Section 407-430-5 - INTEREST EXPENSE ADJUSTMENTThe interest expense (either positive or negative) associated with under- and over-collections of gas costs, shall be included in the cost of gas adjustment.
A. Over-and under-collected gas costs, and associated interest costs shall each be accounted for separately for each summer and winter period. The balances in the summer accounts at the end of each summer period shall be transferred to the next summer period for inclusion in the cost of gas adjustment in effect for the next summer period. With respect to the over- and under-collected gas cost account only, the gas utility shall accrue interest during the intervening winter period by applying the company's average short-term cost of borrowing, as the company's average short-term cost of borrowing, as determined in Section 5(C), to this account for each month of the intervening winter period. The balances at the end of each winter period shall be treated in the same manner.B. The over-/under-collection gas cost accounts for each period shall be credited or debited each month with the difference between gas cost revenues billed that month and gas costs incurred that month. Gas cost revenues are the total of the base rate gas cost recovery and cost of gas adjustment revenues, net of transition and supplier refund revenues.C. The over-/under-collection interest accounts for each period shall be credited or debited each month with the over-/under-collection interest expense. This expense shall be computed by applying the Company's average short-term cost of borrowing for the month to the average of the beginning and end of month balances of the over-/under-collection gas cost accounts, for each month of the applicable period.D. If, in a gas utility's most recent rate proceeding, the Commission has approved, by stipulation or otherwise, a capital structure, cost of equity and overall cost of capital, then in lieu of using actual and projected short-term debt interest costs in this section to reflect the capital costs associated with deferring the recovery or return of over- or under-collected gas costs, the Commission may, in its discretion, make the adjustment by using the overall cost of capital, adjusted to account for the taxes on the equity portion of that return on capital.65- 407 C.M.R. ch. 430, § 5