Pennsylvania Gas Companies Rely on Rate Hikes to Fund Projects

by | May 12, 2016

Pittsburgh-area residents whose natural gas is delivered by Columbia Gas of Pennsylvania and electricity by West Penn Power soon could have to pay an extra $20 a month, according to a report in the local Post-Gazette.

That rate hike would be just a little bit more than customers were hit with in 2015. At that time, both utilities raised their customers’ average monthly bill by $16.29.

Why so much within two years? Both utilities can anticipate about nine months of questioning on that exact subject as the Pennsylvania Public Utility Commission (PUC) begins hearing arguments in their separate rate adjustment cases (Docket Nos. R-2016-2529660 and M-2015-2514769).

Columbia Gas

Columbia Gas, a subsidiary of NiSource that serves about 419,000 customers statewide, filed on March 18 for an increase in base rates for distribution service of another $55.3 million a year. That would inflate the monthly bill of a typical residential customer by $9.64, or 12 percent, to $86.97 per month.

“Our number one priority is maintaining the safety of our customers and the communities we serve,” said company President Mark Kempic. “We have made, and will continue to make, substantial capital investments in our system to enhance the safe and reliable system that we currently operate. We believe this filing provides a number of tangible benefits to

Indeed, company management stated, from 2007 through 2015, Columbia Gas invested nearly $1.1 billion to modernize and expand its distribution system in Pennsylvania. In 2016 alone, Columbia said, it plans to invest $210 million in Pennsylvania, with more than $160 million dedicated to upgrading aging underground infrastructure across its 26-county service territory.

The rationale: The filing, if approved by the PUC, would not only provide the Columbia Gas with an opportunity to earn a fair return on its infrastructure capital investments, but also enhance pipeline safety through a number of initiatives.

West Penn Power

For its part, West Penn Power, subsidiary of FirstEnergy, filed on May 2 for an increase of $98 million, or approximately 5.7 percent over current rates. If approved, the total bill for an average residential customer using 1,000 kWh/month would increase 9.64 percent, or $10.89, for a new monthly total bill of $123.88.

The bill for a commercial customer using 40 KW for 250 hours would increase 1.8 percent, or $16.58, for a total bill of $959.86.  The bill for an industrial customer using 20 MW for 474 hours would increase 0.8 percent, or $4,191.28, for a total bill of $548,425.83.

West Penn, which has 720,000 customers in the Keystone State, approved a rate case last May that raised customer rates by about 13 percent — the first rate increase in more than two decades.

Pending PUC approval, FirstEnergy has requested that the new rates take effect on June 27, 2016.  The process, however, could take up to an additional nine months.

FirstEnergy Corp., West Penn’s parent company, also is proposing increases at the three other Pennsylvania utilities it owns, seeking to boost revenue by $439 million across all four utilities. FirstEnergy spokesman Scott Surgeoner told the Pittsburgh Post-Gazette that the rates would bring revenue into line with the costs of doing business to a customer base that has grown over the years.

“Look at it from perspective that we’re serving more customers,” Surgeoner said. “There’s more miles or wire, more poles, there are more transformers, more equipment that we have to maintain on an annual basis, and the revenue to do this is less than it was previously.”

In both cases, intervening groups have just begun gathering experts and preparing testimony. The PUC has scheduled a public hearing on the Columbia rate case for May 25 in Washington, Pennsylvania.


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