(a) The commission shall create for each electing distribution company a universal service fund for the purpose of:

(1) Assuring that gas is available for sale by marketers to firm retail customers within the territory certificated to each such marketer;

(2) Enabling the electing distribution company to expand its facilities and service in the public interest;

(3) Assisting low-income customers in times of emergency as determined by the commission; and

(4) Providing energy conservation assistance to low-income customers in a fair and equitable manner as determined by the commission; provided, however, that not more than 10 percent of the amount in the universal service fund shall be expended for such purpose in any calendar year.

(b)(1) The fund shall be administered by the commission under rules to be promulgated by the commission in accordance with the provisions of this Code section. Prior to the beginning of each fiscal year of the electing distribution company, the commission shall determine the amount of the fund appropriate for such fiscal year. In making such determination, the commission shall consider the following:

(A) The amount required to provide appropriate compensation to marketers with respect to uncollectible accounts arising from commodity sales to firm retail customers;

(B) The amount required to provide sufficient contributions in aid of construction to permit the electing distribution company to extend and expand its facilities from time to time as the commission deems to be in the public interest; and

(C) The amount required to assist low-income persons subject to price increases.

(2) Notwithstanding any other provisions of this Code section, the commission shall, pursuant to rules and regulations, administer and expend moneys in the fund primarily for the purpose provided in subparagraph (C) of paragraph (1) of this subsection for the 24 months immediately succeeding April 27, 2001.

(c) The fund shall be created and maintained from time to time from the following sources:

(1) Rate refunds to the electing distribution company from its interstate pipeline suppliers;

(2) Any earnings allocable to ratepayers under performance based rates of the electing distribution company authorized by this article;

(3) A surcharge to the rates for firm distribution service of the electing distribution company authorized for such purpose by the commission from time to time; and (4) Any other payments to the fund provided by law.

(d) Any amounts remaining in such fund at the end of a fiscal year shall be available for refund to retail customers in such manner as the commission shall deem equitable. The balance at fiscal year end, whether positive or negative, after such refund, if any, shall become the initial balance of the fund for the ensuing fiscal year and shall be considered by the commission in making the determination required in subsection (b) of this Code section.

(e) Moneys in the fund shall be deposited in a separate, interest-bearing escrow account maintained by the electing distribution company at any state or federally chartered bank, trust company, or savings and loan association located in this state. Upon application to the commission, the commission shall order the distribution of an appropriate portion of such moneys on a quarterly basis and in accordance with the provisions of this Code section. Interest earned on moneys in the fund shall accrue to the benefit of the fund.

(f) In determining whether to grant the application of a marketer for a distribution from the fund in whole or in part, the commission shall consider:

(1) The expenditures reasonably required for commodity sales by a marketer within the relevant territory based upon the cost of gas as established by published cost indexes, the transportation charges of the interstate pipeline involved, and the rates for firm distribution service of the electing distribution company. The commission shall also consider the actual costs incurred to serve the customers and revenues available to the marketer from sales within the affected territory available to provide a fair return to the marketer;

(2) Whether the marketer pursued reasonable diligence in seeking to recover the uncollectable accounts; and

(3) The reduction to the total amount of the uncollectable accounts appropriate to assure that marketers pursue reasonable diligence in their collection efforts.

(g)(1) In determining whether to grant the application of an electing distribution company for a distribution from the fund in whole or in part, the commission shall consider:

(A) The capital budget of the electing distribution company for the relevant fiscal year;

(B) The estimated total overall applicable cost of the proposed extension, including construction costs, financing costs, working capital requirements, and engineering and contracting fees, as well as all other costs that are necessary and reasonable;

(C) The projected initial service date of the new facilities, the estimated revenues to the electing distribution company during the first five fiscal years following the initial service date, and the estimated rate of return to the electing distribution company produced by such revenues during each such fiscal year; (D) The amount of the contribution in aid of construction required for the revenues from the proposed new facility to produce a just and reasonable return to the electing distribution company; and

(E) Whether the proposed new facility is in the public interest.

(2) In no event shall the distribution to an electing distribution company from the fund for facilities and service expansion during any fiscal year exceed 5 percent of the capital budget of such company for such fiscal year.

(3) Any investment in new facilities financed from the universal service fund shall be accounted for as a contribution in aid of construction.