applicable share
(4) Safe harbor for prepaid natural gas (A) In general The term “investment-type property” does not include a prepayment under a qualified natural gas supply contract. (B) Qualified natural gas supply contract For purposes of this paragraph, the term “qualified natural gas supply contract” means any contract to acquire natural gas for resale by a utility owned by a governmental unit if the amount of gas permitted to be acquired under the contract by the utility during any year does not exceed the sum of— (i) the annual average amount during the testing period of natural gas purchased (other than for resale) by customers of such utility who are located within the service area of such utility, and (ii) the amount of natural gas to be used to transport the prepaid natural gas to the utility during such year. (C) Natural gas used to generate electricity Natural gas used to generate electricity shall be taken into account in determining the average under subparagraph (B)(i)— (i) only if the electricity is generated by a utility owned by a governmental unit, and (ii) only to the extent that the electricity is sold (other than for resale) to customers of such utility who are located within the service area of such utility. (D) Adjustments for changes in customer base (i) New business customers If— (I) after the close of the testing period and before the date of issuance of the issue, the utility owned by a governmental unit enters into a contract to supply natural gas (other than for resale) for a business use at a property within the service area of such utility, and (II) the utility did not supply natural gas to such property during the testing period or the ratable amount of natural gas to be supplied under the contract is significantly greater than the ratable amount of gas supplied to such property during the testing period, then a contract shall not fail to be treated as a qualified natural gas supply contract by reason of supplying the additional natural gas under the contract referred to in subclause (I). (ii) Lost customers The average under subparagraph (B)(i) shall not exceed the annual amount of natural gas reasonably expected to be purchased (other than for resale) by persons who are located within the service area of such utility and who, as of the date of issuance of the issue, are customers of such utility. (E) Ruling requests The Secretary may increase the average under subparagraph (B)(i) for any period if the utility owned by the governmental unit establishes to the satisfaction of the Secretary that, based on objective evidence of growth in natural gas consumption or population, such average would otherwise be insufficient for such period. (F) Adjustment for natural gas otherwise on hand (i) In general The amount otherwise permitted to be acquired under the contract for any period shall be reduced by— (I) the applicable share of natural gas held by the utility on the date of issuance of the issue, and (II) the natural gas (not taken into account under subclause (I)) which the utility has a right to acquire during such period (determined as of the date of issuance of the issue). (ii) Applicable share For purposes of the clause (i), the term “applicable share” means, with respect to any period, the natural gas allocable to such period if the gas were allocated ratably over the period to which the prepayment relates. (G) Intentional acts Subparagraph (A) shall cease to apply to any issue if the utility owned by the governmental unit engages in any intentional act to render the volume of natural gas acquired by such prepayment to be in excess of the sum of— (i) the amount of natural gas needed (other than for resale) by customers of such utility who are located within the service area of such utility, and (ii) the amount of natural gas used to transport such natural gas to the utility. (H) Testing period For purposes of this paragraph, the term “testing period” means, with respect to an issue, the most recent 5 calendar years ending before the date of issuance of the issue. (I) Service area For purposes of this paragraph, the service area of a utility owned by a governmental unit shall be comprised of— (i) any area throughout which such utility provided at all times during the testing period— (I) in the case of a natural gas utility, natural gas transmission or distribution services, and (II) in the case of an electric utility, electricity distribution services, (ii) any area within a county contiguous to the area described in clause (i) in which retail customers of such utility are located if such area is not also served by another utility providing natural gas or electricity services, as the case may be, and (iii) any area recognized as the service area of such utility under State or Federal law.