1. B. Gas stored during the year shall be priced at cost according to generally accepted methods of cost determination consistently applied from year to year. Transmission expenses for facilities of the utility used in moving the gas to the storage area and expenses of storage facilities shall not be included in the inventory of gas except as may be authorized or directed by the Commission.

   NOTE B-1: In general, gas stored from the supply in an integrated system shall be priced at the average cost of the gas constituting the common supply of the system, although this general rule may be departed from where conditions of system operation of gas supply and utilization permit a valid presumption that the gas stored may be considered to be from specified sources, as indicated below.

   NOTE B-2: When in harmony with the over-all system operation of gas supply and utilization, and the presumption is consistently observed from year to year, gas stored during the year may be presumed to be from total gas purchases, or from purchases from specified sources. When either of these presumptions is proper, the cost of gas stored shall be the weighted average cost of all gas purchased, or the weighted average cost of purchases from the specified sources, as appropriate. The weighted average cost may be the average for the preceding twelve months, except, where a significant change occurs in the cost of gas, the full effect of such change shall be reflected for the period after the change is effective.

   NOTE B-3: When in harmony with the over-all system operation of gas supply and utilization, and the presumptions are consistently observed from year to year, gas stored during the year may be presumed to be from identified sources of the utility's own production. Such stored gas shall be priced at the weighted average cost of gas produced from the specified production areas. Where this presumption is made, or where the stored gas is identified as a matter of fact under circumstances which do not permit a proper application of the theory of displacement, the utility shall maintain separate records of the cost of gas produced from such areas and the derivation of the cost used for stored gas from such sources.

   NOTE B-4: Where gas is purchased specifically for storage, or a price concession is received because of the storing of purchased gas, such gas shall be priced at the net contract price of the gas so purchased and stored.

   NOTE B-5: The provisions of this instruction and the related footnotes shall not be construed as permitting or authorizing a restatement of the amounts at which stored gas inventories are stated on the utility's books at the effective date of this instruction, except as may be authorized by the Commission.

2. C. Withdrawals of gas may be priced according to the first-in-first-out, last-in-first-out, or weighted average cost method, in connection with which a "base stock" may be employed provided the method adopted by the utility is used consistently from year to year and the inventory records are maintained in accordance therewith. Approval of the Commission must be obtained for any other pricing method, or change in the pricing method adopted by the utility.
3. D. If the gas of any storage project is withdrawn below the amount established as "base stock" or encroaches upon native gas of a storage reservoir, and such gas is to be replaced within 12 months, it shall be permissible to price such gas at the estimated cost of replacement with purchased gas and to record a deferred credit therefor. For the purpose of this instruction, Account 808, Gas withdrawn from storage – Debit, shall be charged with the estimated cost of such replacement gas and Account 253, Other deferred credits, credited. When replacement of the gas is made, the amount in Account 253 shall be cleared and this account credited. This accounting will not affect normal accounting for inputs and withdrawals from storage.

4. E. Separate records shall be maintained for each storage project of the Mcf of gas delivered to storage, withdrawn from storage, and remaining in storage. The projects shall be grouped, however, for the purpose of maintaining inventory cost records of the cost of gas in storage. Exceptions to this general rule are permitted in any of the following circumstances:

   (a) Projects at the supply end of long transmission lines,

   (b) Projects located on separate noninterconnected pipeline systems, and

   (c) Projects which by contractual arrangements approved by the Commission are devoted exclusively to the service of specified customers, and no portion of the gas withdrawals from any such project becomes part of the common system gas supply by displacement or otherwise.

   Where the utility establishes specified volumes of gas as "base stock," separate inventory cost records by projects shall be maintained therefor.

5. F. Amounts debited to this Account for gas placed in storage shall be credited to Account 808.2, Gas delivered to storage – Credit. Amounts credited to this account for gas withdrawn from storage shall be debited to Account 808, Gas withdrawn from storage – Debit.
6. G. Adjustments for inventory losses due to cumulative inaccuracies of gas measurements, or from other causes, shall be charged to Account 823, Gas losses. In the operation of storage projects, the utility shall maintain such procedures of verification as will disclose and result in prompt accounting recognition of significant losses. This account shall be credited with an amount equal to that debited to Account 164.1, Gas stored underground – Current, to classify for balance sheet purposes such portion of the total inventory of gas stored underground as constitutes a current asset according to conventional rules for classification of current assets. (See Account 164.1.)"

In Account 117, Gas stored underground – Noncurrent, the following language replaces the instructions provided in Accounts 117.1, Gas stored – base gas, 117.2, System balancing gas, 117.3, Gas stored in reservoirs and pipelines – noncurrent, 117.4, Gas owed to system gas, and the special instructions to these accounts.

"A. This Account shall include the cost of recoverable gas purchased or produced by the utility which is stored in depleted or partially depleted gas or oil fields, or other underground reservoirs, and held for use in meeting service requirements of the utility's customers.

(Source: Added at 22 Ill. Reg. 9543, effective June 1, 1998)