNG supply as calculated in step 3 divided by the Mcf in step 1
5 The renewable attribute price per Mcf is calculated as follows
RNG cost per Mcf as determined in step 4 ndashplus ldquoother componentsrdquo as calculated pursuant to Attachment A ndash minus ldquoAverage Commodity Costrdquo as calculated pursuant to Attachment A The ldquoother componentsrdquo added to the RNG cost per Mcf will vary depending on where the RNG supply was delivered but in each case will be identified in the calculation shown on Attachment A
6 The renewable attribute price per Mcf the total RNG Mcf delivered is recorded in the Inventory RNG Storage account
7 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
Example 2 - RNG purchased at a renewable attribute price plus a daily or monthly index
Where the pricing of RNG specifically separates the commodity from the renewable attribute the renewable attribute price will be what is recorded in the Renewable Inventory Account
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The renewable attribute price per Mcf the total RNG Mcf delivered as determined in step 1 is recorded in the Renewable Inventory Account
4 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
2 Recalculating the RNG Adder
The RNG Adder paid by customers will be recalculated anytime the Natural Gas charge portion of rates changes The Manager of Gas SupplyGas control is responsible for recalculating the RNG Adder The calculation will be verified and approved by the Vice President ndash Regulatory Affairs The determination of the RNG Adder will be pursuant to the methodology shown in Attachment A The Regulatory Department will prepare the amended RNG Adder tariff for filing with the PUC Upon PUC approval of the RNG Adder the Regulatory Department will prepare a memorandum advising Accounting and Gas Supply of the new RNG Adder as approved
3 Customer purchases VGS Renewable Natural Gas
The RNG Adder at the percent selected by the customer will be applied to the entire monthrsquos usage on the customersrsquo next bill For customers utilizing the S-RNG adder the entire volume elected with be on the customersrsquo next bill The S-RNG Adder nor the RNG Adder and percentage selected will not be prorated based on enrollment or termination date
Customers may terminate or modify their RNG selection upon 3 dayrsquos notice to VGS The termination or modification will be effective on the customerrsquos next monthly bill
The customerrsquos usage for the month will be multiplied by the percentage and the approved RNG Adder For customers utilizing the S-RNG adder the volume elected will be multiplied by the approved RNG adder This amount will then be recorded to SAP accounts 4010015-40010021 depending on which rate class the customer is in The RNG Adder is the same regardless of which rate class a customer is in At the end of the month a report is run by billing from the customer information system that shows total usage and which percentage of RNG the customer has signed up for to calculate the number of MCFrsquos of renewable attribute sold during the billing period Billing also provides a report of the volumes sold through the S-RNG Tarriff The Inventory RNG Storage account maintained within the gas cost model by Accounting is reduced by these Mcf The MCFrsquos are then multiplied by the RNG Adder in effect for the billing month and an entry is made to remove that dollar amount from the Inventory RNG Storage account and into the monthly cost of gas The intent of this transaction is to ensure that cost of the renewable attribute is reflected in the cost of gas in the month it is purchased by the customer This results in a matching of the renewable attribute revenue and expense
The RNG Adder revenue and renewable attributes removed from storage will be included in the gas cost deferral calculation However because there is a matching of the renewable attribute revenue and expense the impact on the deferral calculation will be zero
The calculation of unbilled revenues will exclude RNG as a customer can cancel their participation prior to their next bill
In the event Vermont Gas issues a credit to a customer related to the RNG program the value of the renewable attribute credited and the associated Mcf will not be applied to the Renewable Inventory Account
4 Controls
A spreadsheet is maintained by accounting that shows the MCFrsquos and dollar values of the Renewable Inventory Account This is reconciled monthly by the accounting team and will be reviewed by the Manager Gas SupplyGas Control
Accounting will validate that the amount removed from the Renewable Inventory Account matches the RNG Adder revenue Any discrepancies will be reviewed and corrected
A report will be run for each bill cycle that shows any changes to the RNG percentages selected this will include customers opting to withdraw from the RNG program The customer care team will validate any changes against customer confirmation paperwork
5 Renewable Inventory Account Reconciliation and Forecast
The PUC Order approving the RNG program contains provisions describing how RNG supply and demand imbalances will be addressed These provisions and how VGS will track and comply with them are as discussed in this section The PUC Order approving the RNG Program provides that if the available RNG supply during the previous 12 months is less than the amount purchased by customers VGS may use the funds collected to purchase carbon offsets (Finding 13) If carbon offset are not available VGS will contribute the RNG program revenues to the Clean Energy Development Fund or issue prorated credits to affected customers (Finding 15) The Order also provides that in the event RNG supply exceeds customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any remaining RNG attribute inventory amounts through the PGA or through a rate case as part of its cost of service if the s PGA is no longer in effect at that time (Finding 16 as modified) Finding 11 provides that VGS will use a ldquotrue-uprdquo period of up to 12 months in order to balance the difference between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply) Taken together these provisions require VGS to evaluate the imbalance after 12-months and then true-up the imbalance over the next twelve months To provide a forecast of the supplydemand imbalance quarterly the billing area will run a report showing the expected RNG volumes based on current customer commitments by month for the next 12-months Current customers commitments will be calculated based on the previous 12 months of usage multiplied by the RNG percentage currently signed up for The marketing department will provide their forecast of new RNG sales for the next 12-months Both will be provided to the Manager Gas SupplyGas Control The Manager Gas SupplyGas Control will compare the forecasted RNG sales known and expected to RNG supply commitments and provide a 24-month forecast of the supplydemand balance The supplydemand balance will be reviewed at the risk management meeting The strategy for addressing the imbalance consistent with the PUC order will be determined by the risk management committee
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
Docket No 8667 Page 11
VII Corumrssron Drscussrox
On August 22017 the Department filed a letter stating that it supports the issuance of an
Order by the Commission that adopts the proposal for decision in full
Also on August 22017 VGS filed comments on the proposal for decision requesting
that Finding 16 be modified as follows (additional text in italics) If RNG supply exceeds
customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary
flow any remaining RNG attribute inventory amounts through the PGA or through a rate case ifVGS was under traditional cost of service regulation (subject to [Commission] approval)
VGS asserts that [a]bsent such specific language it is possible that VGS would be unable [to]
defer such costs for future recovery and that removal of that component introduces uncertainty
about the potential procedural mechanisms available for cost recovery in the last resort VGS
states that with the Commissions consideraacutetion of this request it does not request oral argument
No other comments were filed on the proposal for decision
The Hearing Officer recommended that the Commission find that determinations
regarding recovery of costs associated with the RNG program will be made in the context of
future proceedings regarding VGSs rates We agree with this recommendation VGS should
have an opportunity to request rate recovery for excess RNG supply However this proceeding
is not the proper time for such a determination Accordingly Finding 16 is hereby modified as
follows If RNG supply exceeds customer demand VGS would first seek to sell the excess
RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any
remaining RNG attribute inventory amounts through the PGA or through arate case as part of
its cost of service if the PGA is no longer in effect atthat timeWe emphasize the importance of the successful implementation of the RNG program in
helping to meet the States renewable energy policy objectives The annual report on the
implementation of the RNG program will serve as a valuable tool to assess that progress In this
proceeding CLF has raised policy considerations that should serve to guide these future reviews
of the RNG program For example CLF has raised concerns regarding the effectiveness of the
voluntary nature of the program In assessing its program we expect VGS to revisit and report
on the feasibility of incorporating RNG as a portion of its supply mix in the future It is
important for VGSs RNG program to be sustainable and continue to evolve ensuring significant
DocketNo8667 Page 12
contributions toward meeting the States renewable energy goals and reducing the consumption
of fossil fuel Accordingly it is critical that the annual report and the three-year comprehensive
review address not only the effectiveness of the program but also its affordability and the
feasibility of other policy options to advance the production and use of RNG in Vermont
Docket No 8667 Page 13
VIII Onunn
Ir rs Hennsy oRDERED ADJUDGED AND DECRnnn by the Public Utility Commission of the
State of Vermont that
1 The findings conclusions and recommendations of the Hearing Officer are
adopted and the Renewable Natural Gas (RNG) program to be implemented by Vermont Gas
SystemsInc (VGS) is approved
2 When VGS has procured RNG supply in amounts reasonably estimated to be
sufficient for estimated customer demand it shall file a formal tariff including proposed rates for
sale of RNG The tariff shall be reviewedpursuantto the procedures of 30 VSA ccedilccedil225226
and227 and sales under the program shall begin after Commission approval of the tariff
3 VGS shall develop and file for Commission approval a separate Renewable
Vehicle Fuel Tariff to serve customers using RNG as a transportation fuel
4 VGS shall file a marketing plan for the RNG program consistent with the
requirements set forth above within one month of the issuance of this Order
5 VGS shall file an annual report consistent with the requirements set forth above
upon implementation of the RNG program
6 VGS shall file a comprehensive review of the performance of the program with
the Commission and the Department after three years of implementation This review will
include an environmental accounting protocol to quantiff the environmental benefits of the
progrfim
7 VGS shall review proposed RNG supply arrangements with the Department
Docket No 8667
Orprcp oF THE Crnm
Dated at Montpelier Vermont this day of+hb
Z Roisman
Cheney
Page 14
20t7
Puslrc Urrlnv
CovtriquestIssIoN
OP VERMONT
(
)))
)))
Fired otildeeglcL ( JotTAttest c
of the Commission
NorIcE To READERS This decision is subject to revision oftechnical errors Reqders are requested tonotify the Clerk of the Commission (by e-mail telephone or inwriting) or any appqrent errors in order that anynecessary corrections may be made (E-mail address pucclerkvermontgov)
Appeal of this decision to the Supreme Court of Vermont must befiledwith the Clerk of the Comnissionwithin thirty days Appeal will not stay the efect of thszlig Order absentfurther order by this Commission orappropriate actiacuteon by the Supreme Court of Vermont Motions for reconsideration or stay if any must be filed withthe Clerk of the Commissionwithin ten days of the date of this deciacutesion and Order
Exhibit 22 VGS RNG Tariff Rate Filing
Exhibit 23 PUC Approval of VGS RNG Rates
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Case No l8-03 13-TF
Petition of Vermont Gas Systems Inc fotapproval of a new tariff implementing theRenewable Natural Gas program
Order entered
OnonRAppnovINc Tiquestrurn
On January 302018 Vermont Gas Systems Inc (VGS) filed a petition for approval of
a new tariff implementing the Renewable Natural Gas (RNG) program approved by the
Vermont Public Utility Commission (Commission) in Docket No 8667 In that Docket the
Commission required VGS to file a tariff implementing the RNG program when it has procured
RNG supply in amounts reasonably estimated to be sufficient to meet customer demandl In
this Order the Commission approves the new tariff marketed under the name EcoGas with an
effective date of bills rendered on and after March 15 2018
VGS states that it has executed an RNG supply contract with deliveries scheduled for
2018 and that two additional contracts are being negotiated for deliveries beginningin2019
VGS is proposing to set its initial RNG adder at$ll749lCcf which represents a five-year
blended rate based on the three RNG supply arrangements VGS intends to account for the
difference between the cost of RNG supply and the RNG adder as a regulatory asset within gas
costs As additional lower-cost supply is added to the portfolio the regulatory asset balance will
be recovered from EcoGas participants with the goal of fully reducing the balance by the end of
five years Accordingly VGS states that the RNG program will be rate-neutral to VGS and its
non-RNG customers
On February 272018 the Vermont Department of Public Service (Department) filed a
letter recommending that the Commission approve the tariff without a hearing or further
investigation The Department states that the tariff filing and proposed accounting treatment
comply with Vermont rate-setting practices policies precedents and statutes
lslaotx
I Docket 8667 Order of 96117 at 13
Page2Case No 18-0313-TF
Based on the foregoing we hereby approve VGSs proposed RNG tariff to be effective
on a bills-rendered basis beginning on March 15 2018 Recovery of any regulatory asset
balance at the end of the fifth year would need to be approved by the Commission in a future
proceeding
So Omnnnn
Case No l8-0313-TF
8r- day of lruacuterLiquestiquest
Page 3
Dated at Montpelier Vermont this 2018
Roisman PueIrc Urlrrv
CoiriexcllriquestlssloN
Cheney
OF VERMONT
Sarah Hofmann
Onncp oF THE CLBRr
Filed huacuteveuroAacute- icirc dollAttest I
Clerk of the Commission
Notice to Readers This decision is subiect to revision oftechnical errors Readers are requested to notify
the Clerk of the Commission (by e-mail telephone or in writing) or qny qpparent errors in order that any
necessary corrections may be made (E-mail address pucclerkvermontgov)Appeal of this decisiacuteon to the Supreme Court of Yermont must be filed with the Clerk of the Commission
within 30 days Appeal will not stay the efect of this Order oslashbsent further order by this Commission or appropriate
action by the Supreme Court of Vermont Motionsthornr reconsideration or stay if any must befiledwith the Clerk ofthe Commissionwithin 28 doslashys of the date of this decision and Order
)))
))))
PUC Case No 18-0313-TF
Eileen SimollardesLauren HammerVermont Gas
85 Swift StreetSouth Burlington VT 05403
June E Tiemey CommissionerVermont Department of Public Service1 12 State StreetMontpelier VT 05620 -2601
Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
Exhibit 31 Accounting Procedures
Exhibit 31 Accounting for VGS Renewable Natural Gas (Ver-9202019)
1 Purchase of RNG Supply
RNG supply purchases are separated into the cost of the commodity and the cost of the renewable attribute The commodity portion is expensed to gas costs in the delivery month while the renewable attribute is booked to an inventory account referenced herein as the ldquoRenewable Inventory Accountrdquo Like VGSrsquo existing storage inventory accounting the Renewable Inventory Account will track both the dollar value of the renewable attribute and the renewable attribute Mcfs Renewable attribute dollar values are record to ldquo16410050 Inventory RNG Storagerdquo while Mcf values are recorded in the gas cost model maintained by accounting In the month VGS purchases the renewable attribute it is accrued in a book model and goes in to 16410150 Inventory RNG Accrued then moves to the 16410050 in a final model the following month for final
RNG may be purchased at different locations and using varying pricing structures While the accounting for RNG does not vary with the purchase location or price the determination of the value of the renewable attribute will vary depending on whether or not the supply pricing expressly values the renewable attribute as an adder or it is embedded in a fixed price Examples of each are shown below The accounting of RNG supply is intended to separate the cost of the renewable attribute from the cost of the commodity The examples below are not all inclusive of what may occur but intended to show the accounting procedures used to separate the renewable attribute from the commodity and specify ownership of each aspect
In all cases the commodity cost portion - which is the total cost of the RNG purchased excluding the renewable attribute - will be expensed in the delivery month as a cost of gas
Example 1 ndash The fixed price of RNG includes both the commodity and the renewable attribute
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The total cost of the RNG supply purchased during the month is calculated by Accounting within the gas cost model as follows
MMBtu Purchased (as validated in step 2) $ MMBtu purchase price (as provided in a supply confirmation provided by gas supply)
4 For purposes of booking the renewable attribute to inventory it is necessary to calculate the RNG cost per Mcf The RNG cost Mcf is calculated using the total cost of RNG supply as calculated in step 3 divided by the Mcf in step 1
5 The renewable attribute price per Mcf is calculated as follows
RNG cost per Mcf as determined in step 4 ndashplus ldquoother componentsrdquo as calculated pursuant to Attachment A ndash minus ldquoAverage Commodity Costrdquo as calculated pursuant to Attachment A The ldquoother componentsrdquo added to the RNG cost per Mcf will vary depending on where the RNG supply was delivered but in each case will be identified in the calculation shown on Attachment A
6 The renewable attribute price per Mcf the total RNG Mcf delivered is recorded in the Inventory RNG Storage account
7 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
Example 2 - RNG purchased at a renewable attribute price plus a daily or monthly index
Where the pricing of RNG specifically separates the commodity from the renewable attribute the renewable attribute price will be what is recorded in the Renewable Inventory Account
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The renewable attribute price per Mcf the total RNG Mcf delivered as determined in step 1 is recorded in the Renewable Inventory Account
4 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
2 Recalculating the RNG Adder
The RNG Adder paid by customers will be recalculated anytime the Natural Gas charge portion of rates changes The Manager of Gas SupplyGas control is responsible for recalculating the RNG Adder The calculation will be verified and approved by the Vice President ndash Regulatory Affairs The determination of the RNG Adder will be pursuant to the methodology shown in Attachment A The Regulatory Department will prepare the amended RNG Adder tariff for filing with the PUC Upon PUC approval of the RNG Adder the Regulatory Department will prepare a memorandum advising Accounting and Gas Supply of the new RNG Adder as approved
3 Customer purchases VGS Renewable Natural Gas
The RNG Adder at the percent selected by the customer will be applied to the entire monthrsquos usage on the customersrsquo next bill For customers utilizing the S-RNG adder the entire volume elected with be on the customersrsquo next bill The S-RNG Adder nor the RNG Adder and percentage selected will not be prorated based on enrollment or termination date
Customers may terminate or modify their RNG selection upon 3 dayrsquos notice to VGS The termination or modification will be effective on the customerrsquos next monthly bill
The customerrsquos usage for the month will be multiplied by the percentage and the approved RNG Adder For customers utilizing the S-RNG adder the volume elected will be multiplied by the approved RNG adder This amount will then be recorded to SAP accounts 4010015-40010021 depending on which rate class the customer is in The RNG Adder is the same regardless of which rate class a customer is in At the end of the month a report is run by billing from the customer information system that shows total usage and which percentage of RNG the customer has signed up for to calculate the number of MCFrsquos of renewable attribute sold during the billing period Billing also provides a report of the volumes sold through the S-RNG Tarriff The Inventory RNG Storage account maintained within the gas cost model by Accounting is reduced by these Mcf The MCFrsquos are then multiplied by the RNG Adder in effect for the billing month and an entry is made to remove that dollar amount from the Inventory RNG Storage account and into the monthly cost of gas The intent of this transaction is to ensure that cost of the renewable attribute is reflected in the cost of gas in the month it is purchased by the customer This results in a matching of the renewable attribute revenue and expense
The RNG Adder revenue and renewable attributes removed from storage will be included in the gas cost deferral calculation However because there is a matching of the renewable attribute revenue and expense the impact on the deferral calculation will be zero
The calculation of unbilled revenues will exclude RNG as a customer can cancel their participation prior to their next bill
In the event Vermont Gas issues a credit to a customer related to the RNG program the value of the renewable attribute credited and the associated Mcf will not be applied to the Renewable Inventory Account
4 Controls
A spreadsheet is maintained by accounting that shows the MCFrsquos and dollar values of the Renewable Inventory Account This is reconciled monthly by the accounting team and will be reviewed by the Manager Gas SupplyGas Control
Accounting will validate that the amount removed from the Renewable Inventory Account matches the RNG Adder revenue Any discrepancies will be reviewed and corrected
A report will be run for each bill cycle that shows any changes to the RNG percentages selected this will include customers opting to withdraw from the RNG program The customer care team will validate any changes against customer confirmation paperwork
5 Renewable Inventory Account Reconciliation and Forecast
The PUC Order approving the RNG program contains provisions describing how RNG supply and demand imbalances will be addressed These provisions and how VGS will track and comply with them are as discussed in this section The PUC Order approving the RNG Program provides that if the available RNG supply during the previous 12 months is less than the amount purchased by customers VGS may use the funds collected to purchase carbon offsets (Finding 13) If carbon offset are not available VGS will contribute the RNG program revenues to the Clean Energy Development Fund or issue prorated credits to affected customers (Finding 15) The Order also provides that in the event RNG supply exceeds customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any remaining RNG attribute inventory amounts through the PGA or through a rate case as part of its cost of service if the s PGA is no longer in effect at that time (Finding 16 as modified) Finding 11 provides that VGS will use a ldquotrue-uprdquo period of up to 12 months in order to balance the difference between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply) Taken together these provisions require VGS to evaluate the imbalance after 12-months and then true-up the imbalance over the next twelve months To provide a forecast of the supplydemand imbalance quarterly the billing area will run a report showing the expected RNG volumes based on current customer commitments by month for the next 12-months Current customers commitments will be calculated based on the previous 12 months of usage multiplied by the RNG percentage currently signed up for The marketing department will provide their forecast of new RNG sales for the next 12-months Both will be provided to the Manager Gas SupplyGas Control The Manager Gas SupplyGas Control will compare the forecasted RNG sales known and expected to RNG supply commitments and provide a 24-month forecast of the supplydemand balance The supplydemand balance will be reviewed at the risk management meeting The strategy for addressing the imbalance consistent with the PUC order will be determined by the risk management committee
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
DocketNo8667 Page 12
contributions toward meeting the States renewable energy goals and reducing the consumption
of fossil fuel Accordingly it is critical that the annual report and the three-year comprehensive
review address not only the effectiveness of the program but also its affordability and the
feasibility of other policy options to advance the production and use of RNG in Vermont
Docket No 8667 Page 13
VIII Onunn
Ir rs Hennsy oRDERED ADJUDGED AND DECRnnn by the Public Utility Commission of the
State of Vermont that
1 The findings conclusions and recommendations of the Hearing Officer are
adopted and the Renewable Natural Gas (RNG) program to be implemented by Vermont Gas
SystemsInc (VGS) is approved
2 When VGS has procured RNG supply in amounts reasonably estimated to be
sufficient for estimated customer demand it shall file a formal tariff including proposed rates for
sale of RNG The tariff shall be reviewedpursuantto the procedures of 30 VSA ccedilccedil225226
and227 and sales under the program shall begin after Commission approval of the tariff
3 VGS shall develop and file for Commission approval a separate Renewable
Vehicle Fuel Tariff to serve customers using RNG as a transportation fuel
4 VGS shall file a marketing plan for the RNG program consistent with the
requirements set forth above within one month of the issuance of this Order
5 VGS shall file an annual report consistent with the requirements set forth above
upon implementation of the RNG program
6 VGS shall file a comprehensive review of the performance of the program with
the Commission and the Department after three years of implementation This review will
include an environmental accounting protocol to quantiff the environmental benefits of the
progrfim
7 VGS shall review proposed RNG supply arrangements with the Department
Docket No 8667
Orprcp oF THE Crnm
Dated at Montpelier Vermont this day of+hb
Z Roisman
Cheney
Page 14
20t7
Puslrc Urrlnv
CovtriquestIssIoN
OP VERMONT
(
)))
)))
Fired otildeeglcL ( JotTAttest c
of the Commission
NorIcE To READERS This decision is subject to revision oftechnical errors Reqders are requested tonotify the Clerk of the Commission (by e-mail telephone or inwriting) or any appqrent errors in order that anynecessary corrections may be made (E-mail address pucclerkvermontgov)
Appeal of this decision to the Supreme Court of Vermont must befiledwith the Clerk of the Comnissionwithin thirty days Appeal will not stay the efect of thszlig Order absentfurther order by this Commission orappropriate actiacuteon by the Supreme Court of Vermont Motions for reconsideration or stay if any must be filed withthe Clerk of the Commissionwithin ten days of the date of this deciacutesion and Order
Exhibit 22 VGS RNG Tariff Rate Filing
Exhibit 23 PUC Approval of VGS RNG Rates
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Case No l8-03 13-TF
Petition of Vermont Gas Systems Inc fotapproval of a new tariff implementing theRenewable Natural Gas program
Order entered
OnonRAppnovINc Tiquestrurn
On January 302018 Vermont Gas Systems Inc (VGS) filed a petition for approval of
a new tariff implementing the Renewable Natural Gas (RNG) program approved by the
Vermont Public Utility Commission (Commission) in Docket No 8667 In that Docket the
Commission required VGS to file a tariff implementing the RNG program when it has procured
RNG supply in amounts reasonably estimated to be sufficient to meet customer demandl In
this Order the Commission approves the new tariff marketed under the name EcoGas with an
effective date of bills rendered on and after March 15 2018
VGS states that it has executed an RNG supply contract with deliveries scheduled for
2018 and that two additional contracts are being negotiated for deliveries beginningin2019
VGS is proposing to set its initial RNG adder at$ll749lCcf which represents a five-year
blended rate based on the three RNG supply arrangements VGS intends to account for the
difference between the cost of RNG supply and the RNG adder as a regulatory asset within gas
costs As additional lower-cost supply is added to the portfolio the regulatory asset balance will
be recovered from EcoGas participants with the goal of fully reducing the balance by the end of
five years Accordingly VGS states that the RNG program will be rate-neutral to VGS and its
non-RNG customers
On February 272018 the Vermont Department of Public Service (Department) filed a
letter recommending that the Commission approve the tariff without a hearing or further
investigation The Department states that the tariff filing and proposed accounting treatment
comply with Vermont rate-setting practices policies precedents and statutes
lslaotx
I Docket 8667 Order of 96117 at 13
Page2Case No 18-0313-TF
Based on the foregoing we hereby approve VGSs proposed RNG tariff to be effective
on a bills-rendered basis beginning on March 15 2018 Recovery of any regulatory asset
balance at the end of the fifth year would need to be approved by the Commission in a future
proceeding
So Omnnnn
Case No l8-0313-TF
8r- day of lruacuterLiquestiquest
Page 3
Dated at Montpelier Vermont this 2018
Roisman PueIrc Urlrrv
CoiriexcllriquestlssloN
Cheney
OF VERMONT
Sarah Hofmann
Onncp oF THE CLBRr
Filed huacuteveuroAacute- icirc dollAttest I
Clerk of the Commission
Notice to Readers This decision is subiect to revision oftechnical errors Readers are requested to notify
the Clerk of the Commission (by e-mail telephone or in writing) or qny qpparent errors in order that any
necessary corrections may be made (E-mail address pucclerkvermontgov)Appeal of this decisiacuteon to the Supreme Court of Yermont must be filed with the Clerk of the Commission
within 30 days Appeal will not stay the efect of this Order oslashbsent further order by this Commission or appropriate
action by the Supreme Court of Vermont Motionsthornr reconsideration or stay if any must befiledwith the Clerk ofthe Commissionwithin 28 doslashys of the date of this decision and Order
)))
))))
PUC Case No 18-0313-TF
Eileen SimollardesLauren HammerVermont Gas
85 Swift StreetSouth Burlington VT 05403
June E Tiemey CommissionerVermont Department of Public Service1 12 State StreetMontpelier VT 05620 -2601
Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
Exhibit 31 Accounting Procedures
Exhibit 31 Accounting for VGS Renewable Natural Gas (Ver-9202019)
1 Purchase of RNG Supply
RNG supply purchases are separated into the cost of the commodity and the cost of the renewable attribute The commodity portion is expensed to gas costs in the delivery month while the renewable attribute is booked to an inventory account referenced herein as the ldquoRenewable Inventory Accountrdquo Like VGSrsquo existing storage inventory accounting the Renewable Inventory Account will track both the dollar value of the renewable attribute and the renewable attribute Mcfs Renewable attribute dollar values are record to ldquo16410050 Inventory RNG Storagerdquo while Mcf values are recorded in the gas cost model maintained by accounting In the month VGS purchases the renewable attribute it is accrued in a book model and goes in to 16410150 Inventory RNG Accrued then moves to the 16410050 in a final model the following month for final
RNG may be purchased at different locations and using varying pricing structures While the accounting for RNG does not vary with the purchase location or price the determination of the value of the renewable attribute will vary depending on whether or not the supply pricing expressly values the renewable attribute as an adder or it is embedded in a fixed price Examples of each are shown below The accounting of RNG supply is intended to separate the cost of the renewable attribute from the cost of the commodity The examples below are not all inclusive of what may occur but intended to show the accounting procedures used to separate the renewable attribute from the commodity and specify ownership of each aspect
In all cases the commodity cost portion - which is the total cost of the RNG purchased excluding the renewable attribute - will be expensed in the delivery month as a cost of gas
Example 1 ndash The fixed price of RNG includes both the commodity and the renewable attribute
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The total cost of the RNG supply purchased during the month is calculated by Accounting within the gas cost model as follows
MMBtu Purchased (as validated in step 2) $ MMBtu purchase price (as provided in a supply confirmation provided by gas supply)
4 For purposes of booking the renewable attribute to inventory it is necessary to calculate the RNG cost per Mcf The RNG cost Mcf is calculated using the total cost of RNG supply as calculated in step 3 divided by the Mcf in step 1
5 The renewable attribute price per Mcf is calculated as follows
RNG cost per Mcf as determined in step 4 ndashplus ldquoother componentsrdquo as calculated pursuant to Attachment A ndash minus ldquoAverage Commodity Costrdquo as calculated pursuant to Attachment A The ldquoother componentsrdquo added to the RNG cost per Mcf will vary depending on where the RNG supply was delivered but in each case will be identified in the calculation shown on Attachment A
6 The renewable attribute price per Mcf the total RNG Mcf delivered is recorded in the Inventory RNG Storage account
7 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
Example 2 - RNG purchased at a renewable attribute price plus a daily or monthly index
Where the pricing of RNG specifically separates the commodity from the renewable attribute the renewable attribute price will be what is recorded in the Renewable Inventory Account
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The renewable attribute price per Mcf the total RNG Mcf delivered as determined in step 1 is recorded in the Renewable Inventory Account
4 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
2 Recalculating the RNG Adder
The RNG Adder paid by customers will be recalculated anytime the Natural Gas charge portion of rates changes The Manager of Gas SupplyGas control is responsible for recalculating the RNG Adder The calculation will be verified and approved by the Vice President ndash Regulatory Affairs The determination of the RNG Adder will be pursuant to the methodology shown in Attachment A The Regulatory Department will prepare the amended RNG Adder tariff for filing with the PUC Upon PUC approval of the RNG Adder the Regulatory Department will prepare a memorandum advising Accounting and Gas Supply of the new RNG Adder as approved
3 Customer purchases VGS Renewable Natural Gas
The RNG Adder at the percent selected by the customer will be applied to the entire monthrsquos usage on the customersrsquo next bill For customers utilizing the S-RNG adder the entire volume elected with be on the customersrsquo next bill The S-RNG Adder nor the RNG Adder and percentage selected will not be prorated based on enrollment or termination date
Customers may terminate or modify their RNG selection upon 3 dayrsquos notice to VGS The termination or modification will be effective on the customerrsquos next monthly bill
The customerrsquos usage for the month will be multiplied by the percentage and the approved RNG Adder For customers utilizing the S-RNG adder the volume elected will be multiplied by the approved RNG adder This amount will then be recorded to SAP accounts 4010015-40010021 depending on which rate class the customer is in The RNG Adder is the same regardless of which rate class a customer is in At the end of the month a report is run by billing from the customer information system that shows total usage and which percentage of RNG the customer has signed up for to calculate the number of MCFrsquos of renewable attribute sold during the billing period Billing also provides a report of the volumes sold through the S-RNG Tarriff The Inventory RNG Storage account maintained within the gas cost model by Accounting is reduced by these Mcf The MCFrsquos are then multiplied by the RNG Adder in effect for the billing month and an entry is made to remove that dollar amount from the Inventory RNG Storage account and into the monthly cost of gas The intent of this transaction is to ensure that cost of the renewable attribute is reflected in the cost of gas in the month it is purchased by the customer This results in a matching of the renewable attribute revenue and expense
The RNG Adder revenue and renewable attributes removed from storage will be included in the gas cost deferral calculation However because there is a matching of the renewable attribute revenue and expense the impact on the deferral calculation will be zero
The calculation of unbilled revenues will exclude RNG as a customer can cancel their participation prior to their next bill
In the event Vermont Gas issues a credit to a customer related to the RNG program the value of the renewable attribute credited and the associated Mcf will not be applied to the Renewable Inventory Account
4 Controls
A spreadsheet is maintained by accounting that shows the MCFrsquos and dollar values of the Renewable Inventory Account This is reconciled monthly by the accounting team and will be reviewed by the Manager Gas SupplyGas Control
Accounting will validate that the amount removed from the Renewable Inventory Account matches the RNG Adder revenue Any discrepancies will be reviewed and corrected
A report will be run for each bill cycle that shows any changes to the RNG percentages selected this will include customers opting to withdraw from the RNG program The customer care team will validate any changes against customer confirmation paperwork
5 Renewable Inventory Account Reconciliation and Forecast
The PUC Order approving the RNG program contains provisions describing how RNG supply and demand imbalances will be addressed These provisions and how VGS will track and comply with them are as discussed in this section The PUC Order approving the RNG Program provides that if the available RNG supply during the previous 12 months is less than the amount purchased by customers VGS may use the funds collected to purchase carbon offsets (Finding 13) If carbon offset are not available VGS will contribute the RNG program revenues to the Clean Energy Development Fund or issue prorated credits to affected customers (Finding 15) The Order also provides that in the event RNG supply exceeds customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any remaining RNG attribute inventory amounts through the PGA or through a rate case as part of its cost of service if the s PGA is no longer in effect at that time (Finding 16 as modified) Finding 11 provides that VGS will use a ldquotrue-uprdquo period of up to 12 months in order to balance the difference between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply) Taken together these provisions require VGS to evaluate the imbalance after 12-months and then true-up the imbalance over the next twelve months To provide a forecast of the supplydemand imbalance quarterly the billing area will run a report showing the expected RNG volumes based on current customer commitments by month for the next 12-months Current customers commitments will be calculated based on the previous 12 months of usage multiplied by the RNG percentage currently signed up for The marketing department will provide their forecast of new RNG sales for the next 12-months Both will be provided to the Manager Gas SupplyGas Control The Manager Gas SupplyGas Control will compare the forecasted RNG sales known and expected to RNG supply commitments and provide a 24-month forecast of the supplydemand balance The supplydemand balance will be reviewed at the risk management meeting The strategy for addressing the imbalance consistent with the PUC order will be determined by the risk management committee
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
Docket No 8667 Page 13
VIII Onunn
Ir rs Hennsy oRDERED ADJUDGED AND DECRnnn by the Public Utility Commission of the
State of Vermont that
1 The findings conclusions and recommendations of the Hearing Officer are
adopted and the Renewable Natural Gas (RNG) program to be implemented by Vermont Gas
SystemsInc (VGS) is approved
2 When VGS has procured RNG supply in amounts reasonably estimated to be
sufficient for estimated customer demand it shall file a formal tariff including proposed rates for
sale of RNG The tariff shall be reviewedpursuantto the procedures of 30 VSA ccedilccedil225226
and227 and sales under the program shall begin after Commission approval of the tariff
3 VGS shall develop and file for Commission approval a separate Renewable
Vehicle Fuel Tariff to serve customers using RNG as a transportation fuel
4 VGS shall file a marketing plan for the RNG program consistent with the
requirements set forth above within one month of the issuance of this Order
5 VGS shall file an annual report consistent with the requirements set forth above
upon implementation of the RNG program
6 VGS shall file a comprehensive review of the performance of the program with
the Commission and the Department after three years of implementation This review will
include an environmental accounting protocol to quantiff the environmental benefits of the
progrfim
7 VGS shall review proposed RNG supply arrangements with the Department
Docket No 8667
Orprcp oF THE Crnm
Dated at Montpelier Vermont this day of+hb
Z Roisman
Cheney
Page 14
20t7
Puslrc Urrlnv
CovtriquestIssIoN
OP VERMONT
(
)))
)))
Fired otildeeglcL ( JotTAttest c
of the Commission
NorIcE To READERS This decision is subject to revision oftechnical errors Reqders are requested tonotify the Clerk of the Commission (by e-mail telephone or inwriting) or any appqrent errors in order that anynecessary corrections may be made (E-mail address pucclerkvermontgov)
Appeal of this decision to the Supreme Court of Vermont must befiledwith the Clerk of the Comnissionwithin thirty days Appeal will not stay the efect of thszlig Order absentfurther order by this Commission orappropriate actiacuteon by the Supreme Court of Vermont Motions for reconsideration or stay if any must be filed withthe Clerk of the Commissionwithin ten days of the date of this deciacutesion and Order
Exhibit 22 VGS RNG Tariff Rate Filing
Exhibit 23 PUC Approval of VGS RNG Rates
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Case No l8-03 13-TF
Petition of Vermont Gas Systems Inc fotapproval of a new tariff implementing theRenewable Natural Gas program
Order entered
OnonRAppnovINc Tiquestrurn
On January 302018 Vermont Gas Systems Inc (VGS) filed a petition for approval of
a new tariff implementing the Renewable Natural Gas (RNG) program approved by the
Vermont Public Utility Commission (Commission) in Docket No 8667 In that Docket the
Commission required VGS to file a tariff implementing the RNG program when it has procured
RNG supply in amounts reasonably estimated to be sufficient to meet customer demandl In
this Order the Commission approves the new tariff marketed under the name EcoGas with an
effective date of bills rendered on and after March 15 2018
VGS states that it has executed an RNG supply contract with deliveries scheduled for
2018 and that two additional contracts are being negotiated for deliveries beginningin2019
VGS is proposing to set its initial RNG adder at$ll749lCcf which represents a five-year
blended rate based on the three RNG supply arrangements VGS intends to account for the
difference between the cost of RNG supply and the RNG adder as a regulatory asset within gas
costs As additional lower-cost supply is added to the portfolio the regulatory asset balance will
be recovered from EcoGas participants with the goal of fully reducing the balance by the end of
five years Accordingly VGS states that the RNG program will be rate-neutral to VGS and its
non-RNG customers
On February 272018 the Vermont Department of Public Service (Department) filed a
letter recommending that the Commission approve the tariff without a hearing or further
investigation The Department states that the tariff filing and proposed accounting treatment
comply with Vermont rate-setting practices policies precedents and statutes
lslaotx
I Docket 8667 Order of 96117 at 13
Page2Case No 18-0313-TF
Based on the foregoing we hereby approve VGSs proposed RNG tariff to be effective
on a bills-rendered basis beginning on March 15 2018 Recovery of any regulatory asset
balance at the end of the fifth year would need to be approved by the Commission in a future
proceeding
So Omnnnn
Case No l8-0313-TF
8r- day of lruacuterLiquestiquest
Page 3
Dated at Montpelier Vermont this 2018
Roisman PueIrc Urlrrv
CoiriexcllriquestlssloN
Cheney
OF VERMONT
Sarah Hofmann
Onncp oF THE CLBRr
Filed huacuteveuroAacute- icirc dollAttest I
Clerk of the Commission
Notice to Readers This decision is subiect to revision oftechnical errors Readers are requested to notify
the Clerk of the Commission (by e-mail telephone or in writing) or qny qpparent errors in order that any
necessary corrections may be made (E-mail address pucclerkvermontgov)Appeal of this decisiacuteon to the Supreme Court of Yermont must be filed with the Clerk of the Commission
within 30 days Appeal will not stay the efect of this Order oslashbsent further order by this Commission or appropriate
action by the Supreme Court of Vermont Motionsthornr reconsideration or stay if any must befiledwith the Clerk ofthe Commissionwithin 28 doslashys of the date of this decision and Order
)))
))))
PUC Case No 18-0313-TF
Eileen SimollardesLauren HammerVermont Gas
85 Swift StreetSouth Burlington VT 05403
June E Tiemey CommissionerVermont Department of Public Service1 12 State StreetMontpelier VT 05620 -2601
Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
Exhibit 31 Accounting Procedures
Exhibit 31 Accounting for VGS Renewable Natural Gas (Ver-9202019)
1 Purchase of RNG Supply
RNG supply purchases are separated into the cost of the commodity and the cost of the renewable attribute The commodity portion is expensed to gas costs in the delivery month while the renewable attribute is booked to an inventory account referenced herein as the ldquoRenewable Inventory Accountrdquo Like VGSrsquo existing storage inventory accounting the Renewable Inventory Account will track both the dollar value of the renewable attribute and the renewable attribute Mcfs Renewable attribute dollar values are record to ldquo16410050 Inventory RNG Storagerdquo while Mcf values are recorded in the gas cost model maintained by accounting In the month VGS purchases the renewable attribute it is accrued in a book model and goes in to 16410150 Inventory RNG Accrued then moves to the 16410050 in a final model the following month for final
RNG may be purchased at different locations and using varying pricing structures While the accounting for RNG does not vary with the purchase location or price the determination of the value of the renewable attribute will vary depending on whether or not the supply pricing expressly values the renewable attribute as an adder or it is embedded in a fixed price Examples of each are shown below The accounting of RNG supply is intended to separate the cost of the renewable attribute from the cost of the commodity The examples below are not all inclusive of what may occur but intended to show the accounting procedures used to separate the renewable attribute from the commodity and specify ownership of each aspect
In all cases the commodity cost portion - which is the total cost of the RNG purchased excluding the renewable attribute - will be expensed in the delivery month as a cost of gas
Example 1 ndash The fixed price of RNG includes both the commodity and the renewable attribute
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The total cost of the RNG supply purchased during the month is calculated by Accounting within the gas cost model as follows
MMBtu Purchased (as validated in step 2) $ MMBtu purchase price (as provided in a supply confirmation provided by gas supply)
4 For purposes of booking the renewable attribute to inventory it is necessary to calculate the RNG cost per Mcf The RNG cost Mcf is calculated using the total cost of RNG supply as calculated in step 3 divided by the Mcf in step 1
5 The renewable attribute price per Mcf is calculated as follows
RNG cost per Mcf as determined in step 4 ndashplus ldquoother componentsrdquo as calculated pursuant to Attachment A ndash minus ldquoAverage Commodity Costrdquo as calculated pursuant to Attachment A The ldquoother componentsrdquo added to the RNG cost per Mcf will vary depending on where the RNG supply was delivered but in each case will be identified in the calculation shown on Attachment A
6 The renewable attribute price per Mcf the total RNG Mcf delivered is recorded in the Inventory RNG Storage account
7 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
Example 2 - RNG purchased at a renewable attribute price plus a daily or monthly index
Where the pricing of RNG specifically separates the commodity from the renewable attribute the renewable attribute price will be what is recorded in the Renewable Inventory Account
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The renewable attribute price per Mcf the total RNG Mcf delivered as determined in step 1 is recorded in the Renewable Inventory Account
4 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
2 Recalculating the RNG Adder
The RNG Adder paid by customers will be recalculated anytime the Natural Gas charge portion of rates changes The Manager of Gas SupplyGas control is responsible for recalculating the RNG Adder The calculation will be verified and approved by the Vice President ndash Regulatory Affairs The determination of the RNG Adder will be pursuant to the methodology shown in Attachment A The Regulatory Department will prepare the amended RNG Adder tariff for filing with the PUC Upon PUC approval of the RNG Adder the Regulatory Department will prepare a memorandum advising Accounting and Gas Supply of the new RNG Adder as approved
3 Customer purchases VGS Renewable Natural Gas
The RNG Adder at the percent selected by the customer will be applied to the entire monthrsquos usage on the customersrsquo next bill For customers utilizing the S-RNG adder the entire volume elected with be on the customersrsquo next bill The S-RNG Adder nor the RNG Adder and percentage selected will not be prorated based on enrollment or termination date
Customers may terminate or modify their RNG selection upon 3 dayrsquos notice to VGS The termination or modification will be effective on the customerrsquos next monthly bill
The customerrsquos usage for the month will be multiplied by the percentage and the approved RNG Adder For customers utilizing the S-RNG adder the volume elected will be multiplied by the approved RNG adder This amount will then be recorded to SAP accounts 4010015-40010021 depending on which rate class the customer is in The RNG Adder is the same regardless of which rate class a customer is in At the end of the month a report is run by billing from the customer information system that shows total usage and which percentage of RNG the customer has signed up for to calculate the number of MCFrsquos of renewable attribute sold during the billing period Billing also provides a report of the volumes sold through the S-RNG Tarriff The Inventory RNG Storage account maintained within the gas cost model by Accounting is reduced by these Mcf The MCFrsquos are then multiplied by the RNG Adder in effect for the billing month and an entry is made to remove that dollar amount from the Inventory RNG Storage account and into the monthly cost of gas The intent of this transaction is to ensure that cost of the renewable attribute is reflected in the cost of gas in the month it is purchased by the customer This results in a matching of the renewable attribute revenue and expense
The RNG Adder revenue and renewable attributes removed from storage will be included in the gas cost deferral calculation However because there is a matching of the renewable attribute revenue and expense the impact on the deferral calculation will be zero
The calculation of unbilled revenues will exclude RNG as a customer can cancel their participation prior to their next bill
In the event Vermont Gas issues a credit to a customer related to the RNG program the value of the renewable attribute credited and the associated Mcf will not be applied to the Renewable Inventory Account
4 Controls
A spreadsheet is maintained by accounting that shows the MCFrsquos and dollar values of the Renewable Inventory Account This is reconciled monthly by the accounting team and will be reviewed by the Manager Gas SupplyGas Control
Accounting will validate that the amount removed from the Renewable Inventory Account matches the RNG Adder revenue Any discrepancies will be reviewed and corrected
A report will be run for each bill cycle that shows any changes to the RNG percentages selected this will include customers opting to withdraw from the RNG program The customer care team will validate any changes against customer confirmation paperwork
5 Renewable Inventory Account Reconciliation and Forecast
The PUC Order approving the RNG program contains provisions describing how RNG supply and demand imbalances will be addressed These provisions and how VGS will track and comply with them are as discussed in this section The PUC Order approving the RNG Program provides that if the available RNG supply during the previous 12 months is less than the amount purchased by customers VGS may use the funds collected to purchase carbon offsets (Finding 13) If carbon offset are not available VGS will contribute the RNG program revenues to the Clean Energy Development Fund or issue prorated credits to affected customers (Finding 15) The Order also provides that in the event RNG supply exceeds customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any remaining RNG attribute inventory amounts through the PGA or through a rate case as part of its cost of service if the s PGA is no longer in effect at that time (Finding 16 as modified) Finding 11 provides that VGS will use a ldquotrue-uprdquo period of up to 12 months in order to balance the difference between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply) Taken together these provisions require VGS to evaluate the imbalance after 12-months and then true-up the imbalance over the next twelve months To provide a forecast of the supplydemand imbalance quarterly the billing area will run a report showing the expected RNG volumes based on current customer commitments by month for the next 12-months Current customers commitments will be calculated based on the previous 12 months of usage multiplied by the RNG percentage currently signed up for The marketing department will provide their forecast of new RNG sales for the next 12-months Both will be provided to the Manager Gas SupplyGas Control The Manager Gas SupplyGas Control will compare the forecasted RNG sales known and expected to RNG supply commitments and provide a 24-month forecast of the supplydemand balance The supplydemand balance will be reviewed at the risk management meeting The strategy for addressing the imbalance consistent with the PUC order will be determined by the risk management committee
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
Docket No 8667
Orprcp oF THE Crnm
Dated at Montpelier Vermont this day of+hb
Z Roisman
Cheney
Page 14
20t7
Puslrc Urrlnv
CovtriquestIssIoN
OP VERMONT
(
)))
)))
Fired otildeeglcL ( JotTAttest c
of the Commission
NorIcE To READERS This decision is subject to revision oftechnical errors Reqders are requested tonotify the Clerk of the Commission (by e-mail telephone or inwriting) or any appqrent errors in order that anynecessary corrections may be made (E-mail address pucclerkvermontgov)
Appeal of this decision to the Supreme Court of Vermont must befiledwith the Clerk of the Comnissionwithin thirty days Appeal will not stay the efect of thszlig Order absentfurther order by this Commission orappropriate actiacuteon by the Supreme Court of Vermont Motions for reconsideration or stay if any must be filed withthe Clerk of the Commissionwithin ten days of the date of this deciacutesion and Order
Exhibit 22 VGS RNG Tariff Rate Filing
Exhibit 23 PUC Approval of VGS RNG Rates
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Case No l8-03 13-TF
Petition of Vermont Gas Systems Inc fotapproval of a new tariff implementing theRenewable Natural Gas program
Order entered
OnonRAppnovINc Tiquestrurn
On January 302018 Vermont Gas Systems Inc (VGS) filed a petition for approval of
a new tariff implementing the Renewable Natural Gas (RNG) program approved by the
Vermont Public Utility Commission (Commission) in Docket No 8667 In that Docket the
Commission required VGS to file a tariff implementing the RNG program when it has procured
RNG supply in amounts reasonably estimated to be sufficient to meet customer demandl In
this Order the Commission approves the new tariff marketed under the name EcoGas with an
effective date of bills rendered on and after March 15 2018
VGS states that it has executed an RNG supply contract with deliveries scheduled for
2018 and that two additional contracts are being negotiated for deliveries beginningin2019
VGS is proposing to set its initial RNG adder at$ll749lCcf which represents a five-year
blended rate based on the three RNG supply arrangements VGS intends to account for the
difference between the cost of RNG supply and the RNG adder as a regulatory asset within gas
costs As additional lower-cost supply is added to the portfolio the regulatory asset balance will
be recovered from EcoGas participants with the goal of fully reducing the balance by the end of
five years Accordingly VGS states that the RNG program will be rate-neutral to VGS and its
non-RNG customers
On February 272018 the Vermont Department of Public Service (Department) filed a
letter recommending that the Commission approve the tariff without a hearing or further
investigation The Department states that the tariff filing and proposed accounting treatment
comply with Vermont rate-setting practices policies precedents and statutes
lslaotx
I Docket 8667 Order of 96117 at 13
Page2Case No 18-0313-TF
Based on the foregoing we hereby approve VGSs proposed RNG tariff to be effective
on a bills-rendered basis beginning on March 15 2018 Recovery of any regulatory asset
balance at the end of the fifth year would need to be approved by the Commission in a future
proceeding
So Omnnnn
Case No l8-0313-TF
8r- day of lruacuterLiquestiquest
Page 3
Dated at Montpelier Vermont this 2018
Roisman PueIrc Urlrrv
CoiriexcllriquestlssloN
Cheney
OF VERMONT
Sarah Hofmann
Onncp oF THE CLBRr
Filed huacuteveuroAacute- icirc dollAttest I
Clerk of the Commission
Notice to Readers This decision is subiect to revision oftechnical errors Readers are requested to notify
the Clerk of the Commission (by e-mail telephone or in writing) or qny qpparent errors in order that any
necessary corrections may be made (E-mail address pucclerkvermontgov)Appeal of this decisiacuteon to the Supreme Court of Yermont must be filed with the Clerk of the Commission
within 30 days Appeal will not stay the efect of this Order oslashbsent further order by this Commission or appropriate
action by the Supreme Court of Vermont Motionsthornr reconsideration or stay if any must befiledwith the Clerk ofthe Commissionwithin 28 doslashys of the date of this decision and Order
)))
))))
PUC Case No 18-0313-TF
Eileen SimollardesLauren HammerVermont Gas
85 Swift StreetSouth Burlington VT 05403
June E Tiemey CommissionerVermont Department of Public Service1 12 State StreetMontpelier VT 05620 -2601
Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
Exhibit 31 Accounting Procedures
Exhibit 31 Accounting for VGS Renewable Natural Gas (Ver-9202019)
1 Purchase of RNG Supply
RNG supply purchases are separated into the cost of the commodity and the cost of the renewable attribute The commodity portion is expensed to gas costs in the delivery month while the renewable attribute is booked to an inventory account referenced herein as the ldquoRenewable Inventory Accountrdquo Like VGSrsquo existing storage inventory accounting the Renewable Inventory Account will track both the dollar value of the renewable attribute and the renewable attribute Mcfs Renewable attribute dollar values are record to ldquo16410050 Inventory RNG Storagerdquo while Mcf values are recorded in the gas cost model maintained by accounting In the month VGS purchases the renewable attribute it is accrued in a book model and goes in to 16410150 Inventory RNG Accrued then moves to the 16410050 in a final model the following month for final
RNG may be purchased at different locations and using varying pricing structures While the accounting for RNG does not vary with the purchase location or price the determination of the value of the renewable attribute will vary depending on whether or not the supply pricing expressly values the renewable attribute as an adder or it is embedded in a fixed price Examples of each are shown below The accounting of RNG supply is intended to separate the cost of the renewable attribute from the cost of the commodity The examples below are not all inclusive of what may occur but intended to show the accounting procedures used to separate the renewable attribute from the commodity and specify ownership of each aspect
In all cases the commodity cost portion - which is the total cost of the RNG purchased excluding the renewable attribute - will be expensed in the delivery month as a cost of gas
Example 1 ndash The fixed price of RNG includes both the commodity and the renewable attribute
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The total cost of the RNG supply purchased during the month is calculated by Accounting within the gas cost model as follows
MMBtu Purchased (as validated in step 2) $ MMBtu purchase price (as provided in a supply confirmation provided by gas supply)
4 For purposes of booking the renewable attribute to inventory it is necessary to calculate the RNG cost per Mcf The RNG cost Mcf is calculated using the total cost of RNG supply as calculated in step 3 divided by the Mcf in step 1
5 The renewable attribute price per Mcf is calculated as follows
RNG cost per Mcf as determined in step 4 ndashplus ldquoother componentsrdquo as calculated pursuant to Attachment A ndash minus ldquoAverage Commodity Costrdquo as calculated pursuant to Attachment A The ldquoother componentsrdquo added to the RNG cost per Mcf will vary depending on where the RNG supply was delivered but in each case will be identified in the calculation shown on Attachment A
6 The renewable attribute price per Mcf the total RNG Mcf delivered is recorded in the Inventory RNG Storage account
7 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
Example 2 - RNG purchased at a renewable attribute price plus a daily or monthly index
Where the pricing of RNG specifically separates the commodity from the renewable attribute the renewable attribute price will be what is recorded in the Renewable Inventory Account
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The renewable attribute price per Mcf the total RNG Mcf delivered as determined in step 1 is recorded in the Renewable Inventory Account
4 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
2 Recalculating the RNG Adder
The RNG Adder paid by customers will be recalculated anytime the Natural Gas charge portion of rates changes The Manager of Gas SupplyGas control is responsible for recalculating the RNG Adder The calculation will be verified and approved by the Vice President ndash Regulatory Affairs The determination of the RNG Adder will be pursuant to the methodology shown in Attachment A The Regulatory Department will prepare the amended RNG Adder tariff for filing with the PUC Upon PUC approval of the RNG Adder the Regulatory Department will prepare a memorandum advising Accounting and Gas Supply of the new RNG Adder as approved
3 Customer purchases VGS Renewable Natural Gas
The RNG Adder at the percent selected by the customer will be applied to the entire monthrsquos usage on the customersrsquo next bill For customers utilizing the S-RNG adder the entire volume elected with be on the customersrsquo next bill The S-RNG Adder nor the RNG Adder and percentage selected will not be prorated based on enrollment or termination date
Customers may terminate or modify their RNG selection upon 3 dayrsquos notice to VGS The termination or modification will be effective on the customerrsquos next monthly bill
The customerrsquos usage for the month will be multiplied by the percentage and the approved RNG Adder For customers utilizing the S-RNG adder the volume elected will be multiplied by the approved RNG adder This amount will then be recorded to SAP accounts 4010015-40010021 depending on which rate class the customer is in The RNG Adder is the same regardless of which rate class a customer is in At the end of the month a report is run by billing from the customer information system that shows total usage and which percentage of RNG the customer has signed up for to calculate the number of MCFrsquos of renewable attribute sold during the billing period Billing also provides a report of the volumes sold through the S-RNG Tarriff The Inventory RNG Storage account maintained within the gas cost model by Accounting is reduced by these Mcf The MCFrsquos are then multiplied by the RNG Adder in effect for the billing month and an entry is made to remove that dollar amount from the Inventory RNG Storage account and into the monthly cost of gas The intent of this transaction is to ensure that cost of the renewable attribute is reflected in the cost of gas in the month it is purchased by the customer This results in a matching of the renewable attribute revenue and expense
The RNG Adder revenue and renewable attributes removed from storage will be included in the gas cost deferral calculation However because there is a matching of the renewable attribute revenue and expense the impact on the deferral calculation will be zero
The calculation of unbilled revenues will exclude RNG as a customer can cancel their participation prior to their next bill
In the event Vermont Gas issues a credit to a customer related to the RNG program the value of the renewable attribute credited and the associated Mcf will not be applied to the Renewable Inventory Account
4 Controls
A spreadsheet is maintained by accounting that shows the MCFrsquos and dollar values of the Renewable Inventory Account This is reconciled monthly by the accounting team and will be reviewed by the Manager Gas SupplyGas Control
Accounting will validate that the amount removed from the Renewable Inventory Account matches the RNG Adder revenue Any discrepancies will be reviewed and corrected
A report will be run for each bill cycle that shows any changes to the RNG percentages selected this will include customers opting to withdraw from the RNG program The customer care team will validate any changes against customer confirmation paperwork
5 Renewable Inventory Account Reconciliation and Forecast
The PUC Order approving the RNG program contains provisions describing how RNG supply and demand imbalances will be addressed These provisions and how VGS will track and comply with them are as discussed in this section The PUC Order approving the RNG Program provides that if the available RNG supply during the previous 12 months is less than the amount purchased by customers VGS may use the funds collected to purchase carbon offsets (Finding 13) If carbon offset are not available VGS will contribute the RNG program revenues to the Clean Energy Development Fund or issue prorated credits to affected customers (Finding 15) The Order also provides that in the event RNG supply exceeds customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any remaining RNG attribute inventory amounts through the PGA or through a rate case as part of its cost of service if the s PGA is no longer in effect at that time (Finding 16 as modified) Finding 11 provides that VGS will use a ldquotrue-uprdquo period of up to 12 months in order to balance the difference between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply) Taken together these provisions require VGS to evaluate the imbalance after 12-months and then true-up the imbalance over the next twelve months To provide a forecast of the supplydemand imbalance quarterly the billing area will run a report showing the expected RNG volumes based on current customer commitments by month for the next 12-months Current customers commitments will be calculated based on the previous 12 months of usage multiplied by the RNG percentage currently signed up for The marketing department will provide their forecast of new RNG sales for the next 12-months Both will be provided to the Manager Gas SupplyGas Control The Manager Gas SupplyGas Control will compare the forecasted RNG sales known and expected to RNG supply commitments and provide a 24-month forecast of the supplydemand balance The supplydemand balance will be reviewed at the risk management meeting The strategy for addressing the imbalance consistent with the PUC order will be determined by the risk management committee
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
Exhibit 22 VGS RNG Tariff Rate Filing
Exhibit 23 PUC Approval of VGS RNG Rates
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Case No l8-03 13-TF
Petition of Vermont Gas Systems Inc fotapproval of a new tariff implementing theRenewable Natural Gas program
Order entered
OnonRAppnovINc Tiquestrurn
On January 302018 Vermont Gas Systems Inc (VGS) filed a petition for approval of
a new tariff implementing the Renewable Natural Gas (RNG) program approved by the
Vermont Public Utility Commission (Commission) in Docket No 8667 In that Docket the
Commission required VGS to file a tariff implementing the RNG program when it has procured
RNG supply in amounts reasonably estimated to be sufficient to meet customer demandl In
this Order the Commission approves the new tariff marketed under the name EcoGas with an
effective date of bills rendered on and after March 15 2018
VGS states that it has executed an RNG supply contract with deliveries scheduled for
2018 and that two additional contracts are being negotiated for deliveries beginningin2019
VGS is proposing to set its initial RNG adder at$ll749lCcf which represents a five-year
blended rate based on the three RNG supply arrangements VGS intends to account for the
difference between the cost of RNG supply and the RNG adder as a regulatory asset within gas
costs As additional lower-cost supply is added to the portfolio the regulatory asset balance will
be recovered from EcoGas participants with the goal of fully reducing the balance by the end of
five years Accordingly VGS states that the RNG program will be rate-neutral to VGS and its
non-RNG customers
On February 272018 the Vermont Department of Public Service (Department) filed a
letter recommending that the Commission approve the tariff without a hearing or further
investigation The Department states that the tariff filing and proposed accounting treatment
comply with Vermont rate-setting practices policies precedents and statutes
lslaotx
I Docket 8667 Order of 96117 at 13
Page2Case No 18-0313-TF
Based on the foregoing we hereby approve VGSs proposed RNG tariff to be effective
on a bills-rendered basis beginning on March 15 2018 Recovery of any regulatory asset
balance at the end of the fifth year would need to be approved by the Commission in a future
proceeding
So Omnnnn
Case No l8-0313-TF
8r- day of lruacuterLiquestiquest
Page 3
Dated at Montpelier Vermont this 2018
Roisman PueIrc Urlrrv
CoiriexcllriquestlssloN
Cheney
OF VERMONT
Sarah Hofmann
Onncp oF THE CLBRr
Filed huacuteveuroAacute- icirc dollAttest I
Clerk of the Commission
Notice to Readers This decision is subiect to revision oftechnical errors Readers are requested to notify
the Clerk of the Commission (by e-mail telephone or in writing) or qny qpparent errors in order that any
necessary corrections may be made (E-mail address pucclerkvermontgov)Appeal of this decisiacuteon to the Supreme Court of Yermont must be filed with the Clerk of the Commission
within 30 days Appeal will not stay the efect of this Order oslashbsent further order by this Commission or appropriate
action by the Supreme Court of Vermont Motionsthornr reconsideration or stay if any must befiledwith the Clerk ofthe Commissionwithin 28 doslashys of the date of this decision and Order
)))
))))
PUC Case No 18-0313-TF
Eileen SimollardesLauren HammerVermont Gas
85 Swift StreetSouth Burlington VT 05403
June E Tiemey CommissionerVermont Department of Public Service1 12 State StreetMontpelier VT 05620 -2601
Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
Exhibit 31 Accounting Procedures
Exhibit 31 Accounting for VGS Renewable Natural Gas (Ver-9202019)
1 Purchase of RNG Supply
RNG supply purchases are separated into the cost of the commodity and the cost of the renewable attribute The commodity portion is expensed to gas costs in the delivery month while the renewable attribute is booked to an inventory account referenced herein as the ldquoRenewable Inventory Accountrdquo Like VGSrsquo existing storage inventory accounting the Renewable Inventory Account will track both the dollar value of the renewable attribute and the renewable attribute Mcfs Renewable attribute dollar values are record to ldquo16410050 Inventory RNG Storagerdquo while Mcf values are recorded in the gas cost model maintained by accounting In the month VGS purchases the renewable attribute it is accrued in a book model and goes in to 16410150 Inventory RNG Accrued then moves to the 16410050 in a final model the following month for final
RNG may be purchased at different locations and using varying pricing structures While the accounting for RNG does not vary with the purchase location or price the determination of the value of the renewable attribute will vary depending on whether or not the supply pricing expressly values the renewable attribute as an adder or it is embedded in a fixed price Examples of each are shown below The accounting of RNG supply is intended to separate the cost of the renewable attribute from the cost of the commodity The examples below are not all inclusive of what may occur but intended to show the accounting procedures used to separate the renewable attribute from the commodity and specify ownership of each aspect
In all cases the commodity cost portion - which is the total cost of the RNG purchased excluding the renewable attribute - will be expensed in the delivery month as a cost of gas
Example 1 ndash The fixed price of RNG includes both the commodity and the renewable attribute
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The total cost of the RNG supply purchased during the month is calculated by Accounting within the gas cost model as follows
MMBtu Purchased (as validated in step 2) $ MMBtu purchase price (as provided in a supply confirmation provided by gas supply)
4 For purposes of booking the renewable attribute to inventory it is necessary to calculate the RNG cost per Mcf The RNG cost Mcf is calculated using the total cost of RNG supply as calculated in step 3 divided by the Mcf in step 1
5 The renewable attribute price per Mcf is calculated as follows
RNG cost per Mcf as determined in step 4 ndashplus ldquoother componentsrdquo as calculated pursuant to Attachment A ndash minus ldquoAverage Commodity Costrdquo as calculated pursuant to Attachment A The ldquoother componentsrdquo added to the RNG cost per Mcf will vary depending on where the RNG supply was delivered but in each case will be identified in the calculation shown on Attachment A
6 The renewable attribute price per Mcf the total RNG Mcf delivered is recorded in the Inventory RNG Storage account
7 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
Example 2 - RNG purchased at a renewable attribute price plus a daily or monthly index
Where the pricing of RNG specifically separates the commodity from the renewable attribute the renewable attribute price will be what is recorded in the Renewable Inventory Account
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The renewable attribute price per Mcf the total RNG Mcf delivered as determined in step 1 is recorded in the Renewable Inventory Account
4 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
2 Recalculating the RNG Adder
The RNG Adder paid by customers will be recalculated anytime the Natural Gas charge portion of rates changes The Manager of Gas SupplyGas control is responsible for recalculating the RNG Adder The calculation will be verified and approved by the Vice President ndash Regulatory Affairs The determination of the RNG Adder will be pursuant to the methodology shown in Attachment A The Regulatory Department will prepare the amended RNG Adder tariff for filing with the PUC Upon PUC approval of the RNG Adder the Regulatory Department will prepare a memorandum advising Accounting and Gas Supply of the new RNG Adder as approved
3 Customer purchases VGS Renewable Natural Gas
The RNG Adder at the percent selected by the customer will be applied to the entire monthrsquos usage on the customersrsquo next bill For customers utilizing the S-RNG adder the entire volume elected with be on the customersrsquo next bill The S-RNG Adder nor the RNG Adder and percentage selected will not be prorated based on enrollment or termination date
Customers may terminate or modify their RNG selection upon 3 dayrsquos notice to VGS The termination or modification will be effective on the customerrsquos next monthly bill
The customerrsquos usage for the month will be multiplied by the percentage and the approved RNG Adder For customers utilizing the S-RNG adder the volume elected will be multiplied by the approved RNG adder This amount will then be recorded to SAP accounts 4010015-40010021 depending on which rate class the customer is in The RNG Adder is the same regardless of which rate class a customer is in At the end of the month a report is run by billing from the customer information system that shows total usage and which percentage of RNG the customer has signed up for to calculate the number of MCFrsquos of renewable attribute sold during the billing period Billing also provides a report of the volumes sold through the S-RNG Tarriff The Inventory RNG Storage account maintained within the gas cost model by Accounting is reduced by these Mcf The MCFrsquos are then multiplied by the RNG Adder in effect for the billing month and an entry is made to remove that dollar amount from the Inventory RNG Storage account and into the monthly cost of gas The intent of this transaction is to ensure that cost of the renewable attribute is reflected in the cost of gas in the month it is purchased by the customer This results in a matching of the renewable attribute revenue and expense
The RNG Adder revenue and renewable attributes removed from storage will be included in the gas cost deferral calculation However because there is a matching of the renewable attribute revenue and expense the impact on the deferral calculation will be zero
The calculation of unbilled revenues will exclude RNG as a customer can cancel their participation prior to their next bill
In the event Vermont Gas issues a credit to a customer related to the RNG program the value of the renewable attribute credited and the associated Mcf will not be applied to the Renewable Inventory Account
4 Controls
A spreadsheet is maintained by accounting that shows the MCFrsquos and dollar values of the Renewable Inventory Account This is reconciled monthly by the accounting team and will be reviewed by the Manager Gas SupplyGas Control
Accounting will validate that the amount removed from the Renewable Inventory Account matches the RNG Adder revenue Any discrepancies will be reviewed and corrected
A report will be run for each bill cycle that shows any changes to the RNG percentages selected this will include customers opting to withdraw from the RNG program The customer care team will validate any changes against customer confirmation paperwork
5 Renewable Inventory Account Reconciliation and Forecast
The PUC Order approving the RNG program contains provisions describing how RNG supply and demand imbalances will be addressed These provisions and how VGS will track and comply with them are as discussed in this section The PUC Order approving the RNG Program provides that if the available RNG supply during the previous 12 months is less than the amount purchased by customers VGS may use the funds collected to purchase carbon offsets (Finding 13) If carbon offset are not available VGS will contribute the RNG program revenues to the Clean Energy Development Fund or issue prorated credits to affected customers (Finding 15) The Order also provides that in the event RNG supply exceeds customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any remaining RNG attribute inventory amounts through the PGA or through a rate case as part of its cost of service if the s PGA is no longer in effect at that time (Finding 16 as modified) Finding 11 provides that VGS will use a ldquotrue-uprdquo period of up to 12 months in order to balance the difference between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply) Taken together these provisions require VGS to evaluate the imbalance after 12-months and then true-up the imbalance over the next twelve months To provide a forecast of the supplydemand imbalance quarterly the billing area will run a report showing the expected RNG volumes based on current customer commitments by month for the next 12-months Current customers commitments will be calculated based on the previous 12 months of usage multiplied by the RNG percentage currently signed up for The marketing department will provide their forecast of new RNG sales for the next 12-months Both will be provided to the Manager Gas SupplyGas Control The Manager Gas SupplyGas Control will compare the forecasted RNG sales known and expected to RNG supply commitments and provide a 24-month forecast of the supplydemand balance The supplydemand balance will be reviewed at the risk management meeting The strategy for addressing the imbalance consistent with the PUC order will be determined by the risk management committee
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
Exhibit 23 PUC Approval of VGS RNG Rates
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Case No l8-03 13-TF
Petition of Vermont Gas Systems Inc fotapproval of a new tariff implementing theRenewable Natural Gas program
Order entered
OnonRAppnovINc Tiquestrurn
On January 302018 Vermont Gas Systems Inc (VGS) filed a petition for approval of
a new tariff implementing the Renewable Natural Gas (RNG) program approved by the
Vermont Public Utility Commission (Commission) in Docket No 8667 In that Docket the
Commission required VGS to file a tariff implementing the RNG program when it has procured
RNG supply in amounts reasonably estimated to be sufficient to meet customer demandl In
this Order the Commission approves the new tariff marketed under the name EcoGas with an
effective date of bills rendered on and after March 15 2018
VGS states that it has executed an RNG supply contract with deliveries scheduled for
2018 and that two additional contracts are being negotiated for deliveries beginningin2019
VGS is proposing to set its initial RNG adder at$ll749lCcf which represents a five-year
blended rate based on the three RNG supply arrangements VGS intends to account for the
difference between the cost of RNG supply and the RNG adder as a regulatory asset within gas
costs As additional lower-cost supply is added to the portfolio the regulatory asset balance will
be recovered from EcoGas participants with the goal of fully reducing the balance by the end of
five years Accordingly VGS states that the RNG program will be rate-neutral to VGS and its
non-RNG customers
On February 272018 the Vermont Department of Public Service (Department) filed a
letter recommending that the Commission approve the tariff without a hearing or further
investigation The Department states that the tariff filing and proposed accounting treatment
comply with Vermont rate-setting practices policies precedents and statutes
lslaotx
I Docket 8667 Order of 96117 at 13
Page2Case No 18-0313-TF
Based on the foregoing we hereby approve VGSs proposed RNG tariff to be effective
on a bills-rendered basis beginning on March 15 2018 Recovery of any regulatory asset
balance at the end of the fifth year would need to be approved by the Commission in a future
proceeding
So Omnnnn
Case No l8-0313-TF
8r- day of lruacuterLiquestiquest
Page 3
Dated at Montpelier Vermont this 2018
Roisman PueIrc Urlrrv
CoiriexcllriquestlssloN
Cheney
OF VERMONT
Sarah Hofmann
Onncp oF THE CLBRr
Filed huacuteveuroAacute- icirc dollAttest I
Clerk of the Commission
Notice to Readers This decision is subiect to revision oftechnical errors Readers are requested to notify
the Clerk of the Commission (by e-mail telephone or in writing) or qny qpparent errors in order that any
necessary corrections may be made (E-mail address pucclerkvermontgov)Appeal of this decisiacuteon to the Supreme Court of Yermont must be filed with the Clerk of the Commission
within 30 days Appeal will not stay the efect of this Order oslashbsent further order by this Commission or appropriate
action by the Supreme Court of Vermont Motionsthornr reconsideration or stay if any must befiledwith the Clerk ofthe Commissionwithin 28 doslashys of the date of this decision and Order
)))
))))
PUC Case No 18-0313-TF
Eileen SimollardesLauren HammerVermont Gas
85 Swift StreetSouth Burlington VT 05403
June E Tiemey CommissionerVermont Department of Public Service1 12 State StreetMontpelier VT 05620 -2601
Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
Exhibit 31 Accounting Procedures
Exhibit 31 Accounting for VGS Renewable Natural Gas (Ver-9202019)
1 Purchase of RNG Supply
RNG supply purchases are separated into the cost of the commodity and the cost of the renewable attribute The commodity portion is expensed to gas costs in the delivery month while the renewable attribute is booked to an inventory account referenced herein as the ldquoRenewable Inventory Accountrdquo Like VGSrsquo existing storage inventory accounting the Renewable Inventory Account will track both the dollar value of the renewable attribute and the renewable attribute Mcfs Renewable attribute dollar values are record to ldquo16410050 Inventory RNG Storagerdquo while Mcf values are recorded in the gas cost model maintained by accounting In the month VGS purchases the renewable attribute it is accrued in a book model and goes in to 16410150 Inventory RNG Accrued then moves to the 16410050 in a final model the following month for final
RNG may be purchased at different locations and using varying pricing structures While the accounting for RNG does not vary with the purchase location or price the determination of the value of the renewable attribute will vary depending on whether or not the supply pricing expressly values the renewable attribute as an adder or it is embedded in a fixed price Examples of each are shown below The accounting of RNG supply is intended to separate the cost of the renewable attribute from the cost of the commodity The examples below are not all inclusive of what may occur but intended to show the accounting procedures used to separate the renewable attribute from the commodity and specify ownership of each aspect
In all cases the commodity cost portion - which is the total cost of the RNG purchased excluding the renewable attribute - will be expensed in the delivery month as a cost of gas
Example 1 ndash The fixed price of RNG includes both the commodity and the renewable attribute
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The total cost of the RNG supply purchased during the month is calculated by Accounting within the gas cost model as follows
MMBtu Purchased (as validated in step 2) $ MMBtu purchase price (as provided in a supply confirmation provided by gas supply)
4 For purposes of booking the renewable attribute to inventory it is necessary to calculate the RNG cost per Mcf The RNG cost Mcf is calculated using the total cost of RNG supply as calculated in step 3 divided by the Mcf in step 1
5 The renewable attribute price per Mcf is calculated as follows
RNG cost per Mcf as determined in step 4 ndashplus ldquoother componentsrdquo as calculated pursuant to Attachment A ndash minus ldquoAverage Commodity Costrdquo as calculated pursuant to Attachment A The ldquoother componentsrdquo added to the RNG cost per Mcf will vary depending on where the RNG supply was delivered but in each case will be identified in the calculation shown on Attachment A
6 The renewable attribute price per Mcf the total RNG Mcf delivered is recorded in the Inventory RNG Storage account
7 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
Example 2 - RNG purchased at a renewable attribute price plus a daily or monthly index
Where the pricing of RNG specifically separates the commodity from the renewable attribute the renewable attribute price will be what is recorded in the Renewable Inventory Account
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The renewable attribute price per Mcf the total RNG Mcf delivered as determined in step 1 is recorded in the Renewable Inventory Account
4 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
2 Recalculating the RNG Adder
The RNG Adder paid by customers will be recalculated anytime the Natural Gas charge portion of rates changes The Manager of Gas SupplyGas control is responsible for recalculating the RNG Adder The calculation will be verified and approved by the Vice President ndash Regulatory Affairs The determination of the RNG Adder will be pursuant to the methodology shown in Attachment A The Regulatory Department will prepare the amended RNG Adder tariff for filing with the PUC Upon PUC approval of the RNG Adder the Regulatory Department will prepare a memorandum advising Accounting and Gas Supply of the new RNG Adder as approved
3 Customer purchases VGS Renewable Natural Gas
The RNG Adder at the percent selected by the customer will be applied to the entire monthrsquos usage on the customersrsquo next bill For customers utilizing the S-RNG adder the entire volume elected with be on the customersrsquo next bill The S-RNG Adder nor the RNG Adder and percentage selected will not be prorated based on enrollment or termination date
Customers may terminate or modify their RNG selection upon 3 dayrsquos notice to VGS The termination or modification will be effective on the customerrsquos next monthly bill
The customerrsquos usage for the month will be multiplied by the percentage and the approved RNG Adder For customers utilizing the S-RNG adder the volume elected will be multiplied by the approved RNG adder This amount will then be recorded to SAP accounts 4010015-40010021 depending on which rate class the customer is in The RNG Adder is the same regardless of which rate class a customer is in At the end of the month a report is run by billing from the customer information system that shows total usage and which percentage of RNG the customer has signed up for to calculate the number of MCFrsquos of renewable attribute sold during the billing period Billing also provides a report of the volumes sold through the S-RNG Tarriff The Inventory RNG Storage account maintained within the gas cost model by Accounting is reduced by these Mcf The MCFrsquos are then multiplied by the RNG Adder in effect for the billing month and an entry is made to remove that dollar amount from the Inventory RNG Storage account and into the monthly cost of gas The intent of this transaction is to ensure that cost of the renewable attribute is reflected in the cost of gas in the month it is purchased by the customer This results in a matching of the renewable attribute revenue and expense
The RNG Adder revenue and renewable attributes removed from storage will be included in the gas cost deferral calculation However because there is a matching of the renewable attribute revenue and expense the impact on the deferral calculation will be zero
The calculation of unbilled revenues will exclude RNG as a customer can cancel their participation prior to their next bill
In the event Vermont Gas issues a credit to a customer related to the RNG program the value of the renewable attribute credited and the associated Mcf will not be applied to the Renewable Inventory Account
4 Controls
A spreadsheet is maintained by accounting that shows the MCFrsquos and dollar values of the Renewable Inventory Account This is reconciled monthly by the accounting team and will be reviewed by the Manager Gas SupplyGas Control
Accounting will validate that the amount removed from the Renewable Inventory Account matches the RNG Adder revenue Any discrepancies will be reviewed and corrected
A report will be run for each bill cycle that shows any changes to the RNG percentages selected this will include customers opting to withdraw from the RNG program The customer care team will validate any changes against customer confirmation paperwork
5 Renewable Inventory Account Reconciliation and Forecast
The PUC Order approving the RNG program contains provisions describing how RNG supply and demand imbalances will be addressed These provisions and how VGS will track and comply with them are as discussed in this section The PUC Order approving the RNG Program provides that if the available RNG supply during the previous 12 months is less than the amount purchased by customers VGS may use the funds collected to purchase carbon offsets (Finding 13) If carbon offset are not available VGS will contribute the RNG program revenues to the Clean Energy Development Fund or issue prorated credits to affected customers (Finding 15) The Order also provides that in the event RNG supply exceeds customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any remaining RNG attribute inventory amounts through the PGA or through a rate case as part of its cost of service if the s PGA is no longer in effect at that time (Finding 16 as modified) Finding 11 provides that VGS will use a ldquotrue-uprdquo period of up to 12 months in order to balance the difference between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply) Taken together these provisions require VGS to evaluate the imbalance after 12-months and then true-up the imbalance over the next twelve months To provide a forecast of the supplydemand imbalance quarterly the billing area will run a report showing the expected RNG volumes based on current customer commitments by month for the next 12-months Current customers commitments will be calculated based on the previous 12 months of usage multiplied by the RNG percentage currently signed up for The marketing department will provide their forecast of new RNG sales for the next 12-months Both will be provided to the Manager Gas SupplyGas Control The Manager Gas SupplyGas Control will compare the forecasted RNG sales known and expected to RNG supply commitments and provide a 24-month forecast of the supplydemand balance The supplydemand balance will be reviewed at the risk management meeting The strategy for addressing the imbalance consistent with the PUC order will be determined by the risk management committee
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
STATE OF VERMONTPUBLIC UTILITY COMMISSION
Case No l8-03 13-TF
Petition of Vermont Gas Systems Inc fotapproval of a new tariff implementing theRenewable Natural Gas program
Order entered
OnonRAppnovINc Tiquestrurn
On January 302018 Vermont Gas Systems Inc (VGS) filed a petition for approval of
a new tariff implementing the Renewable Natural Gas (RNG) program approved by the
Vermont Public Utility Commission (Commission) in Docket No 8667 In that Docket the
Commission required VGS to file a tariff implementing the RNG program when it has procured
RNG supply in amounts reasonably estimated to be sufficient to meet customer demandl In
this Order the Commission approves the new tariff marketed under the name EcoGas with an
effective date of bills rendered on and after March 15 2018
VGS states that it has executed an RNG supply contract with deliveries scheduled for
2018 and that two additional contracts are being negotiated for deliveries beginningin2019
VGS is proposing to set its initial RNG adder at$ll749lCcf which represents a five-year
blended rate based on the three RNG supply arrangements VGS intends to account for the
difference between the cost of RNG supply and the RNG adder as a regulatory asset within gas
costs As additional lower-cost supply is added to the portfolio the regulatory asset balance will
be recovered from EcoGas participants with the goal of fully reducing the balance by the end of
five years Accordingly VGS states that the RNG program will be rate-neutral to VGS and its
non-RNG customers
On February 272018 the Vermont Department of Public Service (Department) filed a
letter recommending that the Commission approve the tariff without a hearing or further
investigation The Department states that the tariff filing and proposed accounting treatment
comply with Vermont rate-setting practices policies precedents and statutes
lslaotx
I Docket 8667 Order of 96117 at 13
Page2Case No 18-0313-TF
Based on the foregoing we hereby approve VGSs proposed RNG tariff to be effective
on a bills-rendered basis beginning on March 15 2018 Recovery of any regulatory asset
balance at the end of the fifth year would need to be approved by the Commission in a future
proceeding
So Omnnnn
Case No l8-0313-TF
8r- day of lruacuterLiquestiquest
Page 3
Dated at Montpelier Vermont this 2018
Roisman PueIrc Urlrrv
CoiriexcllriquestlssloN
Cheney
OF VERMONT
Sarah Hofmann
Onncp oF THE CLBRr
Filed huacuteveuroAacute- icirc dollAttest I
Clerk of the Commission
Notice to Readers This decision is subiect to revision oftechnical errors Readers are requested to notify
the Clerk of the Commission (by e-mail telephone or in writing) or qny qpparent errors in order that any
necessary corrections may be made (E-mail address pucclerkvermontgov)Appeal of this decisiacuteon to the Supreme Court of Yermont must be filed with the Clerk of the Commission
within 30 days Appeal will not stay the efect of this Order oslashbsent further order by this Commission or appropriate
action by the Supreme Court of Vermont Motionsthornr reconsideration or stay if any must befiledwith the Clerk ofthe Commissionwithin 28 doslashys of the date of this decision and Order
)))
))))
PUC Case No 18-0313-TF
Eileen SimollardesLauren HammerVermont Gas
85 Swift StreetSouth Burlington VT 05403
June E Tiemey CommissionerVermont Department of Public Service1 12 State StreetMontpelier VT 05620 -2601
Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
Exhibit 31 Accounting Procedures
Exhibit 31 Accounting for VGS Renewable Natural Gas (Ver-9202019)
1 Purchase of RNG Supply
RNG supply purchases are separated into the cost of the commodity and the cost of the renewable attribute The commodity portion is expensed to gas costs in the delivery month while the renewable attribute is booked to an inventory account referenced herein as the ldquoRenewable Inventory Accountrdquo Like VGSrsquo existing storage inventory accounting the Renewable Inventory Account will track both the dollar value of the renewable attribute and the renewable attribute Mcfs Renewable attribute dollar values are record to ldquo16410050 Inventory RNG Storagerdquo while Mcf values are recorded in the gas cost model maintained by accounting In the month VGS purchases the renewable attribute it is accrued in a book model and goes in to 16410150 Inventory RNG Accrued then moves to the 16410050 in a final model the following month for final
RNG may be purchased at different locations and using varying pricing structures While the accounting for RNG does not vary with the purchase location or price the determination of the value of the renewable attribute will vary depending on whether or not the supply pricing expressly values the renewable attribute as an adder or it is embedded in a fixed price Examples of each are shown below The accounting of RNG supply is intended to separate the cost of the renewable attribute from the cost of the commodity The examples below are not all inclusive of what may occur but intended to show the accounting procedures used to separate the renewable attribute from the commodity and specify ownership of each aspect
In all cases the commodity cost portion - which is the total cost of the RNG purchased excluding the renewable attribute - will be expensed in the delivery month as a cost of gas
Example 1 ndash The fixed price of RNG includes both the commodity and the renewable attribute
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The total cost of the RNG supply purchased during the month is calculated by Accounting within the gas cost model as follows
MMBtu Purchased (as validated in step 2) $ MMBtu purchase price (as provided in a supply confirmation provided by gas supply)
4 For purposes of booking the renewable attribute to inventory it is necessary to calculate the RNG cost per Mcf The RNG cost Mcf is calculated using the total cost of RNG supply as calculated in step 3 divided by the Mcf in step 1
5 The renewable attribute price per Mcf is calculated as follows
RNG cost per Mcf as determined in step 4 ndashplus ldquoother componentsrdquo as calculated pursuant to Attachment A ndash minus ldquoAverage Commodity Costrdquo as calculated pursuant to Attachment A The ldquoother componentsrdquo added to the RNG cost per Mcf will vary depending on where the RNG supply was delivered but in each case will be identified in the calculation shown on Attachment A
6 The renewable attribute price per Mcf the total RNG Mcf delivered is recorded in the Inventory RNG Storage account
7 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
Example 2 - RNG purchased at a renewable attribute price plus a daily or monthly index
Where the pricing of RNG specifically separates the commodity from the renewable attribute the renewable attribute price will be what is recorded in the Renewable Inventory Account
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The renewable attribute price per Mcf the total RNG Mcf delivered as determined in step 1 is recorded in the Renewable Inventory Account
4 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
2 Recalculating the RNG Adder
The RNG Adder paid by customers will be recalculated anytime the Natural Gas charge portion of rates changes The Manager of Gas SupplyGas control is responsible for recalculating the RNG Adder The calculation will be verified and approved by the Vice President ndash Regulatory Affairs The determination of the RNG Adder will be pursuant to the methodology shown in Attachment A The Regulatory Department will prepare the amended RNG Adder tariff for filing with the PUC Upon PUC approval of the RNG Adder the Regulatory Department will prepare a memorandum advising Accounting and Gas Supply of the new RNG Adder as approved
3 Customer purchases VGS Renewable Natural Gas
The RNG Adder at the percent selected by the customer will be applied to the entire monthrsquos usage on the customersrsquo next bill For customers utilizing the S-RNG adder the entire volume elected with be on the customersrsquo next bill The S-RNG Adder nor the RNG Adder and percentage selected will not be prorated based on enrollment or termination date
Customers may terminate or modify their RNG selection upon 3 dayrsquos notice to VGS The termination or modification will be effective on the customerrsquos next monthly bill
The customerrsquos usage for the month will be multiplied by the percentage and the approved RNG Adder For customers utilizing the S-RNG adder the volume elected will be multiplied by the approved RNG adder This amount will then be recorded to SAP accounts 4010015-40010021 depending on which rate class the customer is in The RNG Adder is the same regardless of which rate class a customer is in At the end of the month a report is run by billing from the customer information system that shows total usage and which percentage of RNG the customer has signed up for to calculate the number of MCFrsquos of renewable attribute sold during the billing period Billing also provides a report of the volumes sold through the S-RNG Tarriff The Inventory RNG Storage account maintained within the gas cost model by Accounting is reduced by these Mcf The MCFrsquos are then multiplied by the RNG Adder in effect for the billing month and an entry is made to remove that dollar amount from the Inventory RNG Storage account and into the monthly cost of gas The intent of this transaction is to ensure that cost of the renewable attribute is reflected in the cost of gas in the month it is purchased by the customer This results in a matching of the renewable attribute revenue and expense
The RNG Adder revenue and renewable attributes removed from storage will be included in the gas cost deferral calculation However because there is a matching of the renewable attribute revenue and expense the impact on the deferral calculation will be zero
The calculation of unbilled revenues will exclude RNG as a customer can cancel their participation prior to their next bill
In the event Vermont Gas issues a credit to a customer related to the RNG program the value of the renewable attribute credited and the associated Mcf will not be applied to the Renewable Inventory Account
4 Controls
A spreadsheet is maintained by accounting that shows the MCFrsquos and dollar values of the Renewable Inventory Account This is reconciled monthly by the accounting team and will be reviewed by the Manager Gas SupplyGas Control
Accounting will validate that the amount removed from the Renewable Inventory Account matches the RNG Adder revenue Any discrepancies will be reviewed and corrected
A report will be run for each bill cycle that shows any changes to the RNG percentages selected this will include customers opting to withdraw from the RNG program The customer care team will validate any changes against customer confirmation paperwork
5 Renewable Inventory Account Reconciliation and Forecast
The PUC Order approving the RNG program contains provisions describing how RNG supply and demand imbalances will be addressed These provisions and how VGS will track and comply with them are as discussed in this section The PUC Order approving the RNG Program provides that if the available RNG supply during the previous 12 months is less than the amount purchased by customers VGS may use the funds collected to purchase carbon offsets (Finding 13) If carbon offset are not available VGS will contribute the RNG program revenues to the Clean Energy Development Fund or issue prorated credits to affected customers (Finding 15) The Order also provides that in the event RNG supply exceeds customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any remaining RNG attribute inventory amounts through the PGA or through a rate case as part of its cost of service if the s PGA is no longer in effect at that time (Finding 16 as modified) Finding 11 provides that VGS will use a ldquotrue-uprdquo period of up to 12 months in order to balance the difference between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply) Taken together these provisions require VGS to evaluate the imbalance after 12-months and then true-up the imbalance over the next twelve months To provide a forecast of the supplydemand imbalance quarterly the billing area will run a report showing the expected RNG volumes based on current customer commitments by month for the next 12-months Current customers commitments will be calculated based on the previous 12 months of usage multiplied by the RNG percentage currently signed up for The marketing department will provide their forecast of new RNG sales for the next 12-months Both will be provided to the Manager Gas SupplyGas Control The Manager Gas SupplyGas Control will compare the forecasted RNG sales known and expected to RNG supply commitments and provide a 24-month forecast of the supplydemand balance The supplydemand balance will be reviewed at the risk management meeting The strategy for addressing the imbalance consistent with the PUC order will be determined by the risk management committee
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
Page2Case No 18-0313-TF
Based on the foregoing we hereby approve VGSs proposed RNG tariff to be effective
on a bills-rendered basis beginning on March 15 2018 Recovery of any regulatory asset
balance at the end of the fifth year would need to be approved by the Commission in a future
proceeding
So Omnnnn
Case No l8-0313-TF
8r- day of lruacuterLiquestiquest
Page 3
Dated at Montpelier Vermont this 2018
Roisman PueIrc Urlrrv
CoiriexcllriquestlssloN
Cheney
OF VERMONT
Sarah Hofmann
Onncp oF THE CLBRr
Filed huacuteveuroAacute- icirc dollAttest I
Clerk of the Commission
Notice to Readers This decision is subiect to revision oftechnical errors Readers are requested to notify
the Clerk of the Commission (by e-mail telephone or in writing) or qny qpparent errors in order that any
necessary corrections may be made (E-mail address pucclerkvermontgov)Appeal of this decisiacuteon to the Supreme Court of Yermont must be filed with the Clerk of the Commission
within 30 days Appeal will not stay the efect of this Order oslashbsent further order by this Commission or appropriate
action by the Supreme Court of Vermont Motionsthornr reconsideration or stay if any must befiledwith the Clerk ofthe Commissionwithin 28 doslashys of the date of this decision and Order
)))
))))
PUC Case No 18-0313-TF
Eileen SimollardesLauren HammerVermont Gas
85 Swift StreetSouth Burlington VT 05403
June E Tiemey CommissionerVermont Department of Public Service1 12 State StreetMontpelier VT 05620 -2601
Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
Exhibit 31 Accounting Procedures
Exhibit 31 Accounting for VGS Renewable Natural Gas (Ver-9202019)
1 Purchase of RNG Supply
RNG supply purchases are separated into the cost of the commodity and the cost of the renewable attribute The commodity portion is expensed to gas costs in the delivery month while the renewable attribute is booked to an inventory account referenced herein as the ldquoRenewable Inventory Accountrdquo Like VGSrsquo existing storage inventory accounting the Renewable Inventory Account will track both the dollar value of the renewable attribute and the renewable attribute Mcfs Renewable attribute dollar values are record to ldquo16410050 Inventory RNG Storagerdquo while Mcf values are recorded in the gas cost model maintained by accounting In the month VGS purchases the renewable attribute it is accrued in a book model and goes in to 16410150 Inventory RNG Accrued then moves to the 16410050 in a final model the following month for final
RNG may be purchased at different locations and using varying pricing structures While the accounting for RNG does not vary with the purchase location or price the determination of the value of the renewable attribute will vary depending on whether or not the supply pricing expressly values the renewable attribute as an adder or it is embedded in a fixed price Examples of each are shown below The accounting of RNG supply is intended to separate the cost of the renewable attribute from the cost of the commodity The examples below are not all inclusive of what may occur but intended to show the accounting procedures used to separate the renewable attribute from the commodity and specify ownership of each aspect
In all cases the commodity cost portion - which is the total cost of the RNG purchased excluding the renewable attribute - will be expensed in the delivery month as a cost of gas
Example 1 ndash The fixed price of RNG includes both the commodity and the renewable attribute
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The total cost of the RNG supply purchased during the month is calculated by Accounting within the gas cost model as follows
MMBtu Purchased (as validated in step 2) $ MMBtu purchase price (as provided in a supply confirmation provided by gas supply)
4 For purposes of booking the renewable attribute to inventory it is necessary to calculate the RNG cost per Mcf The RNG cost Mcf is calculated using the total cost of RNG supply as calculated in step 3 divided by the Mcf in step 1
5 The renewable attribute price per Mcf is calculated as follows
RNG cost per Mcf as determined in step 4 ndashplus ldquoother componentsrdquo as calculated pursuant to Attachment A ndash minus ldquoAverage Commodity Costrdquo as calculated pursuant to Attachment A The ldquoother componentsrdquo added to the RNG cost per Mcf will vary depending on where the RNG supply was delivered but in each case will be identified in the calculation shown on Attachment A
6 The renewable attribute price per Mcf the total RNG Mcf delivered is recorded in the Inventory RNG Storage account
7 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
Example 2 - RNG purchased at a renewable attribute price plus a daily or monthly index
Where the pricing of RNG specifically separates the commodity from the renewable attribute the renewable attribute price will be what is recorded in the Renewable Inventory Account
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The renewable attribute price per Mcf the total RNG Mcf delivered as determined in step 1 is recorded in the Renewable Inventory Account
4 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
2 Recalculating the RNG Adder
The RNG Adder paid by customers will be recalculated anytime the Natural Gas charge portion of rates changes The Manager of Gas SupplyGas control is responsible for recalculating the RNG Adder The calculation will be verified and approved by the Vice President ndash Regulatory Affairs The determination of the RNG Adder will be pursuant to the methodology shown in Attachment A The Regulatory Department will prepare the amended RNG Adder tariff for filing with the PUC Upon PUC approval of the RNG Adder the Regulatory Department will prepare a memorandum advising Accounting and Gas Supply of the new RNG Adder as approved
3 Customer purchases VGS Renewable Natural Gas
The RNG Adder at the percent selected by the customer will be applied to the entire monthrsquos usage on the customersrsquo next bill For customers utilizing the S-RNG adder the entire volume elected with be on the customersrsquo next bill The S-RNG Adder nor the RNG Adder and percentage selected will not be prorated based on enrollment or termination date
Customers may terminate or modify their RNG selection upon 3 dayrsquos notice to VGS The termination or modification will be effective on the customerrsquos next monthly bill
The customerrsquos usage for the month will be multiplied by the percentage and the approved RNG Adder For customers utilizing the S-RNG adder the volume elected will be multiplied by the approved RNG adder This amount will then be recorded to SAP accounts 4010015-40010021 depending on which rate class the customer is in The RNG Adder is the same regardless of which rate class a customer is in At the end of the month a report is run by billing from the customer information system that shows total usage and which percentage of RNG the customer has signed up for to calculate the number of MCFrsquos of renewable attribute sold during the billing period Billing also provides a report of the volumes sold through the S-RNG Tarriff The Inventory RNG Storage account maintained within the gas cost model by Accounting is reduced by these Mcf The MCFrsquos are then multiplied by the RNG Adder in effect for the billing month and an entry is made to remove that dollar amount from the Inventory RNG Storage account and into the monthly cost of gas The intent of this transaction is to ensure that cost of the renewable attribute is reflected in the cost of gas in the month it is purchased by the customer This results in a matching of the renewable attribute revenue and expense
The RNG Adder revenue and renewable attributes removed from storage will be included in the gas cost deferral calculation However because there is a matching of the renewable attribute revenue and expense the impact on the deferral calculation will be zero
The calculation of unbilled revenues will exclude RNG as a customer can cancel their participation prior to their next bill
In the event Vermont Gas issues a credit to a customer related to the RNG program the value of the renewable attribute credited and the associated Mcf will not be applied to the Renewable Inventory Account
4 Controls
A spreadsheet is maintained by accounting that shows the MCFrsquos and dollar values of the Renewable Inventory Account This is reconciled monthly by the accounting team and will be reviewed by the Manager Gas SupplyGas Control
Accounting will validate that the amount removed from the Renewable Inventory Account matches the RNG Adder revenue Any discrepancies will be reviewed and corrected
A report will be run for each bill cycle that shows any changes to the RNG percentages selected this will include customers opting to withdraw from the RNG program The customer care team will validate any changes against customer confirmation paperwork
5 Renewable Inventory Account Reconciliation and Forecast
The PUC Order approving the RNG program contains provisions describing how RNG supply and demand imbalances will be addressed These provisions and how VGS will track and comply with them are as discussed in this section The PUC Order approving the RNG Program provides that if the available RNG supply during the previous 12 months is less than the amount purchased by customers VGS may use the funds collected to purchase carbon offsets (Finding 13) If carbon offset are not available VGS will contribute the RNG program revenues to the Clean Energy Development Fund or issue prorated credits to affected customers (Finding 15) The Order also provides that in the event RNG supply exceeds customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any remaining RNG attribute inventory amounts through the PGA or through a rate case as part of its cost of service if the s PGA is no longer in effect at that time (Finding 16 as modified) Finding 11 provides that VGS will use a ldquotrue-uprdquo period of up to 12 months in order to balance the difference between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply) Taken together these provisions require VGS to evaluate the imbalance after 12-months and then true-up the imbalance over the next twelve months To provide a forecast of the supplydemand imbalance quarterly the billing area will run a report showing the expected RNG volumes based on current customer commitments by month for the next 12-months Current customers commitments will be calculated based on the previous 12 months of usage multiplied by the RNG percentage currently signed up for The marketing department will provide their forecast of new RNG sales for the next 12-months Both will be provided to the Manager Gas SupplyGas Control The Manager Gas SupplyGas Control will compare the forecasted RNG sales known and expected to RNG supply commitments and provide a 24-month forecast of the supplydemand balance The supplydemand balance will be reviewed at the risk management meeting The strategy for addressing the imbalance consistent with the PUC order will be determined by the risk management committee
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
Case No l8-0313-TF
8r- day of lruacuterLiquestiquest
Page 3
Dated at Montpelier Vermont this 2018
Roisman PueIrc Urlrrv
CoiriexcllriquestlssloN
Cheney
OF VERMONT
Sarah Hofmann
Onncp oF THE CLBRr
Filed huacuteveuroAacute- icirc dollAttest I
Clerk of the Commission
Notice to Readers This decision is subiect to revision oftechnical errors Readers are requested to notify
the Clerk of the Commission (by e-mail telephone or in writing) or qny qpparent errors in order that any
necessary corrections may be made (E-mail address pucclerkvermontgov)Appeal of this decisiacuteon to the Supreme Court of Yermont must be filed with the Clerk of the Commission
within 30 days Appeal will not stay the efect of this Order oslashbsent further order by this Commission or appropriate
action by the Supreme Court of Vermont Motionsthornr reconsideration or stay if any must befiledwith the Clerk ofthe Commissionwithin 28 doslashys of the date of this decision and Order
)))
))))
PUC Case No 18-0313-TF
Eileen SimollardesLauren HammerVermont Gas
85 Swift StreetSouth Burlington VT 05403
June E Tiemey CommissionerVermont Department of Public Service1 12 State StreetMontpelier VT 05620 -2601
Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
Exhibit 31 Accounting Procedures
Exhibit 31 Accounting for VGS Renewable Natural Gas (Ver-9202019)
1 Purchase of RNG Supply
RNG supply purchases are separated into the cost of the commodity and the cost of the renewable attribute The commodity portion is expensed to gas costs in the delivery month while the renewable attribute is booked to an inventory account referenced herein as the ldquoRenewable Inventory Accountrdquo Like VGSrsquo existing storage inventory accounting the Renewable Inventory Account will track both the dollar value of the renewable attribute and the renewable attribute Mcfs Renewable attribute dollar values are record to ldquo16410050 Inventory RNG Storagerdquo while Mcf values are recorded in the gas cost model maintained by accounting In the month VGS purchases the renewable attribute it is accrued in a book model and goes in to 16410150 Inventory RNG Accrued then moves to the 16410050 in a final model the following month for final
RNG may be purchased at different locations and using varying pricing structures While the accounting for RNG does not vary with the purchase location or price the determination of the value of the renewable attribute will vary depending on whether or not the supply pricing expressly values the renewable attribute as an adder or it is embedded in a fixed price Examples of each are shown below The accounting of RNG supply is intended to separate the cost of the renewable attribute from the cost of the commodity The examples below are not all inclusive of what may occur but intended to show the accounting procedures used to separate the renewable attribute from the commodity and specify ownership of each aspect
In all cases the commodity cost portion - which is the total cost of the RNG purchased excluding the renewable attribute - will be expensed in the delivery month as a cost of gas
Example 1 ndash The fixed price of RNG includes both the commodity and the renewable attribute
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The total cost of the RNG supply purchased during the month is calculated by Accounting within the gas cost model as follows
MMBtu Purchased (as validated in step 2) $ MMBtu purchase price (as provided in a supply confirmation provided by gas supply)
4 For purposes of booking the renewable attribute to inventory it is necessary to calculate the RNG cost per Mcf The RNG cost Mcf is calculated using the total cost of RNG supply as calculated in step 3 divided by the Mcf in step 1
5 The renewable attribute price per Mcf is calculated as follows
RNG cost per Mcf as determined in step 4 ndashplus ldquoother componentsrdquo as calculated pursuant to Attachment A ndash minus ldquoAverage Commodity Costrdquo as calculated pursuant to Attachment A The ldquoother componentsrdquo added to the RNG cost per Mcf will vary depending on where the RNG supply was delivered but in each case will be identified in the calculation shown on Attachment A
6 The renewable attribute price per Mcf the total RNG Mcf delivered is recorded in the Inventory RNG Storage account
7 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
Example 2 - RNG purchased at a renewable attribute price plus a daily or monthly index
Where the pricing of RNG specifically separates the commodity from the renewable attribute the renewable attribute price will be what is recorded in the Renewable Inventory Account
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The renewable attribute price per Mcf the total RNG Mcf delivered as determined in step 1 is recorded in the Renewable Inventory Account
4 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
2 Recalculating the RNG Adder
The RNG Adder paid by customers will be recalculated anytime the Natural Gas charge portion of rates changes The Manager of Gas SupplyGas control is responsible for recalculating the RNG Adder The calculation will be verified and approved by the Vice President ndash Regulatory Affairs The determination of the RNG Adder will be pursuant to the methodology shown in Attachment A The Regulatory Department will prepare the amended RNG Adder tariff for filing with the PUC Upon PUC approval of the RNG Adder the Regulatory Department will prepare a memorandum advising Accounting and Gas Supply of the new RNG Adder as approved
3 Customer purchases VGS Renewable Natural Gas
The RNG Adder at the percent selected by the customer will be applied to the entire monthrsquos usage on the customersrsquo next bill For customers utilizing the S-RNG adder the entire volume elected with be on the customersrsquo next bill The S-RNG Adder nor the RNG Adder and percentage selected will not be prorated based on enrollment or termination date
Customers may terminate or modify their RNG selection upon 3 dayrsquos notice to VGS The termination or modification will be effective on the customerrsquos next monthly bill
The customerrsquos usage for the month will be multiplied by the percentage and the approved RNG Adder For customers utilizing the S-RNG adder the volume elected will be multiplied by the approved RNG adder This amount will then be recorded to SAP accounts 4010015-40010021 depending on which rate class the customer is in The RNG Adder is the same regardless of which rate class a customer is in At the end of the month a report is run by billing from the customer information system that shows total usage and which percentage of RNG the customer has signed up for to calculate the number of MCFrsquos of renewable attribute sold during the billing period Billing also provides a report of the volumes sold through the S-RNG Tarriff The Inventory RNG Storage account maintained within the gas cost model by Accounting is reduced by these Mcf The MCFrsquos are then multiplied by the RNG Adder in effect for the billing month and an entry is made to remove that dollar amount from the Inventory RNG Storage account and into the monthly cost of gas The intent of this transaction is to ensure that cost of the renewable attribute is reflected in the cost of gas in the month it is purchased by the customer This results in a matching of the renewable attribute revenue and expense
The RNG Adder revenue and renewable attributes removed from storage will be included in the gas cost deferral calculation However because there is a matching of the renewable attribute revenue and expense the impact on the deferral calculation will be zero
The calculation of unbilled revenues will exclude RNG as a customer can cancel their participation prior to their next bill
In the event Vermont Gas issues a credit to a customer related to the RNG program the value of the renewable attribute credited and the associated Mcf will not be applied to the Renewable Inventory Account
4 Controls
A spreadsheet is maintained by accounting that shows the MCFrsquos and dollar values of the Renewable Inventory Account This is reconciled monthly by the accounting team and will be reviewed by the Manager Gas SupplyGas Control
Accounting will validate that the amount removed from the Renewable Inventory Account matches the RNG Adder revenue Any discrepancies will be reviewed and corrected
A report will be run for each bill cycle that shows any changes to the RNG percentages selected this will include customers opting to withdraw from the RNG program The customer care team will validate any changes against customer confirmation paperwork
5 Renewable Inventory Account Reconciliation and Forecast
The PUC Order approving the RNG program contains provisions describing how RNG supply and demand imbalances will be addressed These provisions and how VGS will track and comply with them are as discussed in this section The PUC Order approving the RNG Program provides that if the available RNG supply during the previous 12 months is less than the amount purchased by customers VGS may use the funds collected to purchase carbon offsets (Finding 13) If carbon offset are not available VGS will contribute the RNG program revenues to the Clean Energy Development Fund or issue prorated credits to affected customers (Finding 15) The Order also provides that in the event RNG supply exceeds customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any remaining RNG attribute inventory amounts through the PGA or through a rate case as part of its cost of service if the s PGA is no longer in effect at that time (Finding 16 as modified) Finding 11 provides that VGS will use a ldquotrue-uprdquo period of up to 12 months in order to balance the difference between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply) Taken together these provisions require VGS to evaluate the imbalance after 12-months and then true-up the imbalance over the next twelve months To provide a forecast of the supplydemand imbalance quarterly the billing area will run a report showing the expected RNG volumes based on current customer commitments by month for the next 12-months Current customers commitments will be calculated based on the previous 12 months of usage multiplied by the RNG percentage currently signed up for The marketing department will provide their forecast of new RNG sales for the next 12-months Both will be provided to the Manager Gas SupplyGas Control The Manager Gas SupplyGas Control will compare the forecasted RNG sales known and expected to RNG supply commitments and provide a 24-month forecast of the supplydemand balance The supplydemand balance will be reviewed at the risk management meeting The strategy for addressing the imbalance consistent with the PUC order will be determined by the risk management committee
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
PUC Case No 18-0313-TF
Eileen SimollardesLauren HammerVermont Gas
85 Swift StreetSouth Burlington VT 05403
June E Tiemey CommissionerVermont Department of Public Service1 12 State StreetMontpelier VT 05620 -2601
Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
Exhibit 31 Accounting Procedures
Exhibit 31 Accounting for VGS Renewable Natural Gas (Ver-9202019)
1 Purchase of RNG Supply
RNG supply purchases are separated into the cost of the commodity and the cost of the renewable attribute The commodity portion is expensed to gas costs in the delivery month while the renewable attribute is booked to an inventory account referenced herein as the ldquoRenewable Inventory Accountrdquo Like VGSrsquo existing storage inventory accounting the Renewable Inventory Account will track both the dollar value of the renewable attribute and the renewable attribute Mcfs Renewable attribute dollar values are record to ldquo16410050 Inventory RNG Storagerdquo while Mcf values are recorded in the gas cost model maintained by accounting In the month VGS purchases the renewable attribute it is accrued in a book model and goes in to 16410150 Inventory RNG Accrued then moves to the 16410050 in a final model the following month for final
RNG may be purchased at different locations and using varying pricing structures While the accounting for RNG does not vary with the purchase location or price the determination of the value of the renewable attribute will vary depending on whether or not the supply pricing expressly values the renewable attribute as an adder or it is embedded in a fixed price Examples of each are shown below The accounting of RNG supply is intended to separate the cost of the renewable attribute from the cost of the commodity The examples below are not all inclusive of what may occur but intended to show the accounting procedures used to separate the renewable attribute from the commodity and specify ownership of each aspect
In all cases the commodity cost portion - which is the total cost of the RNG purchased excluding the renewable attribute - will be expensed in the delivery month as a cost of gas
Example 1 ndash The fixed price of RNG includes both the commodity and the renewable attribute
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The total cost of the RNG supply purchased during the month is calculated by Accounting within the gas cost model as follows
MMBtu Purchased (as validated in step 2) $ MMBtu purchase price (as provided in a supply confirmation provided by gas supply)
4 For purposes of booking the renewable attribute to inventory it is necessary to calculate the RNG cost per Mcf The RNG cost Mcf is calculated using the total cost of RNG supply as calculated in step 3 divided by the Mcf in step 1
5 The renewable attribute price per Mcf is calculated as follows
RNG cost per Mcf as determined in step 4 ndashplus ldquoother componentsrdquo as calculated pursuant to Attachment A ndash minus ldquoAverage Commodity Costrdquo as calculated pursuant to Attachment A The ldquoother componentsrdquo added to the RNG cost per Mcf will vary depending on where the RNG supply was delivered but in each case will be identified in the calculation shown on Attachment A
6 The renewable attribute price per Mcf the total RNG Mcf delivered is recorded in the Inventory RNG Storage account
7 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
Example 2 - RNG purchased at a renewable attribute price plus a daily or monthly index
Where the pricing of RNG specifically separates the commodity from the renewable attribute the renewable attribute price will be what is recorded in the Renewable Inventory Account
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The renewable attribute price per Mcf the total RNG Mcf delivered as determined in step 1 is recorded in the Renewable Inventory Account
4 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
2 Recalculating the RNG Adder
The RNG Adder paid by customers will be recalculated anytime the Natural Gas charge portion of rates changes The Manager of Gas SupplyGas control is responsible for recalculating the RNG Adder The calculation will be verified and approved by the Vice President ndash Regulatory Affairs The determination of the RNG Adder will be pursuant to the methodology shown in Attachment A The Regulatory Department will prepare the amended RNG Adder tariff for filing with the PUC Upon PUC approval of the RNG Adder the Regulatory Department will prepare a memorandum advising Accounting and Gas Supply of the new RNG Adder as approved
3 Customer purchases VGS Renewable Natural Gas
The RNG Adder at the percent selected by the customer will be applied to the entire monthrsquos usage on the customersrsquo next bill For customers utilizing the S-RNG adder the entire volume elected with be on the customersrsquo next bill The S-RNG Adder nor the RNG Adder and percentage selected will not be prorated based on enrollment or termination date
Customers may terminate or modify their RNG selection upon 3 dayrsquos notice to VGS The termination or modification will be effective on the customerrsquos next monthly bill
The customerrsquos usage for the month will be multiplied by the percentage and the approved RNG Adder For customers utilizing the S-RNG adder the volume elected will be multiplied by the approved RNG adder This amount will then be recorded to SAP accounts 4010015-40010021 depending on which rate class the customer is in The RNG Adder is the same regardless of which rate class a customer is in At the end of the month a report is run by billing from the customer information system that shows total usage and which percentage of RNG the customer has signed up for to calculate the number of MCFrsquos of renewable attribute sold during the billing period Billing also provides a report of the volumes sold through the S-RNG Tarriff The Inventory RNG Storage account maintained within the gas cost model by Accounting is reduced by these Mcf The MCFrsquos are then multiplied by the RNG Adder in effect for the billing month and an entry is made to remove that dollar amount from the Inventory RNG Storage account and into the monthly cost of gas The intent of this transaction is to ensure that cost of the renewable attribute is reflected in the cost of gas in the month it is purchased by the customer This results in a matching of the renewable attribute revenue and expense
The RNG Adder revenue and renewable attributes removed from storage will be included in the gas cost deferral calculation However because there is a matching of the renewable attribute revenue and expense the impact on the deferral calculation will be zero
The calculation of unbilled revenues will exclude RNG as a customer can cancel their participation prior to their next bill
In the event Vermont Gas issues a credit to a customer related to the RNG program the value of the renewable attribute credited and the associated Mcf will not be applied to the Renewable Inventory Account
4 Controls
A spreadsheet is maintained by accounting that shows the MCFrsquos and dollar values of the Renewable Inventory Account This is reconciled monthly by the accounting team and will be reviewed by the Manager Gas SupplyGas Control
Accounting will validate that the amount removed from the Renewable Inventory Account matches the RNG Adder revenue Any discrepancies will be reviewed and corrected
A report will be run for each bill cycle that shows any changes to the RNG percentages selected this will include customers opting to withdraw from the RNG program The customer care team will validate any changes against customer confirmation paperwork
5 Renewable Inventory Account Reconciliation and Forecast
The PUC Order approving the RNG program contains provisions describing how RNG supply and demand imbalances will be addressed These provisions and how VGS will track and comply with them are as discussed in this section The PUC Order approving the RNG Program provides that if the available RNG supply during the previous 12 months is less than the amount purchased by customers VGS may use the funds collected to purchase carbon offsets (Finding 13) If carbon offset are not available VGS will contribute the RNG program revenues to the Clean Energy Development Fund or issue prorated credits to affected customers (Finding 15) The Order also provides that in the event RNG supply exceeds customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any remaining RNG attribute inventory amounts through the PGA or through a rate case as part of its cost of service if the s PGA is no longer in effect at that time (Finding 16 as modified) Finding 11 provides that VGS will use a ldquotrue-uprdquo period of up to 12 months in order to balance the difference between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply) Taken together these provisions require VGS to evaluate the imbalance after 12-months and then true-up the imbalance over the next twelve months To provide a forecast of the supplydemand imbalance quarterly the billing area will run a report showing the expected RNG volumes based on current customer commitments by month for the next 12-months Current customers commitments will be calculated based on the previous 12 months of usage multiplied by the RNG percentage currently signed up for The marketing department will provide their forecast of new RNG sales for the next 12-months Both will be provided to the Manager Gas SupplyGas Control The Manager Gas SupplyGas Control will compare the forecasted RNG sales known and expected to RNG supply commitments and provide a 24-month forecast of the supplydemand balance The supplydemand balance will be reviewed at the risk management meeting The strategy for addressing the imbalance consistent with the PUC order will be determined by the risk management committee
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
Exhibit 31 Accounting Procedures
Exhibit 31 Accounting for VGS Renewable Natural Gas (Ver-9202019)
1 Purchase of RNG Supply
RNG supply purchases are separated into the cost of the commodity and the cost of the renewable attribute The commodity portion is expensed to gas costs in the delivery month while the renewable attribute is booked to an inventory account referenced herein as the ldquoRenewable Inventory Accountrdquo Like VGSrsquo existing storage inventory accounting the Renewable Inventory Account will track both the dollar value of the renewable attribute and the renewable attribute Mcfs Renewable attribute dollar values are record to ldquo16410050 Inventory RNG Storagerdquo while Mcf values are recorded in the gas cost model maintained by accounting In the month VGS purchases the renewable attribute it is accrued in a book model and goes in to 16410150 Inventory RNG Accrued then moves to the 16410050 in a final model the following month for final
RNG may be purchased at different locations and using varying pricing structures While the accounting for RNG does not vary with the purchase location or price the determination of the value of the renewable attribute will vary depending on whether or not the supply pricing expressly values the renewable attribute as an adder or it is embedded in a fixed price Examples of each are shown below The accounting of RNG supply is intended to separate the cost of the renewable attribute from the cost of the commodity The examples below are not all inclusive of what may occur but intended to show the accounting procedures used to separate the renewable attribute from the commodity and specify ownership of each aspect
In all cases the commodity cost portion - which is the total cost of the RNG purchased excluding the renewable attribute - will be expensed in the delivery month as a cost of gas
Example 1 ndash The fixed price of RNG includes both the commodity and the renewable attribute
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The total cost of the RNG supply purchased during the month is calculated by Accounting within the gas cost model as follows
MMBtu Purchased (as validated in step 2) $ MMBtu purchase price (as provided in a supply confirmation provided by gas supply)
4 For purposes of booking the renewable attribute to inventory it is necessary to calculate the RNG cost per Mcf The RNG cost Mcf is calculated using the total cost of RNG supply as calculated in step 3 divided by the Mcf in step 1
5 The renewable attribute price per Mcf is calculated as follows
RNG cost per Mcf as determined in step 4 ndashplus ldquoother componentsrdquo as calculated pursuant to Attachment A ndash minus ldquoAverage Commodity Costrdquo as calculated pursuant to Attachment A The ldquoother componentsrdquo added to the RNG cost per Mcf will vary depending on where the RNG supply was delivered but in each case will be identified in the calculation shown on Attachment A
6 The renewable attribute price per Mcf the total RNG Mcf delivered is recorded in the Inventory RNG Storage account
7 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
Example 2 - RNG purchased at a renewable attribute price plus a daily or monthly index
Where the pricing of RNG specifically separates the commodity from the renewable attribute the renewable attribute price will be what is recorded in the Renewable Inventory Account
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The renewable attribute price per Mcf the total RNG Mcf delivered as determined in step 1 is recorded in the Renewable Inventory Account
4 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
2 Recalculating the RNG Adder
The RNG Adder paid by customers will be recalculated anytime the Natural Gas charge portion of rates changes The Manager of Gas SupplyGas control is responsible for recalculating the RNG Adder The calculation will be verified and approved by the Vice President ndash Regulatory Affairs The determination of the RNG Adder will be pursuant to the methodology shown in Attachment A The Regulatory Department will prepare the amended RNG Adder tariff for filing with the PUC Upon PUC approval of the RNG Adder the Regulatory Department will prepare a memorandum advising Accounting and Gas Supply of the new RNG Adder as approved
3 Customer purchases VGS Renewable Natural Gas
The RNG Adder at the percent selected by the customer will be applied to the entire monthrsquos usage on the customersrsquo next bill For customers utilizing the S-RNG adder the entire volume elected with be on the customersrsquo next bill The S-RNG Adder nor the RNG Adder and percentage selected will not be prorated based on enrollment or termination date
Customers may terminate or modify their RNG selection upon 3 dayrsquos notice to VGS The termination or modification will be effective on the customerrsquos next monthly bill
The customerrsquos usage for the month will be multiplied by the percentage and the approved RNG Adder For customers utilizing the S-RNG adder the volume elected will be multiplied by the approved RNG adder This amount will then be recorded to SAP accounts 4010015-40010021 depending on which rate class the customer is in The RNG Adder is the same regardless of which rate class a customer is in At the end of the month a report is run by billing from the customer information system that shows total usage and which percentage of RNG the customer has signed up for to calculate the number of MCFrsquos of renewable attribute sold during the billing period Billing also provides a report of the volumes sold through the S-RNG Tarriff The Inventory RNG Storage account maintained within the gas cost model by Accounting is reduced by these Mcf The MCFrsquos are then multiplied by the RNG Adder in effect for the billing month and an entry is made to remove that dollar amount from the Inventory RNG Storage account and into the monthly cost of gas The intent of this transaction is to ensure that cost of the renewable attribute is reflected in the cost of gas in the month it is purchased by the customer This results in a matching of the renewable attribute revenue and expense
The RNG Adder revenue and renewable attributes removed from storage will be included in the gas cost deferral calculation However because there is a matching of the renewable attribute revenue and expense the impact on the deferral calculation will be zero
The calculation of unbilled revenues will exclude RNG as a customer can cancel their participation prior to their next bill
In the event Vermont Gas issues a credit to a customer related to the RNG program the value of the renewable attribute credited and the associated Mcf will not be applied to the Renewable Inventory Account
4 Controls
A spreadsheet is maintained by accounting that shows the MCFrsquos and dollar values of the Renewable Inventory Account This is reconciled monthly by the accounting team and will be reviewed by the Manager Gas SupplyGas Control
Accounting will validate that the amount removed from the Renewable Inventory Account matches the RNG Adder revenue Any discrepancies will be reviewed and corrected
A report will be run for each bill cycle that shows any changes to the RNG percentages selected this will include customers opting to withdraw from the RNG program The customer care team will validate any changes against customer confirmation paperwork
5 Renewable Inventory Account Reconciliation and Forecast
The PUC Order approving the RNG program contains provisions describing how RNG supply and demand imbalances will be addressed These provisions and how VGS will track and comply with them are as discussed in this section The PUC Order approving the RNG Program provides that if the available RNG supply during the previous 12 months is less than the amount purchased by customers VGS may use the funds collected to purchase carbon offsets (Finding 13) If carbon offset are not available VGS will contribute the RNG program revenues to the Clean Energy Development Fund or issue prorated credits to affected customers (Finding 15) The Order also provides that in the event RNG supply exceeds customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any remaining RNG attribute inventory amounts through the PGA or through a rate case as part of its cost of service if the s PGA is no longer in effect at that time (Finding 16 as modified) Finding 11 provides that VGS will use a ldquotrue-uprdquo period of up to 12 months in order to balance the difference between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply) Taken together these provisions require VGS to evaluate the imbalance after 12-months and then true-up the imbalance over the next twelve months To provide a forecast of the supplydemand imbalance quarterly the billing area will run a report showing the expected RNG volumes based on current customer commitments by month for the next 12-months Current customers commitments will be calculated based on the previous 12 months of usage multiplied by the RNG percentage currently signed up for The marketing department will provide their forecast of new RNG sales for the next 12-months Both will be provided to the Manager Gas SupplyGas Control The Manager Gas SupplyGas Control will compare the forecasted RNG sales known and expected to RNG supply commitments and provide a 24-month forecast of the supplydemand balance The supplydemand balance will be reviewed at the risk management meeting The strategy for addressing the imbalance consistent with the PUC order will be determined by the risk management committee
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
Exhibit 31 Accounting Procedures
Exhibit 31 Accounting for VGS Renewable Natural Gas (Ver-9202019)
1 Purchase of RNG Supply
RNG supply purchases are separated into the cost of the commodity and the cost of the renewable attribute The commodity portion is expensed to gas costs in the delivery month while the renewable attribute is booked to an inventory account referenced herein as the ldquoRenewable Inventory Accountrdquo Like VGSrsquo existing storage inventory accounting the Renewable Inventory Account will track both the dollar value of the renewable attribute and the renewable attribute Mcfs Renewable attribute dollar values are record to ldquo16410050 Inventory RNG Storagerdquo while Mcf values are recorded in the gas cost model maintained by accounting In the month VGS purchases the renewable attribute it is accrued in a book model and goes in to 16410150 Inventory RNG Accrued then moves to the 16410050 in a final model the following month for final
RNG may be purchased at different locations and using varying pricing structures While the accounting for RNG does not vary with the purchase location or price the determination of the value of the renewable attribute will vary depending on whether or not the supply pricing expressly values the renewable attribute as an adder or it is embedded in a fixed price Examples of each are shown below The accounting of RNG supply is intended to separate the cost of the renewable attribute from the cost of the commodity The examples below are not all inclusive of what may occur but intended to show the accounting procedures used to separate the renewable attribute from the commodity and specify ownership of each aspect
In all cases the commodity cost portion - which is the total cost of the RNG purchased excluding the renewable attribute - will be expensed in the delivery month as a cost of gas
Example 1 ndash The fixed price of RNG includes both the commodity and the renewable attribute
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The total cost of the RNG supply purchased during the month is calculated by Accounting within the gas cost model as follows
MMBtu Purchased (as validated in step 2) $ MMBtu purchase price (as provided in a supply confirmation provided by gas supply)
4 For purposes of booking the renewable attribute to inventory it is necessary to calculate the RNG cost per Mcf The RNG cost Mcf is calculated using the total cost of RNG supply as calculated in step 3 divided by the Mcf in step 1
5 The renewable attribute price per Mcf is calculated as follows
RNG cost per Mcf as determined in step 4 ndashplus ldquoother componentsrdquo as calculated pursuant to Attachment A ndash minus ldquoAverage Commodity Costrdquo as calculated pursuant to Attachment A The ldquoother componentsrdquo added to the RNG cost per Mcf will vary depending on where the RNG supply was delivered but in each case will be identified in the calculation shown on Attachment A
6 The renewable attribute price per Mcf the total RNG Mcf delivered is recorded in the Inventory RNG Storage account
7 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
Example 2 - RNG purchased at a renewable attribute price plus a daily or monthly index
Where the pricing of RNG specifically separates the commodity from the renewable attribute the renewable attribute price will be what is recorded in the Renewable Inventory Account
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The renewable attribute price per Mcf the total RNG Mcf delivered as determined in step 1 is recorded in the Renewable Inventory Account
4 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
2 Recalculating the RNG Adder
The RNG Adder paid by customers will be recalculated anytime the Natural Gas charge portion of rates changes The Manager of Gas SupplyGas control is responsible for recalculating the RNG Adder The calculation will be verified and approved by the Vice President ndash Regulatory Affairs The determination of the RNG Adder will be pursuant to the methodology shown in Attachment A The Regulatory Department will prepare the amended RNG Adder tariff for filing with the PUC Upon PUC approval of the RNG Adder the Regulatory Department will prepare a memorandum advising Accounting and Gas Supply of the new RNG Adder as approved
3 Customer purchases VGS Renewable Natural Gas
The RNG Adder at the percent selected by the customer will be applied to the entire monthrsquos usage on the customersrsquo next bill For customers utilizing the S-RNG adder the entire volume elected with be on the customersrsquo next bill The S-RNG Adder nor the RNG Adder and percentage selected will not be prorated based on enrollment or termination date
Customers may terminate or modify their RNG selection upon 3 dayrsquos notice to VGS The termination or modification will be effective on the customerrsquos next monthly bill
The customerrsquos usage for the month will be multiplied by the percentage and the approved RNG Adder For customers utilizing the S-RNG adder the volume elected will be multiplied by the approved RNG adder This amount will then be recorded to SAP accounts 4010015-40010021 depending on which rate class the customer is in The RNG Adder is the same regardless of which rate class a customer is in At the end of the month a report is run by billing from the customer information system that shows total usage and which percentage of RNG the customer has signed up for to calculate the number of MCFrsquos of renewable attribute sold during the billing period Billing also provides a report of the volumes sold through the S-RNG Tarriff The Inventory RNG Storage account maintained within the gas cost model by Accounting is reduced by these Mcf The MCFrsquos are then multiplied by the RNG Adder in effect for the billing month and an entry is made to remove that dollar amount from the Inventory RNG Storage account and into the monthly cost of gas The intent of this transaction is to ensure that cost of the renewable attribute is reflected in the cost of gas in the month it is purchased by the customer This results in a matching of the renewable attribute revenue and expense
The RNG Adder revenue and renewable attributes removed from storage will be included in the gas cost deferral calculation However because there is a matching of the renewable attribute revenue and expense the impact on the deferral calculation will be zero
The calculation of unbilled revenues will exclude RNG as a customer can cancel their participation prior to their next bill
In the event Vermont Gas issues a credit to a customer related to the RNG program the value of the renewable attribute credited and the associated Mcf will not be applied to the Renewable Inventory Account
4 Controls
A spreadsheet is maintained by accounting that shows the MCFrsquos and dollar values of the Renewable Inventory Account This is reconciled monthly by the accounting team and will be reviewed by the Manager Gas SupplyGas Control
Accounting will validate that the amount removed from the Renewable Inventory Account matches the RNG Adder revenue Any discrepancies will be reviewed and corrected
A report will be run for each bill cycle that shows any changes to the RNG percentages selected this will include customers opting to withdraw from the RNG program The customer care team will validate any changes against customer confirmation paperwork
5 Renewable Inventory Account Reconciliation and Forecast
The PUC Order approving the RNG program contains provisions describing how RNG supply and demand imbalances will be addressed These provisions and how VGS will track and comply with them are as discussed in this section The PUC Order approving the RNG Program provides that if the available RNG supply during the previous 12 months is less than the amount purchased by customers VGS may use the funds collected to purchase carbon offsets (Finding 13) If carbon offset are not available VGS will contribute the RNG program revenues to the Clean Energy Development Fund or issue prorated credits to affected customers (Finding 15) The Order also provides that in the event RNG supply exceeds customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any remaining RNG attribute inventory amounts through the PGA or through a rate case as part of its cost of service if the s PGA is no longer in effect at that time (Finding 16 as modified) Finding 11 provides that VGS will use a ldquotrue-uprdquo period of up to 12 months in order to balance the difference between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply) Taken together these provisions require VGS to evaluate the imbalance after 12-months and then true-up the imbalance over the next twelve months To provide a forecast of the supplydemand imbalance quarterly the billing area will run a report showing the expected RNG volumes based on current customer commitments by month for the next 12-months Current customers commitments will be calculated based on the previous 12 months of usage multiplied by the RNG percentage currently signed up for The marketing department will provide their forecast of new RNG sales for the next 12-months Both will be provided to the Manager Gas SupplyGas Control The Manager Gas SupplyGas Control will compare the forecasted RNG sales known and expected to RNG supply commitments and provide a 24-month forecast of the supplydemand balance The supplydemand balance will be reviewed at the risk management meeting The strategy for addressing the imbalance consistent with the PUC order will be determined by the risk management committee
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
Exhibit 31 Accounting for VGS Renewable Natural Gas (Ver-9202019)
1 Purchase of RNG Supply
RNG supply purchases are separated into the cost of the commodity and the cost of the renewable attribute The commodity portion is expensed to gas costs in the delivery month while the renewable attribute is booked to an inventory account referenced herein as the ldquoRenewable Inventory Accountrdquo Like VGSrsquo existing storage inventory accounting the Renewable Inventory Account will track both the dollar value of the renewable attribute and the renewable attribute Mcfs Renewable attribute dollar values are record to ldquo16410050 Inventory RNG Storagerdquo while Mcf values are recorded in the gas cost model maintained by accounting In the month VGS purchases the renewable attribute it is accrued in a book model and goes in to 16410150 Inventory RNG Accrued then moves to the 16410050 in a final model the following month for final
RNG may be purchased at different locations and using varying pricing structures While the accounting for RNG does not vary with the purchase location or price the determination of the value of the renewable attribute will vary depending on whether or not the supply pricing expressly values the renewable attribute as an adder or it is embedded in a fixed price Examples of each are shown below The accounting of RNG supply is intended to separate the cost of the renewable attribute from the cost of the commodity The examples below are not all inclusive of what may occur but intended to show the accounting procedures used to separate the renewable attribute from the commodity and specify ownership of each aspect
In all cases the commodity cost portion - which is the total cost of the RNG purchased excluding the renewable attribute - will be expensed in the delivery month as a cost of gas
Example 1 ndash The fixed price of RNG includes both the commodity and the renewable attribute
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The total cost of the RNG supply purchased during the month is calculated by Accounting within the gas cost model as follows
MMBtu Purchased (as validated in step 2) $ MMBtu purchase price (as provided in a supply confirmation provided by gas supply)
4 For purposes of booking the renewable attribute to inventory it is necessary to calculate the RNG cost per Mcf The RNG cost Mcf is calculated using the total cost of RNG supply as calculated in step 3 divided by the Mcf in step 1
5 The renewable attribute price per Mcf is calculated as follows
RNG cost per Mcf as determined in step 4 ndashplus ldquoother componentsrdquo as calculated pursuant to Attachment A ndash minus ldquoAverage Commodity Costrdquo as calculated pursuant to Attachment A The ldquoother componentsrdquo added to the RNG cost per Mcf will vary depending on where the RNG supply was delivered but in each case will be identified in the calculation shown on Attachment A
6 The renewable attribute price per Mcf the total RNG Mcf delivered is recorded in the Inventory RNG Storage account
7 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
Example 2 - RNG purchased at a renewable attribute price plus a daily or monthly index
Where the pricing of RNG specifically separates the commodity from the renewable attribute the renewable attribute price will be what is recorded in the Renewable Inventory Account
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The renewable attribute price per Mcf the total RNG Mcf delivered as determined in step 1 is recorded in the Renewable Inventory Account
4 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
2 Recalculating the RNG Adder
The RNG Adder paid by customers will be recalculated anytime the Natural Gas charge portion of rates changes The Manager of Gas SupplyGas control is responsible for recalculating the RNG Adder The calculation will be verified and approved by the Vice President ndash Regulatory Affairs The determination of the RNG Adder will be pursuant to the methodology shown in Attachment A The Regulatory Department will prepare the amended RNG Adder tariff for filing with the PUC Upon PUC approval of the RNG Adder the Regulatory Department will prepare a memorandum advising Accounting and Gas Supply of the new RNG Adder as approved
3 Customer purchases VGS Renewable Natural Gas
The RNG Adder at the percent selected by the customer will be applied to the entire monthrsquos usage on the customersrsquo next bill For customers utilizing the S-RNG adder the entire volume elected with be on the customersrsquo next bill The S-RNG Adder nor the RNG Adder and percentage selected will not be prorated based on enrollment or termination date
Customers may terminate or modify their RNG selection upon 3 dayrsquos notice to VGS The termination or modification will be effective on the customerrsquos next monthly bill
The customerrsquos usage for the month will be multiplied by the percentage and the approved RNG Adder For customers utilizing the S-RNG adder the volume elected will be multiplied by the approved RNG adder This amount will then be recorded to SAP accounts 4010015-40010021 depending on which rate class the customer is in The RNG Adder is the same regardless of which rate class a customer is in At the end of the month a report is run by billing from the customer information system that shows total usage and which percentage of RNG the customer has signed up for to calculate the number of MCFrsquos of renewable attribute sold during the billing period Billing also provides a report of the volumes sold through the S-RNG Tarriff The Inventory RNG Storage account maintained within the gas cost model by Accounting is reduced by these Mcf The MCFrsquos are then multiplied by the RNG Adder in effect for the billing month and an entry is made to remove that dollar amount from the Inventory RNG Storage account and into the monthly cost of gas The intent of this transaction is to ensure that cost of the renewable attribute is reflected in the cost of gas in the month it is purchased by the customer This results in a matching of the renewable attribute revenue and expense
The RNG Adder revenue and renewable attributes removed from storage will be included in the gas cost deferral calculation However because there is a matching of the renewable attribute revenue and expense the impact on the deferral calculation will be zero
The calculation of unbilled revenues will exclude RNG as a customer can cancel their participation prior to their next bill
In the event Vermont Gas issues a credit to a customer related to the RNG program the value of the renewable attribute credited and the associated Mcf will not be applied to the Renewable Inventory Account
4 Controls
A spreadsheet is maintained by accounting that shows the MCFrsquos and dollar values of the Renewable Inventory Account This is reconciled monthly by the accounting team and will be reviewed by the Manager Gas SupplyGas Control
Accounting will validate that the amount removed from the Renewable Inventory Account matches the RNG Adder revenue Any discrepancies will be reviewed and corrected
A report will be run for each bill cycle that shows any changes to the RNG percentages selected this will include customers opting to withdraw from the RNG program The customer care team will validate any changes against customer confirmation paperwork
5 Renewable Inventory Account Reconciliation and Forecast
The PUC Order approving the RNG program contains provisions describing how RNG supply and demand imbalances will be addressed These provisions and how VGS will track and comply with them are as discussed in this section The PUC Order approving the RNG Program provides that if the available RNG supply during the previous 12 months is less than the amount purchased by customers VGS may use the funds collected to purchase carbon offsets (Finding 13) If carbon offset are not available VGS will contribute the RNG program revenues to the Clean Energy Development Fund or issue prorated credits to affected customers (Finding 15) The Order also provides that in the event RNG supply exceeds customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any remaining RNG attribute inventory amounts through the PGA or through a rate case as part of its cost of service if the s PGA is no longer in effect at that time (Finding 16 as modified) Finding 11 provides that VGS will use a ldquotrue-uprdquo period of up to 12 months in order to balance the difference between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply) Taken together these provisions require VGS to evaluate the imbalance after 12-months and then true-up the imbalance over the next twelve months To provide a forecast of the supplydemand imbalance quarterly the billing area will run a report showing the expected RNG volumes based on current customer commitments by month for the next 12-months Current customers commitments will be calculated based on the previous 12 months of usage multiplied by the RNG percentage currently signed up for The marketing department will provide their forecast of new RNG sales for the next 12-months Both will be provided to the Manager Gas SupplyGas Control The Manager Gas SupplyGas Control will compare the forecasted RNG sales known and expected to RNG supply commitments and provide a 24-month forecast of the supplydemand balance The supplydemand balance will be reviewed at the risk management meeting The strategy for addressing the imbalance consistent with the PUC order will be determined by the risk management committee
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
RNG cost per Mcf as determined in step 4 ndashplus ldquoother componentsrdquo as calculated pursuant to Attachment A ndash minus ldquoAverage Commodity Costrdquo as calculated pursuant to Attachment A The ldquoother componentsrdquo added to the RNG cost per Mcf will vary depending on where the RNG supply was delivered but in each case will be identified in the calculation shown on Attachment A
6 The renewable attribute price per Mcf the total RNG Mcf delivered is recorded in the Inventory RNG Storage account
7 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
Example 2 - RNG purchased at a renewable attribute price plus a daily or monthly index
Where the pricing of RNG specifically separates the commodity from the renewable attribute the renewable attribute price will be what is recorded in the Renewable Inventory Account
1 The volumes purchased are converted to Mcf using TCPL daily delivery records and TCPL daily Heat Value by Accounting Department (Note due to this changing daily the amounts below related to Mcf conversion are average for the month)
2 The volumes purchased are obtained from the purchase log maintained by Gas Control and are verified against supplier invoices by Accounting TCPL records and heat value are provided to Accounting by gas control
3 The renewable attribute price per Mcf the total RNG Mcf delivered as determined in step 1 is recorded in the Renewable Inventory Account
4 Any fuel required for transportation as well as accounting for unaccounted for supply is part of the Average Commodity Charge above and does not need to be separately determined For greater specificity transport fuel and unaccounted supply are deemed to be served by conventional natural gas
2 Recalculating the RNG Adder
The RNG Adder paid by customers will be recalculated anytime the Natural Gas charge portion of rates changes The Manager of Gas SupplyGas control is responsible for recalculating the RNG Adder The calculation will be verified and approved by the Vice President ndash Regulatory Affairs The determination of the RNG Adder will be pursuant to the methodology shown in Attachment A The Regulatory Department will prepare the amended RNG Adder tariff for filing with the PUC Upon PUC approval of the RNG Adder the Regulatory Department will prepare a memorandum advising Accounting and Gas Supply of the new RNG Adder as approved
3 Customer purchases VGS Renewable Natural Gas
The RNG Adder at the percent selected by the customer will be applied to the entire monthrsquos usage on the customersrsquo next bill For customers utilizing the S-RNG adder the entire volume elected with be on the customersrsquo next bill The S-RNG Adder nor the RNG Adder and percentage selected will not be prorated based on enrollment or termination date
Customers may terminate or modify their RNG selection upon 3 dayrsquos notice to VGS The termination or modification will be effective on the customerrsquos next monthly bill
The customerrsquos usage for the month will be multiplied by the percentage and the approved RNG Adder For customers utilizing the S-RNG adder the volume elected will be multiplied by the approved RNG adder This amount will then be recorded to SAP accounts 4010015-40010021 depending on which rate class the customer is in The RNG Adder is the same regardless of which rate class a customer is in At the end of the month a report is run by billing from the customer information system that shows total usage and which percentage of RNG the customer has signed up for to calculate the number of MCFrsquos of renewable attribute sold during the billing period Billing also provides a report of the volumes sold through the S-RNG Tarriff The Inventory RNG Storage account maintained within the gas cost model by Accounting is reduced by these Mcf The MCFrsquos are then multiplied by the RNG Adder in effect for the billing month and an entry is made to remove that dollar amount from the Inventory RNG Storage account and into the monthly cost of gas The intent of this transaction is to ensure that cost of the renewable attribute is reflected in the cost of gas in the month it is purchased by the customer This results in a matching of the renewable attribute revenue and expense
The RNG Adder revenue and renewable attributes removed from storage will be included in the gas cost deferral calculation However because there is a matching of the renewable attribute revenue and expense the impact on the deferral calculation will be zero
The calculation of unbilled revenues will exclude RNG as a customer can cancel their participation prior to their next bill
In the event Vermont Gas issues a credit to a customer related to the RNG program the value of the renewable attribute credited and the associated Mcf will not be applied to the Renewable Inventory Account
4 Controls
A spreadsheet is maintained by accounting that shows the MCFrsquos and dollar values of the Renewable Inventory Account This is reconciled monthly by the accounting team and will be reviewed by the Manager Gas SupplyGas Control
Accounting will validate that the amount removed from the Renewable Inventory Account matches the RNG Adder revenue Any discrepancies will be reviewed and corrected
A report will be run for each bill cycle that shows any changes to the RNG percentages selected this will include customers opting to withdraw from the RNG program The customer care team will validate any changes against customer confirmation paperwork
5 Renewable Inventory Account Reconciliation and Forecast
The PUC Order approving the RNG program contains provisions describing how RNG supply and demand imbalances will be addressed These provisions and how VGS will track and comply with them are as discussed in this section The PUC Order approving the RNG Program provides that if the available RNG supply during the previous 12 months is less than the amount purchased by customers VGS may use the funds collected to purchase carbon offsets (Finding 13) If carbon offset are not available VGS will contribute the RNG program revenues to the Clean Energy Development Fund or issue prorated credits to affected customers (Finding 15) The Order also provides that in the event RNG supply exceeds customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any remaining RNG attribute inventory amounts through the PGA or through a rate case as part of its cost of service if the s PGA is no longer in effect at that time (Finding 16 as modified) Finding 11 provides that VGS will use a ldquotrue-uprdquo period of up to 12 months in order to balance the difference between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply) Taken together these provisions require VGS to evaluate the imbalance after 12-months and then true-up the imbalance over the next twelve months To provide a forecast of the supplydemand imbalance quarterly the billing area will run a report showing the expected RNG volumes based on current customer commitments by month for the next 12-months Current customers commitments will be calculated based on the previous 12 months of usage multiplied by the RNG percentage currently signed up for The marketing department will provide their forecast of new RNG sales for the next 12-months Both will be provided to the Manager Gas SupplyGas Control The Manager Gas SupplyGas Control will compare the forecasted RNG sales known and expected to RNG supply commitments and provide a 24-month forecast of the supplydemand balance The supplydemand balance will be reviewed at the risk management meeting The strategy for addressing the imbalance consistent with the PUC order will be determined by the risk management committee
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
The RNG Adder at the percent selected by the customer will be applied to the entire monthrsquos usage on the customersrsquo next bill For customers utilizing the S-RNG adder the entire volume elected with be on the customersrsquo next bill The S-RNG Adder nor the RNG Adder and percentage selected will not be prorated based on enrollment or termination date
Customers may terminate or modify their RNG selection upon 3 dayrsquos notice to VGS The termination or modification will be effective on the customerrsquos next monthly bill
The customerrsquos usage for the month will be multiplied by the percentage and the approved RNG Adder For customers utilizing the S-RNG adder the volume elected will be multiplied by the approved RNG adder This amount will then be recorded to SAP accounts 4010015-40010021 depending on which rate class the customer is in The RNG Adder is the same regardless of which rate class a customer is in At the end of the month a report is run by billing from the customer information system that shows total usage and which percentage of RNG the customer has signed up for to calculate the number of MCFrsquos of renewable attribute sold during the billing period Billing also provides a report of the volumes sold through the S-RNG Tarriff The Inventory RNG Storage account maintained within the gas cost model by Accounting is reduced by these Mcf The MCFrsquos are then multiplied by the RNG Adder in effect for the billing month and an entry is made to remove that dollar amount from the Inventory RNG Storage account and into the monthly cost of gas The intent of this transaction is to ensure that cost of the renewable attribute is reflected in the cost of gas in the month it is purchased by the customer This results in a matching of the renewable attribute revenue and expense
The RNG Adder revenue and renewable attributes removed from storage will be included in the gas cost deferral calculation However because there is a matching of the renewable attribute revenue and expense the impact on the deferral calculation will be zero
The calculation of unbilled revenues will exclude RNG as a customer can cancel their participation prior to their next bill
In the event Vermont Gas issues a credit to a customer related to the RNG program the value of the renewable attribute credited and the associated Mcf will not be applied to the Renewable Inventory Account
4 Controls
A spreadsheet is maintained by accounting that shows the MCFrsquos and dollar values of the Renewable Inventory Account This is reconciled monthly by the accounting team and will be reviewed by the Manager Gas SupplyGas Control
Accounting will validate that the amount removed from the Renewable Inventory Account matches the RNG Adder revenue Any discrepancies will be reviewed and corrected
A report will be run for each bill cycle that shows any changes to the RNG percentages selected this will include customers opting to withdraw from the RNG program The customer care team will validate any changes against customer confirmation paperwork
5 Renewable Inventory Account Reconciliation and Forecast
The PUC Order approving the RNG program contains provisions describing how RNG supply and demand imbalances will be addressed These provisions and how VGS will track and comply with them are as discussed in this section The PUC Order approving the RNG Program provides that if the available RNG supply during the previous 12 months is less than the amount purchased by customers VGS may use the funds collected to purchase carbon offsets (Finding 13) If carbon offset are not available VGS will contribute the RNG program revenues to the Clean Energy Development Fund or issue prorated credits to affected customers (Finding 15) The Order also provides that in the event RNG supply exceeds customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any remaining RNG attribute inventory amounts through the PGA or through a rate case as part of its cost of service if the s PGA is no longer in effect at that time (Finding 16 as modified) Finding 11 provides that VGS will use a ldquotrue-uprdquo period of up to 12 months in order to balance the difference between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply) Taken together these provisions require VGS to evaluate the imbalance after 12-months and then true-up the imbalance over the next twelve months To provide a forecast of the supplydemand imbalance quarterly the billing area will run a report showing the expected RNG volumes based on current customer commitments by month for the next 12-months Current customers commitments will be calculated based on the previous 12 months of usage multiplied by the RNG percentage currently signed up for The marketing department will provide their forecast of new RNG sales for the next 12-months Both will be provided to the Manager Gas SupplyGas Control The Manager Gas SupplyGas Control will compare the forecasted RNG sales known and expected to RNG supply commitments and provide a 24-month forecast of the supplydemand balance The supplydemand balance will be reviewed at the risk management meeting The strategy for addressing the imbalance consistent with the PUC order will be determined by the risk management committee
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
5 Renewable Inventory Account Reconciliation and Forecast
The PUC Order approving the RNG program contains provisions describing how RNG supply and demand imbalances will be addressed These provisions and how VGS will track and comply with them are as discussed in this section The PUC Order approving the RNG Program provides that if the available RNG supply during the previous 12 months is less than the amount purchased by customers VGS may use the funds collected to purchase carbon offsets (Finding 13) If carbon offset are not available VGS will contribute the RNG program revenues to the Clean Energy Development Fund or issue prorated credits to affected customers (Finding 15) The Order also provides that in the event RNG supply exceeds customer demand VGS would first seek to sell the excess RNG at wholesale and if necessary VGS may seek approval from the Commission to flow any remaining RNG attribute inventory amounts through the PGA or through a rate case as part of its cost of service if the s PGA is no longer in effect at that time (Finding 16 as modified) Finding 11 provides that VGS will use a ldquotrue-uprdquo period of up to 12 months in order to balance the difference between RNG sold to customers (demand) and RNG purchased by VGS from suppliers (supply) Taken together these provisions require VGS to evaluate the imbalance after 12-months and then true-up the imbalance over the next twelve months To provide a forecast of the supplydemand imbalance quarterly the billing area will run a report showing the expected RNG volumes based on current customer commitments by month for the next 12-months Current customers commitments will be calculated based on the previous 12 months of usage multiplied by the RNG percentage currently signed up for The marketing department will provide their forecast of new RNG sales for the next 12-months Both will be provided to the Manager Gas SupplyGas Control The Manager Gas SupplyGas Control will compare the forecasted RNG sales known and expected to RNG supply commitments and provide a 24-month forecast of the supplydemand balance The supplydemand balance will be reviewed at the risk management meeting The strategy for addressing the imbalance consistent with the PUC order will be determined by the risk management committee
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
Exhibit 32 Verification from Suppliers
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
Exhibit 33 Third Party Verification
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
VGS RENEWABLE NATURAL GASMarketing Plan
October 6 2017
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
New VGS Renewable Gas Website
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
VGS Renewable Natural Gas Market Position Statement
VGS Renewable Natural Gas is a simple way to reduce your fossil fuel use achieve
your carbon reduction objectives and contribute in a innovative way to address
climate change
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
The VGS Renewable Natural Gas Story
bull Low CarbonPathway to NetZero
bull SimpleNot complicatedNo New Equipment
bull Empowering to Consumers
bull Innovative and Special
bull Renewable path forward for VGSrsquo infrastructure
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
Target Market Segments
Traditional ConsumersBusiness
Solution Seekers SimpleScalable Difference
Green Business
Sustainable Mission Low Carbon Solution
Early AdoptersCommitted to Addressing Climate
Change through Action Reduce Fossil Fuel
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
Valuing VGS Renewable Natural Gas
Start Small-10 only
$750month $25day
Easy-No Equipment
No Contracts
Local-Be Part of the Movement
Re-Invest EfficiencyNG
Savings
Carbon Value-ex RNG
Offsets 100 of Vehicle Use
Embrace $-ldquoInvest in
Innovative Clean Energy
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
Marketing MixProduct-
Renewable Energy
Price-Premium with Green
Benefits
Place-Energy Services Team Contact Center
Website and Partners
Promotion-Ads Social Media
Bill Inserts PR amp Earned Media
People-Transitioning
Team from Gas Utility to Energy Solutions Team
Physical-Web Vehicle Stickers and Customer Door Stickers
Process-Integrate RNG
Efficiency Carbon
Reductions
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
Place-Distribution Channels
VGS Team-Energy Services Team Service Techs and
Contact Center
Partners-EEUrsquos DUrsquos HVAC vendors and Green
Building Landlords
Agents-CarbonSustainability
Consultants
Vehicle Fueling-Casella UVM Burlington and
Clean Energy
Goal 100 of RNG SOLD
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
VGS RNG Sales Volume (Mcf) Target Metrics
These volumes do not include RNG sales to natural gas vehicles
Customer TypeFY18 Mcf
FY19 Mcf
FY 20 Mcf
FY21 Mcf
FY22 Mcf
Residential Targets 1161 2321 3482 4643 5804 Business and Insitutional Targets 10702 44602 55903 57204 58505 TOTAL Sales Targets 11863 46923 59385 61847 64309
VGS RNG Subscriber Target Metrics
Customer Type
RN
FY18 Subs
FY19 Subs
FY 20 Subs
FY21 Subs
FY22 Subs
Residential Targets 129 258 387 516 645 Business and Insitutional Targets 25 38 50 63 75 TOTAL VGS RNG Subscriber Targets 154 295 437 578 720
These figures do not include customers who may subscribe to RNG for natural gas vehicles
11
Launch (mid-April lsquo18) Website (mid-April lsquo18) Bill InsertsNewsletter (MayJune lsquo18) Digital Ads (May lsquo18-Ongoing) Social Media Ads (May rsquo18-Ongoing) On-line Bill Calculator (May lsquo18)
FY lsquo18 Marketing Budget- $50000
This reflects VGS RNG specific items VGS RNG will also be co-marketed with ongoing VGS marketing and efficiency campaigns
Marketing Implementation Plan (updated 4918)
The journey is just beginning
Exhibit 42 VGS Renewable Natural Gas Trademark
Exhibit 51 Customer Confirmation
Congratulations You have chosen to participate in VGSrsquo Renewable Natural Gas program Your participation in the program supports renewable natural gas (ldquoRNGrdquo) production Like you Vermont Gas is committed to a healthy and sustainable future We are dedicated to helping you meet your energy goals using efficient economic and environmentally conscientious practices and we are thrilled you have enrolled our innovative renewable natural gas program We recognize that your commitment to renewable energy carries a cost and we want you to fully understand the impact on your bill by participating in this program Based on the natural gas you used over the last 12-months for account _________ your cost for the VGS Renewable Natural Gas Adder is currently estimated to be $yr Please note this is an estimate based on RNG you have selected and the current RNG Adder The RNG Adder will change whenever the Natural Gas Charge rate changes as approved by the Vermont Public Utilities Commission Your RNG selection will be billed beginning with your next regularly-scheduled VGS bill As explained in the attached Product Content Label and Program Guidelines you are purchasing the environmental attributes of RNG Due to the way pipelines operate the natural gas you actually use may not contain any RNG But you can be confident that you have purchased the environmental attributes of RNG - contributing to a healthier planet If you have any questions on the RNG Program Guidelines or would like to alter or cancel your VGS Renewable Natural Gas selection please reach out to our customer care team at customerservicevermontgascom or call us at (802) 863-4511
VGS Renewable Natural Gas Program
Product Content Label
By participating in the VGS Renewable Natural Gas program you are purchasing the renewable attributes associated with the production of renewable natural gas (ldquoRNGrdquo) which may also be referred to as biogas or bio-methane A unit of VGS Renewable Natural Gas measured in hundred cubic feet (CCF) represents the environmental attribute of 1 CCF of biogas VGS reserves the right to purchase carbon offsets if RNG supply is not available VGS will notify customers if this occurs
Program Guidelines RNG purchased by VGS will be from the anaerobic digestion of organic matter at landfills waste treatment plants industrial sites and farm digesters VGS will purchase the renewable attributes associated with the RNG VGS will retire the corresponding amount of RNG environmental attribute inventory equal to the amount of RNG purchased by the customer Upon request VGS will provide documentation to the customer
VGS Renewable Natural Gas Adder will appear on customersrsquo monthly bill as an additional line item all other bill components will continue to apply
Customers participating in the VGS Renewable Natural Gas program are subject to VGSrsquo Terms and Conditions outlined in VGSrsquo tariffs and Vermont Public Utility Commission (ldquoPUCrdquo) rules
VGS tariffs can be found at httpwwwvermontgascomaccountrates
VGS Renewable Natural Gas customers will be notified of RNG Adder rate changes in advance the effective date of the change unless otherwise ordered by the PUC The RNG Adder will change whenever the PUC authorizes a change in the Natural Gas Charge portion of the tariff Currently this occurs quarterly
The RNG Adder will apply at the percentage selected by the customer to the usage shown on the monthly bill regardless of enrollment or termination date The RNG Adder will not be pro-rated for partial-month usage
Customers served under a VGS tariff for firm service can subscribe to the RNG Program with no term commitment and can cancel or modify with three daysrsquo notice The termination or modification will be effective with the next regularly scheduled bill
Customers currently on a budget program are encouraged to request a recalculation of their budget plan to adjust for the RNG Adder costs
- Table of Contents
- Revision Log
- About Vermont Gas
- Section 1 Program Overview
-
- 11 What is VGS Renewable Natural Gas
- 12 How much does VGS Renewable Natural Gas cost
- 13 Where is VGS Renewable Natural Gas produced
- 14 What are the environment benefits
-
- Section 2 Regulation
-
- 21 Regulatory Summary
-
- 22 VGS Renewable Natural Gas Adder Tariff
- 23 Annual RNG Report
- 24 Three-year Implementation review
-
- Section 3 Supply Procurement and Accounting
-
- 31 VGS Renewable Natural Gas Supply Overview
- 32 VGS Renewable Natural Gas Supply Contracts
- 33 VGS Renewable Natural Gas Accounting
- 34 Renewable Verification
-
- Section 4 Marketing
-
- 41 Marketing Plan
- 42 Marketing Claims
- 43 VGS Renewable Natural Gas ldquoProduct Content Labelrdquo
-
- Section 5 Customer Information and Billing
-
- 51 Customer Enrollment and Billing Process
- 52 VGS Renewable Natural Gas Website and Frequently Asked Questions
- 53 VGS Renewable Natural Gas Program Guidelines
- 54 VGS Renewable Natural Gas Program Assurance
-
- Exhibits
-
- Exhibit 21 VT PUC Approval Order
- Exhibit 22 VGS RNG Tariff Rate Filing
- Exhibit 23 PUC Approval of VGS RNG Rates
- Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
- Exhibit 31 Accounting Procedures
- Exhibit 32 Verification from Suppliers
- Exhibit 33 Third Party Verification
- Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
- Exhibit 42 VGS Renwable Natural Gas Trademark
- Exhibit 51 Customer Confirmation
-
The journey is just beginning
Exhibit 42 VGS Renewable Natural Gas Trademark
Exhibit 51 Customer Confirmation
Congratulations You have chosen to participate in VGSrsquo Renewable Natural Gas program Your participation in the program supports renewable natural gas (ldquoRNGrdquo) production Like you Vermont Gas is committed to a healthy and sustainable future We are dedicated to helping you meet your energy goals using efficient economic and environmentally conscientious practices and we are thrilled you have enrolled our innovative renewable natural gas program We recognize that your commitment to renewable energy carries a cost and we want you to fully understand the impact on your bill by participating in this program Based on the natural gas you used over the last 12-months for account _________ your cost for the VGS Renewable Natural Gas Adder is currently estimated to be $yr Please note this is an estimate based on RNG you have selected and the current RNG Adder The RNG Adder will change whenever the Natural Gas Charge rate changes as approved by the Vermont Public Utilities Commission Your RNG selection will be billed beginning with your next regularly-scheduled VGS bill As explained in the attached Product Content Label and Program Guidelines you are purchasing the environmental attributes of RNG Due to the way pipelines operate the natural gas you actually use may not contain any RNG But you can be confident that you have purchased the environmental attributes of RNG - contributing to a healthier planet If you have any questions on the RNG Program Guidelines or would like to alter or cancel your VGS Renewable Natural Gas selection please reach out to our customer care team at customerservicevermontgascom or call us at (802) 863-4511
VGS Renewable Natural Gas Program
Product Content Label
By participating in the VGS Renewable Natural Gas program you are purchasing the renewable attributes associated with the production of renewable natural gas (ldquoRNGrdquo) which may also be referred to as biogas or bio-methane A unit of VGS Renewable Natural Gas measured in hundred cubic feet (CCF) represents the environmental attribute of 1 CCF of biogas VGS reserves the right to purchase carbon offsets if RNG supply is not available VGS will notify customers if this occurs
Program Guidelines RNG purchased by VGS will be from the anaerobic digestion of organic matter at landfills waste treatment plants industrial sites and farm digesters VGS will purchase the renewable attributes associated with the RNG VGS will retire the corresponding amount of RNG environmental attribute inventory equal to the amount of RNG purchased by the customer Upon request VGS will provide documentation to the customer
VGS Renewable Natural Gas Adder will appear on customersrsquo monthly bill as an additional line item all other bill components will continue to apply
Customers participating in the VGS Renewable Natural Gas program are subject to VGSrsquo Terms and Conditions outlined in VGSrsquo tariffs and Vermont Public Utility Commission (ldquoPUCrdquo) rules
VGS tariffs can be found at httpwwwvermontgascomaccountrates
VGS Renewable Natural Gas customers will be notified of RNG Adder rate changes in advance the effective date of the change unless otherwise ordered by the PUC The RNG Adder will change whenever the PUC authorizes a change in the Natural Gas Charge portion of the tariff Currently this occurs quarterly
The RNG Adder will apply at the percentage selected by the customer to the usage shown on the monthly bill regardless of enrollment or termination date The RNG Adder will not be pro-rated for partial-month usage
Customers served under a VGS tariff for firm service can subscribe to the RNG Program with no term commitment and can cancel or modify with three daysrsquo notice The termination or modification will be effective with the next regularly scheduled bill
Customers currently on a budget program are encouraged to request a recalculation of their budget plan to adjust for the RNG Adder costs
- Table of Contents
- Revision Log
- About Vermont Gas
- Section 1 Program Overview
-
- 11 What is VGS Renewable Natural Gas
- 12 How much does VGS Renewable Natural Gas cost
- 13 Where is VGS Renewable Natural Gas produced
- 14 What are the environment benefits
-
- Section 2 Regulation
-
- 21 Regulatory Summary
-
- 22 VGS Renewable Natural Gas Adder Tariff
- 23 Annual RNG Report
- 24 Three-year Implementation review
-
- Section 3 Supply Procurement and Accounting
-
- 31 VGS Renewable Natural Gas Supply Overview
- 32 VGS Renewable Natural Gas Supply Contracts
- 33 VGS Renewable Natural Gas Accounting
- 34 Renewable Verification
-
- Section 4 Marketing
-
- 41 Marketing Plan
- 42 Marketing Claims
- 43 VGS Renewable Natural Gas ldquoProduct Content Labelrdquo
-
- Section 5 Customer Information and Billing
-
- 51 Customer Enrollment and Billing Process
- 52 VGS Renewable Natural Gas Website and Frequently Asked Questions
- 53 VGS Renewable Natural Gas Program Guidelines
- 54 VGS Renewable Natural Gas Program Assurance
-
- Exhibits
-
- Exhibit 21 VT PUC Approval Order
- Exhibit 22 VGS RNG Tariff Rate Filing
- Exhibit 23 PUC Approval of VGS RNG Rates
- Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
- Exhibit 31 Accounting Procedures
- Exhibit 32 Verification from Suppliers
- Exhibit 33 Third Party Verification
- Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
- Exhibit 42 VGS Renwable Natural Gas Trademark
- Exhibit 51 Customer Confirmation
-
Exhibit 42 VGS Renewable Natural Gas Trademark
Exhibit 51 Customer Confirmation
Congratulations You have chosen to participate in VGSrsquo Renewable Natural Gas program Your participation in the program supports renewable natural gas (ldquoRNGrdquo) production Like you Vermont Gas is committed to a healthy and sustainable future We are dedicated to helping you meet your energy goals using efficient economic and environmentally conscientious practices and we are thrilled you have enrolled our innovative renewable natural gas program We recognize that your commitment to renewable energy carries a cost and we want you to fully understand the impact on your bill by participating in this program Based on the natural gas you used over the last 12-months for account _________ your cost for the VGS Renewable Natural Gas Adder is currently estimated to be $yr Please note this is an estimate based on RNG you have selected and the current RNG Adder The RNG Adder will change whenever the Natural Gas Charge rate changes as approved by the Vermont Public Utilities Commission Your RNG selection will be billed beginning with your next regularly-scheduled VGS bill As explained in the attached Product Content Label and Program Guidelines you are purchasing the environmental attributes of RNG Due to the way pipelines operate the natural gas you actually use may not contain any RNG But you can be confident that you have purchased the environmental attributes of RNG - contributing to a healthier planet If you have any questions on the RNG Program Guidelines or would like to alter or cancel your VGS Renewable Natural Gas selection please reach out to our customer care team at customerservicevermontgascom or call us at (802) 863-4511
VGS Renewable Natural Gas Program
Product Content Label
By participating in the VGS Renewable Natural Gas program you are purchasing the renewable attributes associated with the production of renewable natural gas (ldquoRNGrdquo) which may also be referred to as biogas or bio-methane A unit of VGS Renewable Natural Gas measured in hundred cubic feet (CCF) represents the environmental attribute of 1 CCF of biogas VGS reserves the right to purchase carbon offsets if RNG supply is not available VGS will notify customers if this occurs
Program Guidelines RNG purchased by VGS will be from the anaerobic digestion of organic matter at landfills waste treatment plants industrial sites and farm digesters VGS will purchase the renewable attributes associated with the RNG VGS will retire the corresponding amount of RNG environmental attribute inventory equal to the amount of RNG purchased by the customer Upon request VGS will provide documentation to the customer
VGS Renewable Natural Gas Adder will appear on customersrsquo monthly bill as an additional line item all other bill components will continue to apply
Customers participating in the VGS Renewable Natural Gas program are subject to VGSrsquo Terms and Conditions outlined in VGSrsquo tariffs and Vermont Public Utility Commission (ldquoPUCrdquo) rules
VGS tariffs can be found at httpwwwvermontgascomaccountrates
VGS Renewable Natural Gas customers will be notified of RNG Adder rate changes in advance the effective date of the change unless otherwise ordered by the PUC The RNG Adder will change whenever the PUC authorizes a change in the Natural Gas Charge portion of the tariff Currently this occurs quarterly
The RNG Adder will apply at the percentage selected by the customer to the usage shown on the monthly bill regardless of enrollment or termination date The RNG Adder will not be pro-rated for partial-month usage
Customers served under a VGS tariff for firm service can subscribe to the RNG Program with no term commitment and can cancel or modify with three daysrsquo notice The termination or modification will be effective with the next regularly scheduled bill
Customers currently on a budget program are encouraged to request a recalculation of their budget plan to adjust for the RNG Adder costs
- Table of Contents
- Revision Log
- About Vermont Gas
- Section 1 Program Overview
-
- 11 What is VGS Renewable Natural Gas
- 12 How much does VGS Renewable Natural Gas cost
- 13 Where is VGS Renewable Natural Gas produced
- 14 What are the environment benefits
-
- Section 2 Regulation
-
- 21 Regulatory Summary
-
- 22 VGS Renewable Natural Gas Adder Tariff
- 23 Annual RNG Report
- 24 Three-year Implementation review
-
- Section 3 Supply Procurement and Accounting
-
- 31 VGS Renewable Natural Gas Supply Overview
- 32 VGS Renewable Natural Gas Supply Contracts
- 33 VGS Renewable Natural Gas Accounting
- 34 Renewable Verification
-
- Section 4 Marketing
-
- 41 Marketing Plan
- 42 Marketing Claims
- 43 VGS Renewable Natural Gas ldquoProduct Content Labelrdquo
-
- Section 5 Customer Information and Billing
-
- 51 Customer Enrollment and Billing Process
- 52 VGS Renewable Natural Gas Website and Frequently Asked Questions
- 53 VGS Renewable Natural Gas Program Guidelines
- 54 VGS Renewable Natural Gas Program Assurance
-
- Exhibits
-
- Exhibit 21 VT PUC Approval Order
- Exhibit 22 VGS RNG Tariff Rate Filing
- Exhibit 23 PUC Approval of VGS RNG Rates
- Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
- Exhibit 31 Accounting Procedures
- Exhibit 32 Verification from Suppliers
- Exhibit 33 Third Party Verification
- Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
- Exhibit 42 VGS Renwable Natural Gas Trademark
- Exhibit 51 Customer Confirmation
-
Exhibit 51 Customer Confirmation
Congratulations You have chosen to participate in VGSrsquo Renewable Natural Gas program Your participation in the program supports renewable natural gas (ldquoRNGrdquo) production Like you Vermont Gas is committed to a healthy and sustainable future We are dedicated to helping you meet your energy goals using efficient economic and environmentally conscientious practices and we are thrilled you have enrolled our innovative renewable natural gas program We recognize that your commitment to renewable energy carries a cost and we want you to fully understand the impact on your bill by participating in this program Based on the natural gas you used over the last 12-months for account _________ your cost for the VGS Renewable Natural Gas Adder is currently estimated to be $yr Please note this is an estimate based on RNG you have selected and the current RNG Adder The RNG Adder will change whenever the Natural Gas Charge rate changes as approved by the Vermont Public Utilities Commission Your RNG selection will be billed beginning with your next regularly-scheduled VGS bill As explained in the attached Product Content Label and Program Guidelines you are purchasing the environmental attributes of RNG Due to the way pipelines operate the natural gas you actually use may not contain any RNG But you can be confident that you have purchased the environmental attributes of RNG - contributing to a healthier planet If you have any questions on the RNG Program Guidelines or would like to alter or cancel your VGS Renewable Natural Gas selection please reach out to our customer care team at customerservicevermontgascom or call us at (802) 863-4511
VGS Renewable Natural Gas Program
Product Content Label
By participating in the VGS Renewable Natural Gas program you are purchasing the renewable attributes associated with the production of renewable natural gas (ldquoRNGrdquo) which may also be referred to as biogas or bio-methane A unit of VGS Renewable Natural Gas measured in hundred cubic feet (CCF) represents the environmental attribute of 1 CCF of biogas VGS reserves the right to purchase carbon offsets if RNG supply is not available VGS will notify customers if this occurs
Program Guidelines RNG purchased by VGS will be from the anaerobic digestion of organic matter at landfills waste treatment plants industrial sites and farm digesters VGS will purchase the renewable attributes associated with the RNG VGS will retire the corresponding amount of RNG environmental attribute inventory equal to the amount of RNG purchased by the customer Upon request VGS will provide documentation to the customer
VGS Renewable Natural Gas Adder will appear on customersrsquo monthly bill as an additional line item all other bill components will continue to apply
Customers participating in the VGS Renewable Natural Gas program are subject to VGSrsquo Terms and Conditions outlined in VGSrsquo tariffs and Vermont Public Utility Commission (ldquoPUCrdquo) rules
VGS tariffs can be found at httpwwwvermontgascomaccountrates
VGS Renewable Natural Gas customers will be notified of RNG Adder rate changes in advance the effective date of the change unless otherwise ordered by the PUC The RNG Adder will change whenever the PUC authorizes a change in the Natural Gas Charge portion of the tariff Currently this occurs quarterly
The RNG Adder will apply at the percentage selected by the customer to the usage shown on the monthly bill regardless of enrollment or termination date The RNG Adder will not be pro-rated for partial-month usage
Customers served under a VGS tariff for firm service can subscribe to the RNG Program with no term commitment and can cancel or modify with three daysrsquo notice The termination or modification will be effective with the next regularly scheduled bill
Customers currently on a budget program are encouraged to request a recalculation of their budget plan to adjust for the RNG Adder costs
- Table of Contents
- Revision Log
- About Vermont Gas
- Section 1 Program Overview
-
- 11 What is VGS Renewable Natural Gas
- 12 How much does VGS Renewable Natural Gas cost
- 13 Where is VGS Renewable Natural Gas produced
- 14 What are the environment benefits
-
- Section 2 Regulation
-
- 21 Regulatory Summary
-
- 22 VGS Renewable Natural Gas Adder Tariff
- 23 Annual RNG Report
- 24 Three-year Implementation review
-
- Section 3 Supply Procurement and Accounting
-
- 31 VGS Renewable Natural Gas Supply Overview
- 32 VGS Renewable Natural Gas Supply Contracts
- 33 VGS Renewable Natural Gas Accounting
- 34 Renewable Verification
-
- Section 4 Marketing
-
- 41 Marketing Plan
- 42 Marketing Claims
- 43 VGS Renewable Natural Gas ldquoProduct Content Labelrdquo
-
- Section 5 Customer Information and Billing
-
- 51 Customer Enrollment and Billing Process
- 52 VGS Renewable Natural Gas Website and Frequently Asked Questions
- 53 VGS Renewable Natural Gas Program Guidelines
- 54 VGS Renewable Natural Gas Program Assurance
-
- Exhibits
-
- Exhibit 21 VT PUC Approval Order
- Exhibit 22 VGS RNG Tariff Rate Filing
- Exhibit 23 PUC Approval of VGS RNG Rates
- Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
- Exhibit 31 Accounting Procedures
- Exhibit 32 Verification from Suppliers
- Exhibit 33 Third Party Verification
- Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
- Exhibit 42 VGS Renwable Natural Gas Trademark
- Exhibit 51 Customer Confirmation
-
Congratulations You have chosen to participate in VGSrsquo Renewable Natural Gas program Your participation in the program supports renewable natural gas (ldquoRNGrdquo) production Like you Vermont Gas is committed to a healthy and sustainable future We are dedicated to helping you meet your energy goals using efficient economic and environmentally conscientious practices and we are thrilled you have enrolled our innovative renewable natural gas program We recognize that your commitment to renewable energy carries a cost and we want you to fully understand the impact on your bill by participating in this program Based on the natural gas you used over the last 12-months for account _________ your cost for the VGS Renewable Natural Gas Adder is currently estimated to be $yr Please note this is an estimate based on RNG you have selected and the current RNG Adder The RNG Adder will change whenever the Natural Gas Charge rate changes as approved by the Vermont Public Utilities Commission Your RNG selection will be billed beginning with your next regularly-scheduled VGS bill As explained in the attached Product Content Label and Program Guidelines you are purchasing the environmental attributes of RNG Due to the way pipelines operate the natural gas you actually use may not contain any RNG But you can be confident that you have purchased the environmental attributes of RNG - contributing to a healthier planet If you have any questions on the RNG Program Guidelines or would like to alter or cancel your VGS Renewable Natural Gas selection please reach out to our customer care team at customerservicevermontgascom or call us at (802) 863-4511
VGS Renewable Natural Gas Program
Product Content Label
By participating in the VGS Renewable Natural Gas program you are purchasing the renewable attributes associated with the production of renewable natural gas (ldquoRNGrdquo) which may also be referred to as biogas or bio-methane A unit of VGS Renewable Natural Gas measured in hundred cubic feet (CCF) represents the environmental attribute of 1 CCF of biogas VGS reserves the right to purchase carbon offsets if RNG supply is not available VGS will notify customers if this occurs
Program Guidelines RNG purchased by VGS will be from the anaerobic digestion of organic matter at landfills waste treatment plants industrial sites and farm digesters VGS will purchase the renewable attributes associated with the RNG VGS will retire the corresponding amount of RNG environmental attribute inventory equal to the amount of RNG purchased by the customer Upon request VGS will provide documentation to the customer
VGS Renewable Natural Gas Adder will appear on customersrsquo monthly bill as an additional line item all other bill components will continue to apply
Customers participating in the VGS Renewable Natural Gas program are subject to VGSrsquo Terms and Conditions outlined in VGSrsquo tariffs and Vermont Public Utility Commission (ldquoPUCrdquo) rules
VGS tariffs can be found at httpwwwvermontgascomaccountrates
VGS Renewable Natural Gas customers will be notified of RNG Adder rate changes in advance the effective date of the change unless otherwise ordered by the PUC The RNG Adder will change whenever the PUC authorizes a change in the Natural Gas Charge portion of the tariff Currently this occurs quarterly
The RNG Adder will apply at the percentage selected by the customer to the usage shown on the monthly bill regardless of enrollment or termination date The RNG Adder will not be pro-rated for partial-month usage
Customers served under a VGS tariff for firm service can subscribe to the RNG Program with no term commitment and can cancel or modify with three daysrsquo notice The termination or modification will be effective with the next regularly scheduled bill
Customers currently on a budget program are encouraged to request a recalculation of their budget plan to adjust for the RNG Adder costs
- Table of Contents
- Revision Log
- About Vermont Gas
- Section 1 Program Overview
-
- 11 What is VGS Renewable Natural Gas
- 12 How much does VGS Renewable Natural Gas cost
- 13 Where is VGS Renewable Natural Gas produced
- 14 What are the environment benefits
-
- Section 2 Regulation
-
- 21 Regulatory Summary
-
- 22 VGS Renewable Natural Gas Adder Tariff
- 23 Annual RNG Report
- 24 Three-year Implementation review
-
- Section 3 Supply Procurement and Accounting
-
- 31 VGS Renewable Natural Gas Supply Overview
- 32 VGS Renewable Natural Gas Supply Contracts
- 33 VGS Renewable Natural Gas Accounting
- 34 Renewable Verification
-
- Section 4 Marketing
-
- 41 Marketing Plan
- 42 Marketing Claims
- 43 VGS Renewable Natural Gas ldquoProduct Content Labelrdquo
-
- Section 5 Customer Information and Billing
-
- 51 Customer Enrollment and Billing Process
- 52 VGS Renewable Natural Gas Website and Frequently Asked Questions
- 53 VGS Renewable Natural Gas Program Guidelines
- 54 VGS Renewable Natural Gas Program Assurance
-
- Exhibits
-
- Exhibit 21 VT PUC Approval Order
- Exhibit 22 VGS RNG Tariff Rate Filing
- Exhibit 23 PUC Approval of VGS RNG Rates
- Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
- Exhibit 31 Accounting Procedures
- Exhibit 32 Verification from Suppliers
- Exhibit 33 Third Party Verification
- Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
- Exhibit 42 VGS Renwable Natural Gas Trademark
- Exhibit 51 Customer Confirmation
-
VGS Renewable Natural Gas Program
Product Content Label
By participating in the VGS Renewable Natural Gas program you are purchasing the renewable attributes associated with the production of renewable natural gas (ldquoRNGrdquo) which may also be referred to as biogas or bio-methane A unit of VGS Renewable Natural Gas measured in hundred cubic feet (CCF) represents the environmental attribute of 1 CCF of biogas VGS reserves the right to purchase carbon offsets if RNG supply is not available VGS will notify customers if this occurs
Program Guidelines RNG purchased by VGS will be from the anaerobic digestion of organic matter at landfills waste treatment plants industrial sites and farm digesters VGS will purchase the renewable attributes associated with the RNG VGS will retire the corresponding amount of RNG environmental attribute inventory equal to the amount of RNG purchased by the customer Upon request VGS will provide documentation to the customer
VGS Renewable Natural Gas Adder will appear on customersrsquo monthly bill as an additional line item all other bill components will continue to apply
Customers participating in the VGS Renewable Natural Gas program are subject to VGSrsquo Terms and Conditions outlined in VGSrsquo tariffs and Vermont Public Utility Commission (ldquoPUCrdquo) rules
VGS tariffs can be found at httpwwwvermontgascomaccountrates
VGS Renewable Natural Gas customers will be notified of RNG Adder rate changes in advance the effective date of the change unless otherwise ordered by the PUC The RNG Adder will change whenever the PUC authorizes a change in the Natural Gas Charge portion of the tariff Currently this occurs quarterly
The RNG Adder will apply at the percentage selected by the customer to the usage shown on the monthly bill regardless of enrollment or termination date The RNG Adder will not be pro-rated for partial-month usage
Customers served under a VGS tariff for firm service can subscribe to the RNG Program with no term commitment and can cancel or modify with three daysrsquo notice The termination or modification will be effective with the next regularly scheduled bill
Customers currently on a budget program are encouraged to request a recalculation of their budget plan to adjust for the RNG Adder costs
- Table of Contents
- Revision Log
- About Vermont Gas
- Section 1 Program Overview
-
- 11 What is VGS Renewable Natural Gas
- 12 How much does VGS Renewable Natural Gas cost
- 13 Where is VGS Renewable Natural Gas produced
- 14 What are the environment benefits
-
- Section 2 Regulation
-
- 21 Regulatory Summary
-
- 22 VGS Renewable Natural Gas Adder Tariff
- 23 Annual RNG Report
- 24 Three-year Implementation review
-
- Section 3 Supply Procurement and Accounting
-
- 31 VGS Renewable Natural Gas Supply Overview
- 32 VGS Renewable Natural Gas Supply Contracts
- 33 VGS Renewable Natural Gas Accounting
- 34 Renewable Verification
-
- Section 4 Marketing
-
- 41 Marketing Plan
- 42 Marketing Claims
- 43 VGS Renewable Natural Gas ldquoProduct Content Labelrdquo
-
- Section 5 Customer Information and Billing
-
- 51 Customer Enrollment and Billing Process
- 52 VGS Renewable Natural Gas Website and Frequently Asked Questions
- 53 VGS Renewable Natural Gas Program Guidelines
- 54 VGS Renewable Natural Gas Program Assurance
-
- Exhibits
-
- Exhibit 21 VT PUC Approval Order
- Exhibit 22 VGS RNG Tariff Rate Filing
- Exhibit 23 PUC Approval of VGS RNG Rates
- Exhibit 24 VGS S-RNG Tariff Filing and Approval Order
- Exhibit 31 Accounting Procedures
- Exhibit 32 Verification from Suppliers
- Exhibit 33 Third Party Verification
- Exhibit 41 VGS Renewable Natural Gas Marketing Plan (2018)
- Exhibit 42 VGS Renwable Natural Gas Trademark
- Exhibit 51 Customer Confirmation
-