(A) Upon the filing of an application by a natural gas company in such form and pursuant to such procedures as shall be prescribed by rule of the commission under section 4929.10 of the Revised Code for the purpose of this division, the commission shall determine the total allowable amount of capacity and commodity costs, and costs incidental thereto, of the company to be received as revenues under this division. Such amount shall be the just and reasonable costs of the company that the commission by order determines meet all of the following criteria:

(1) The costs were prudently incurred.

(2) The costs are legitimate, net, verifiable, and directly due to capacity and commodity obligations entered into by the natural gas company on behalf of consumers that take commodity sales service from other than the natural gas company.

(3) The costs are otherwise unrecoverable.

(4) The company would otherwise be entitled to an opportunity to recover those costs. The commission shall not authorize such revenue opportunity for a company under this division without first setting the matter for hearing, giving notice of the hearing date to the company, and publishing notice of the hearing one time in a newspaper of general circulation in each county affected by the application. At the hearing, the company shall have the burden of demonstrating allowable costs under this division.

(B) Upon the issuance of an order under division (A) of this section determining any allowable capacity and commodity costs, and costs incidental thereto, of a natural gas company, the company shall file with the commission under section 4905.30 of the Revised Code revised schedules allowing the recovery of such costs as the commission authorized in the order, and containing such necessary and appropriate cost recovery mechanism or mechanisms as the commission prescribes in the order. The commission shall act promptly to approve such revised schedules as it determines comply with the order.

Effective Date: 06-26-2001 .