Natural gas customers and legislators throughout the area are
getting heated up over a proposed surcharge that National Fuel Gas
officials claim is not as bad as it seems.
Last month, National Fuel announced it wants to implement a
surcharge that would add a fee to consumers’ bills if the average
consumption drops. The exact amount is not clear, but would be
based on a formula involving the price of gas, the number of homes
served and the average amount of gas used per household.
National Fuel’s request also includes a delivery service charge
increase of about $9.95 to the average residential customers’
monthly bill. If approved by the Pennsylvania Public Utility
Commission, the average bill would go up 6.9 percent to
$153.92.
But it’s the surcharge that has customers charged up.
The PUC has received about 750 complaints between June 1 – when
National Fuel announced its request – and July 7.
“We don’t normally see this volume of complaints,” said Jennifer
Kocher, spokeswoman for the PUC. Usually complaints are in the
single digits.
A House Republican Policy Committee hearing was held Wednesday
in Erie, a first of many meetings to address the issue.
“We’ve all been told we need to conserve energy,” said State
Rep. Kathy Rapp, R-Warren, who was at the hearing. “The public has
done that … (people are) now being penalized for the very things
they are asked to do” such as weatherizing their home and using
alternative ways to heat their homes.
Nancy Taylor, senior manager of corporate communications at
National Fuel, explained to The Era that the surcharge would not be
that bad if overall usage goes down.
“It’s very minimal,” she said. “That people think they are being
penalized … gas costs make up 70 percent or more of a person’s
bill. The delivery portion of the bill is small to begin with. The
surcharge is very small.”
Taylor added that the charge doesn’t affect individuals, only
entire classes. For instance, if the average use for residents
drops, then the adjustment would be made for the charge.
“It’s done collectively, not on an individual basis,” she
said.
For example, if an entire class lowers its usage by 1 percent,
an individual saves $14 on their bill because they used less gas.
The adjustment on the delivery charge would be 88 cents, Taylor
said.
Taylor also said that barring unforeseen circumstances, such as
a hurricane, National Fuel expects to reduce its gas rates on Aug.
1 by 17 1/2 percent.
Taylor explained that in no-growth areas, it’s hard to make
money when there’s no way to increase sales.
“That’s why we go to the PUC,” she said. “We don’t have any way
otherwise to increase income to cover increased costs.”
If the sales go up during that period, the customer is
credited.
“It can go either way, it’s truly an adjustment mechanism.”
“The surcharge is the prime thing we try to do to kind of
decouple (separate) sales from earnings,” Taylor said. “The company
needs a certain amount of money to run the company. We apply for
rate increases when we need to do that and that’s what we’ve
done.”
Uncertainty over what the measure actually contains was
addressed at Wednesday’s meeting.
Rapp, a member of the State House Environmental Resources and
Energy Committee, said the meeting was well attended.
PUC Chairman Wendell Holland explained the process, including
the time frame, for the measure.
“His role was to explain the process, not take sides on either
issue,” Rapp said.
Rapp brought up the possibility of drilling on Lake Erie.
“There is a willingness there,” she said, adding Canadian
companies drill on the lake, then sell that gas to the U.S.
“We are the buyer of natural gas drilled in Lake Erie,” she
said. “I was happy to see the people in the audience from Erie had
no opposition regarding drilling on the lake.”
In the meantime, people are urged to express their opinions
either with their lawmaker, PUC or National Fuel.
Kocher explained that people can submit formal and informal
complaints. Those who lodge a formal complaint are viewed as part
of the official record and become “a party to the case itself.”
She added the consumer advocate part of the state’s attorney
general’s office already acts on constituents’ behalf as part of
the formal complaint.
Kocher said that the process, which takes about nine months, is
still in the beginning stages. The PUC will shortly make a decision
on whether to ask for a longer time to investigate, something she
said is typical in these types of cases.
She doesn’t expect the timetable for hearings to be announced
until the first part of August; the actual hearings won’t take
place until the end of August or beginning of September.
Taylor said that if the plan proceeds are normal it would be
finalized at the end of January 2007.
“The conservation rider would only become active if customer
usage has gone down between the first of February 2007 and the end
of January 2008,” she said.
However, approval of this precedent-setting measure is not a
shoo-in.
“This is the first time that this type of request has been made
in Pennsylvania,” Kocher said.
On whether the measure will actually be passed, Kocher couldn’t
speculate.
“I don’t know. It seems that after last winter with the
instability of natural gas prices, people are very aware of what
their natural gas company is doing,” she said. “They are very aware
of it right now.”
Taylor said the measure has been approved in several other
states. She, too, was not sure what would happen in
Pennsylvania.
“There’s certainly been a lot of negative reaction in our
service territory,” Taylor said.
Lawmakers throughout this service area have expressed concern
over the surcharge.
“We have received complaints throughout our district,” said Tim
Nyquist from state Sen. Joe Scarnati’s, R-Brockway, office.
Scarnati represents the 25th Senatorial District.
“It’s something the senator is concerned about,” Nyquist said,
adding he’s expressed those concerns to National Fuel. “We are
gathering as much information as we can.”
Rep. Martin Causer, R-Turtlepoint, has also received complaints
and said he suggests people file a formal complaint with the
PUC.
“I share their concern,” Causer said, adding it’s important for
people to get accurate information about the proposal. “Natural gas
prices are a huge issue, a real burden for people.”
Kocher believes this burden has made people more aware of the
actions National Fuel takes.
A public meeting will be held at 10:30 a.m. Friday in the Slater
Room of the Warren Public Library. A petition will be available for
those to sign as an alternative to filing out a complaint.
Individual complaint forms will also be available.
Consumer advocate Kenneth Springirth will also be at the
meeting.
For Rapp constituents who cannot attend the meeting, the PUC
petition will made available at her Warren district office through
July 26.
Rapp said she will personally deliver all the complaints she’s
collected to the PUC in Harrisburg.
“I’ve talked with many constituents of all ages, all income
groups,” Rapp said. “I don’t believe anyone out there consumer-wise
believe this is just.”
Rapp said she’s had constituents tell her they’ve turned their
thermostats down to 50 degrees and have huddled under blankets to
keep warm.
She added that there’s still the LIHEAP program that provides
heating assistance and suggested a possible tax credit for
weatherization.
“In any program you never touch everyone,” she said. “There’s
always people who fall through the cracks. I think we need to take
a good, close look at this” with other hearings.
