|Month||Commodity Revenues||Cost of Gas Sold||Difference||GCVA Balance|
For the following example assume the commodity rate paid by customers remains the same for four months. The opening GCVA balance is zero.
Month 1: The cost of gas sold exceeded the commodity revenues. $2 million owed by customers is added to the GCVA.
Month 2: The cost of gas sold exceeded the commodity revenues. $4 million is added to the previous $2 million deficit, bringing the total amount owing by customers to $6 million.
Month 3: The cost of gas sold exceeded the commodity revenues. $1 million is added to the amount owing by customers for a total of $7 million.
Month 4: There is a change in the market. The revenue now exceeds the cost of gas sold by $7 million. The credit is applied to the existing $7 million deficit. The GCVA is back to zero.
Result: The balance owing by customers has been repaid and no rate change is required. This approach allows rates to generally reflect the market price of natural gas while offering you rate stability in the short term.