Natural Gas InfrastructureOther Programs

In North Carolina, natural gas local distribution companies (LDCs) can recover the infeasible portion of a line extension through its rates for line extensions to companies that will invest at least $200 million in improvements and employ at least 1,500 employees. For an LDC to recover the infeasible portion of natural gas infrastructure to eligible projects in rates through an annual rider, it must first get approval from the Department of Commerce.

The Department of Commerce must first determine that the natural gas infrastructure is for an eligible project, and no more than three eligible projects are authorized. To be eligible, a project must meet all of the following conditions:

• The project will provide opportunities for natural gas usage, jobs and other economic development benefits.
• The business has invested or intends to invest at least $200 million in private funds for real
  and personal property.
• The business will employ or intends to employ at least 1,500 full time employees

The business must also meet a wage standard of 110% of the average wage in the county where the project is located, the business must pay at least 50% of the premiums for health insurance coverage for its employees, must not have any safety and health program violations, and must not have a
disqualifying environmental event as determined by the Department of Environmental Quality.

Utilities Commission: Costs for natural gas infrastructure may be recovered in a rider by a LDC for infrastructure related to projects approved by the Department of Commerce, if the Commission determines the project meets all of the following conditions:

• The project is located in an area where the natural gas infrastructure for the project is not
  economically feasible.
• The developer of the project, the prospective customer, or the occupant of the project
  provides a binding commitment that the project will use the natural gas service for at least 10
  years.
• The projected margin generated by the eligible project will not cover the cost of the natural
  gas infrastructure.

Once approved, the economically infeasible costs of the infrastructure will be recovered in a rider. The costs recovered in the rider will include the costs normally recovered for infrastructure, including the planning and development costs, construction costs, financing costs, depreciation, and property taxes.

The Commission is directed to adopt rules to implement the rider mechanism. The rider may be allowed on an annual or semiannual basis, and will be subject to periodic reconciliation. The rider will terminate when the costs are fully recovered, or with the LDC’s next general rate case, whichever occurs first. A LDC may not invest more than $25 million a year in infrastructure development costs, and the amount recovered in the rider may not exceed 5% of the margin revenues approved in the last rate case of the LDC. The total amount of infrastructure costs that can be recovered by all LDC’s in the state is limited to $75 million. This incentive expires July 1, 2026.