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Weather Normalization Adjustment

Weather Normalization Adjustment

On Thursday, June 15, 2023, the Pennsylvania Public Utility Commission (PUC) approved National Fuel’s use of a Weather Normalization Adjustment (WNA) as a five-year pilot program. Effective with bills issued in October 2023, customer bills rendered annually from October through May during the pilot may reflect a WNA. The WNA makes your gas bill more predictable during periods of extreme temperatures.

A Weather Normalization Adjustment will be applied under these circumstances and as follows:

  • If temperatures are more than three percent colder than normal in a given month, customers will receive a credit on their bill.
  • If temperatures are more than three percent warmer than normal in a given month, customers will receive a surcharge on their bill.
  • In months where weather is within 3% of normal, bills will not have a WNA adjustment.

Frequently Asked Questions

What is a Weather Normalization Adjustment (WNA)?

WNA is a billing method used to levelized differences between “normal” (or expected) weather and “abnormal” (or unexpected) weather in the distribution charge portion of the customer bill. The WNA was approved by the Pennsylvania Public Utility Commission, as part of a 5-year pilot beginning in October 2023, for bills rendered to National Fuel customers from October 1st through May 31st each year. The WNA only applies to the distribution charge portion of a customer bill; it does not adjust the gas commodity portion of the bill.

What does the "Pilot" designation mean for the WNA mechanism?

WNA was approved as a 5-year pilot by the PUC. During this time, the WNA will apply to all customers subject to the rate mechanism and National Fuel will file specific reports on WNA operation with the PUC so the pilot can be monitored over the 5-year period. As with other WNA pilots previously approved by the Pennsylvania Public Utility Commission, the National Fuel WNA pilot has a specified test period (5 years). At or near the end of the pilot, a determination will be made to keep the program in place as-is, modify certain elements of the WNA mechanism or discontinue the rate mechanism for good cause.

What is "normal" weather?

National Fuel develops a 15-year average temperature from information provided by the National Oceanic and Atmospheric Administration (NOAA) from measuring stations located throughout the National Fuel service territory. Next, Heating Degree Day differences (as discussed below) are calculated from this average to predict and plan for normal customer heating requirements.

How do Heating Degree Days measure weather?

Heating Degree Days (HDD) are used to measure how cold it is on a given day. HDDs are calculated by subtracting the average temperature for the day from 65°F. Below 65°F is considered a threshold at which heat would typically be necessary for the average customer.

What does it mean that WNA is intended to be revenue neutral?

The WNA mechanism is intended to be revenue neutral when viewed over a series of years. Weather will vary from the 15-year normal weather average on which the WNA is based; some months will be colder and some will be warmer compared to that 15-year average. By nature of averages, it is expected that there should be relatively the same number of warmer periods as compared to colder periods when looking at the results over a longer range of time and customers are anticipated to have WNA surcharges or credits which approximately balance out over a series of years.

Which customers are subject to WNA?

WNA is applicable to all Pennsylvania Natural Gas Residential and Commercial/Public Authority customers served by National Fuel.

Can a customer choose to opt out of WNA?

No. Residential and Commercial/Public Authority customers served by National Fuel are all subject to WNA under the terms of the pilot and do not currently have an option to opt out of participation.

How does the WNA work?

The WNA adjusts customers’ distribution charges to reflect use during normal weather patterns. It will apply when temperatures are more than 3% colder or 3% warmer than normal based on the actual heating degree days experienced. When weather is more than 3% colder than normal for the billing period, a customer will receive a WNA credit on their bill. When weather is more than 3% warmer than normal, a customer will see a WNA charge on their bill.

Does WNA impact the commodity, or natural gas supply costs, a customer pays?

No. WNA adjusts distribution charges and does not impact gas commodity charges (the amount a customer pays for the supply of natural gas used). WNA only adjusts the non-gas portion of a customer’s bill to reflect normal weather conditions, subject to the 3% temperature limit mentioned above.

What are some of the benefits of WNA for customers?

WNA benefits customers in the following ways:
  • Customers’ bills will not be impacted by WNA for variations within 3% of normal weather.
  • Customers will receive a credit on their bills during colder-than-normal weather when bills are typically at their highest.
  • WNA will provide customers more stable and predictable distribution charges during the heating season.
  • WNA provides National Fuel with revenue stability, enabling the company to better plan and schedule system maintenance and other improvements contributing to the provision of safe and reliable distribution service.

What is the benefit of WNA for National Fuel?

WNA billing better reflects the way National Fuel incurs costs to provide distribution service. Nearly all National Fuel’s expenses do not vary based on the weather or on the amount of gas flowing through the distribution system. Regardless of weather conditions, National Fuel still has similar expenses associated with operating, maintaining, and financing the distribution system infrastructure. The WNA helps align revenues from customer bills with the costs to maintain a safe, reliable natural gas distribution system for National Fuel’s customers.

Is WNA unique to National Fuel?

No. There are other natural gas utilities both within and outside of Pennsylvania who have had WNA mechanisms in place for many years.

Is the WNA a rate increase?

No. The WNA is designed to be “revenue neutral” over time because it reduces bills when the weather is colder than normal and adds a surcharge to bills when the weather is warmer than normal. National Fuel’s rates are designed assuming normal weather conditions and the WNA works to more closely align actual rate revenues with those anticipated in rate proceedings. The calculations used to determine these amounts are based on the method and data approved by the Pennsylvania Public Utility Commission on June 15, 2023 at Docket No. R-2022-3035730.

When will a customer see a WNA on the bill?

Customers will see a “Weather Normalization Adjustment” line item on bills rendered from October 1st through May 31st when weather is more than 3% colder or more than 3% warmer than normal. If weather during the billing period is normal, or within 3% of normal, no WNA will be assessed and no WNA line item will show on the bill.

Where can I see what my WNA was for the billing period?

If a WNA was assessed during the billing period, there will be a line called “Weather Normalization Adjustment” with the associated amount of the credit or charge. This will appear in the “Current Month Charges” section located near the bottom back page of the bill.

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Will every customer be assessed the same WNA amount each month?

No, WNA is calculated separately for each customer using data specific to each individual customer based on their billing period dates, actual usage, and weather for their local region.

Do customers still see benefits from their conservation efforts under WNA?

Yes. Customers still see benefits from energy conservation in two ways. First, when a customer conserves gas during the winter months, for example by turning down the thermostat, the customer is reducing the temperature sensitive portion of their bill. The temperature sensitive portion of the bill is what is adjusted for normal weather within the WNA calculation. Although a customer may still see a WNA assessment on their bill, the amount charged in a warmer than normal scenario will be less than it otherwise would have been with higher temperature sensitive usage. Second, customers will see their energy conservation efforts as a direct benefit on the commodity portion their bill. Commodity charges are based on customer’s actual usage and are not impacted by WNA. Any reduction in use as a result of conservation measures will lower commodity charges. National Fuel continues to encourage customers to take conservation efforts whenever they can.

How is WNA calculated?

Applicability and Purpose: A Weather Normalization Adjustment (“WNA”) shall be applied to bills of Residential and Non-Residential/Public Authority customers for any bills rendered during the heating season October through May. The WNA shall commence with bills rendered on and after October 1, 2023 and shall continue as a five-year pilot unless otherwise modified by Commission Order.

WNA is a distribution charge adjustment and is considered a basic service charge.

Calculation of Adjustment Amount: The WNA will be applied to October through May billing cycles and shall be calculated on a customer account specific basis in accordance with the formula below:

WNBC = BLMC + [((NHDD +/- (NHDD * 3%)) / AHDD) x (AMC-BLMC)] WNAC = WNBC – AMC WNA = WNAC x Distribution Charge Weather Normalized Billing Ccfs (“WNBC”) will be calculated as the Base Load Monthly Ccfs (“BLMC”) added to the product of the Normal Heating Degree Days (“NHDD”, adjusted for a 3% deadband as further discussed in below), divided by the Actual Heating Degree Days (“AHDD”) and the Actual Monthly Ccfs (“AMC”) less the BLMC. Weather Normalized Billing Ccfs (WNBC) will only be calculated if the AMC exceeds the BLMC. WNA will not be applicable for the billing period if AMC is less than the BLMC. BLMC shall be established for each customer using the customer’s actual average daily consumption from the billing system, measured in Ccfs, using bills with read dates of June thru September multiplied by the number of days in the billing period. The average daily base load is recalculated monthly using the most recent twelve months of bill history. If less than twelve months of bill history is available for the premise, an average base load for the related customer class will be applied. AMC shall be measured for each customer and billing cycle and will be inclusive of any heating value corrections. NHDD shall be applied on a Delivery Region specific basis as determined by the customer’s geographical location and, for any given day within a billing period, shall be based upon the Delivery Region’s 15-year average for the given day. AHDD shall be the actual experienced heating degree days during the billing cycle for the customer’s assigned Delivery Region, as determined by the customer’s geographical location. A Delivery Region’s AHDD shall be based upon experienced actual Gas Day temperatures as reported by the National Oceanic and Atmospheric Administration (NOAA) for weather stations located within that Delivery Region pursuant to the application of the Company’s established Delivery Region calculation methodology. The period for which both NHDD and AHDD will be measured for each billing period used for the WNA calculation will be based on the starting day of the customer’s billing cycle minus one day through last day of billing cycle minus one day. If AHDD is unavailable for any day(s) during that period, the respective NHDD for the same day(s) will also be excluded from the calculation, thereby excluding any days missing AHDD from the WNBC calculation. AMC will be subtracted from the WNBC to compute the Weather Normalized Adjustment Ccfs (“WNAC”). The WNAC shall then be multiplied by the applicable Rate Schedule Distribution Charge based on service rendered to compute the WNA amount that will be charged or credited to each Residential and Non-Residential/Public Authority customer. A deadband of 3% shall apply. The WNA for a billing cycle will apply only if the AHDD for the billing cycle are lower than 97% or higher than 103% of the NHDD for the billing cycle. The WNA factor shall be calculated by first adjusting the NHDD for the billing cycle by the deadband percentage of 3%. The deadband percentage shall be multiplied by the NHDD and then added to NHDD for the billing period when the weather is colder than normal (i.e., AHDD>NHDD) or subtracted from NHDD for the billing period when the weather is warmer than normal (i.e., AHDD<NHDD).
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