1. (a)

   1. (1) Gas utilities shall have the opportunity to recover reasonable and prudent explicit costs associated with financial risk management instruments used in the acquisition of natural gas supplies.
   2. (2) Utilities have the right to seek recovery of these costs through the Purchased Gas Adjustment Clause (PGA) or Gas Supply Rate (GSR), as appropriate.
   3. (3) Utilities that wish to exercise this right must submit proposed revisions to the provisions of their PGAs or GSRs, as appropriate, to allow for the flow-through of costs associated with hedging transactions.

2. (b)

   1. (1) To the extent that a gas utility reasonably and prudently incurs explicit costs to use financial risk management instruments during the acquisition of natural gas supplies, it may file for recovery of those costs through its PGA or GSR.
   2. (2) On and after the effective date of this part, utilities will be at risk for disallowance of costs associated with hedging transactions that are not incurred pursuant to a gas purchasing plan and hedging program that has been reviewed by the General Staff.

   3. (3) The Arkansas Public Service Commission retains authority for post-implementation investigation to ensure that the practices actually utilized were:

      1. (A) Consistent with the utility’s strategy and program design as reviewed by the General Staff; or
      2. (B) Otherwise consistent with the policy principles and Arkansas Code § 23-15-103.
   4. (4) The reasonableness and prudence of each utility’s contracting and hedging decisions shall be judged relative to the market circumstances, contracting and hedging instruments, and pertinent information available to the utility at the time it made those decisions.

Codification Notes: This section was promulgated as Section 4 of the Natural Gas Procurement Plan Rules prior to codification in the Code of Arkansas Rules.