Purchased Gas Adjustment and Gas True-up Correction
The purchased gas adjustment (PGA) is used to adjust the retail price of natural gas to cover wholesale gas price fluctuations. In November 2022, the PGA was divided into two components: the purchased gas adjustment (PGA) and the Gas True-up Correction (GTC).
The PGA is a forward looking projection based on forecasted gas costs and usage in the current month. It is calculated on a per CCF basis using the difference between the forecasted cost of gas for the current month and the cost that was assumed when the base rate was determined. The PGA rate is applied to all current month gas usage and can be either positive or negative. It appears as a separate line item on the customer’s bill. Since PGA is forward looking, and based on forecasts and estimates, there will inevitably be some error in the PGA projection.
The GTC is a backward looking correction for any error in PGA two months earlier. After actual gas costs are available, the GTC calculates what PGA should have been 2 months earlier and determines the correction needed. The GTC correction is multiplied by the gas usage on the customer’s bill two months earlier. Like PGA, it can be either positive or negative and it appears as a separate line item on the customer’s current bill.
Separating the GTC correction out onto its own line item allows it to be billed based on the gas used two months ago when the error in PGA happened. This is fairer to all customers because the gas cost and corrections are being applied more accurately to the customers who actually used the gas.