Regulators Hear Call for Simpler Gas Rates

Nov 17, 2013

Credit James Riden / Creative Commons

Connecticut's gas utilities are asking regulators to lower the amount they'd have to charge businesses that sign up for new gas service. The request comes as regulators debate the final shape of the state's new comprehensive energy plan.

The highest rate would fall on new business customers currently off the main.

The Public Utility Regulatory Authority recently issued a draft decision that approved parts of the energy strategy released last year by the Department of Energy and Environmental Protection. The centerpiece of that plan is a massive expansion of natural gas usage in the state, as gas prices continue to fall. DEEP wants to see utilities pushing gas mains into new communities and neighborhoods, and signing up customers who currently can't access the fuel. While the original plan was crafted with the help of the gas utilities, they're not thrilled about some of the changes the regulators now want to make.

Bruce McDermott, who represents Connecticut Natural Gas and Southern Connecticut Gas, said,  "Frankly I think from a pure business standpoint, the draft changes the landscape in a way that the companies frankly just didn't sign up for."

One of those landscape changes is the complex tiered structure of new rates. PURA's draft decision includes different tariffs if you are residential customer or a business customer, and if you're signing up where there already is service, or if you're in one of those new areas. The highest rate would fall on new business customers currently off the main. They'd be charged a 50 percent premium on the distribution portion of their bill.

At a public hearing on the draft, utilities expressed fears that customers won't swallow that. Elizabeth Maldonado, senior counsel for Northeast Utilities, told the PURA panel that it would be particularly hard on small businesses. "Regardless of the actual analysis, in a challenging economic environment, the customer's perception of a 50 percent premium may make marketing to potential off main commercial customers very challenging." All three gas utilities, Yankee, CNG and Southern, are calling on regulators to amend the plan to allow them to charge a flat 30 percent premium across the board. 

DEEP, too, is concerned about some of the changes the regulators are contemplating, including increasing the length of time the new rate would be charged to ten years. DEEP's Peggy Diaz urged PURA to scale this back to seven years, to make the switch more attractive for businesses. She told the panel, "The Bureau believes that helping businesses to become more competitive will provide benefits to all Connecticut consumers. A major component of the CES was also to stimulate economic development, and in the opinion of the bureau, this requirement would stymie further development."

Consumer advocates, meanwhile, are concerned that the utilities don't use the new rate incentives to build out service to places where it won't be used, or that are too expensive to reach economically. Joe Rosenthal spoke for the Office of the Consumer Counsel. He said he supports the energy plan, but called for a conservative approach. "That doesn't mean we don't do a robust gas expansion plan," he said. "It means that in the early years, we focus on on-main customers, and the most cost-effective off-main customers. And guess what? That leads to the greatest good for the greatest number of people using the finite resources."

The authority said it will make its final decision on the plan November 21.