PHMSA Response Letter

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Mr. Donald Lomoljo
Assistant Staff Counsel
Public Utilities Commission of Nevada
1150 East William Street
Carson City, NV 89701

Dear Mr. Lomoljo:

In an email to the Pipeline and Hazardous Materials Safety Administration (PHMSA) dated December 2, 2011, you requested an interpretation as to the applicability of 49 CFR Part 192 to proposed operator-owned meter components and appurtenances installed downstream of the customer meter which are used to facilitate a differential billing rate for applications such as gas-fired air conditioning units, vehicle fueling stations, etc. To distinguish it from the customer meter (as defined in 49 CFR § 192.3), you call the downstream meter a "deduct meter." You provided an illustration of the above-described meter configuration. You stated that three possible findings have been proposed by parties to the case as described below:

1. An operator-owned deduct meter and related appurtenances installed on customer piping downstream of the customer meter to facilitate a special differential billing rate would not be subject to Part 192, and the piping between the two operator-owned meters would remain the responsibility of the customer and subject to local piping code, as opposed to Part 192 requirements.
   
2. An operator-owned deduct meter and related appurtenances installed on customer piping downstream of the customer meter to facilitate a special differential billing rate would be subject to Part 192, but the piping between the two operator-owned meters would remain the responsibility of the customer and subject to local piping code, as opposed to Part 192 requirements.
   
3. An operator-owned deduct meter and related appurtenances installed on customer piping downstream of the customer meter to facilitate a special differential billing rate would form the furthest downstream connection to the customer's piping and thus would be subject to Part 192 requirements, together with the piping between the two operator-owned meters.
   

You asked PHMSA to specify which of the above proposals is the correct interpretation, or if none of these are correct, the proper interpretation language, so that you may properly describe these deduct meters in your tariffs where such retrofit applications are requested.

During a January 10, 2012, phone conversation with my staff, you and Mr. Ken Jones, Staff Gas Pipeline Engineer for the Public Utility Commission of Nevada (PUCN), confirmed that the meters downstream from the customer meter would be used only for seasonal rate calculations. In a January 12, 2012, email you provided PHMSA with more information. You stated that it is your understanding that the utility¿s initial intended application of the deduct meters is to encourage the use of natural gas in an uncommon application (air conditioning) during the off-peak gas season (summer) by use of a special discounted rate, while the other common gas appliances would continue to be billed at the usual rate. You stated that there is only one customer involved, but that customer will get two bills during the 4-month special billing period, with one bill being the read of the deduct meter at the special rate and the other bill being the read from the customer meter MINUS the read of the deduct meter at the normal rate. For the other eight months, the deduct meter will be idle and billing will be solely from the reading of the customer meter at the normal billing rate.

The definition of "customer meter" at §192.3 is "the meter that measures the transfer of gas from an operator to a consumer." Your description of the deduct meter in this proposed configuration would fall under the definition of "customer meter." According to § 192.3, a "service line" ends at the outlet of the customer meter or at the connection to a customer's piping, whichever is further downstream, or at the connection to customer piping if there is no meter. In this configuration, the service line ends at the outlet of the meter that is farthest downstream.

Therefore, it is PHMSA's opinion that an operator-owned deduct meter and related appurtenances installed on customer piping downstream of the customer meter to facilitate a special differential billing rate would form the furthest downstream connection to the customer's piping and thus would be subject to Part 192 requirements, together with the piping between the two operator-owned meters.

I hope that this information is helpful to you. If I can be of further assistance, please contact me at 202-366-4046.

Sincerely,

John A. Gale
Director, Office of Standards
and Rulemaking