Score one for Joe Q. Public – partially at least.
On Thursday, National Fuel Gas announced it has withdrawn its
controversial proposed surcharge which would have added a fee to
customer bills if the average consumption dropped as part of a
settlement agreement reached by the utility and the Pennsylvania
Utility Commission, among other agencies.
However, the settlement also calls for National Fuel to increase
its delivery service charges by 4 percent – a hike of more than $5
for a typical residential customer using 8,300 cubic feet of gas a
month, effective in January.
National Fuel officials said a settlement was reached, in part,
because the state agreed to investigate efforts that energy
utilities can take to help their customers conserve energy or use
it more efficiently.
The statewide generic proceeding announced by PUC on Sept. 28
will also examine ratemaking mechanisms – including revenue
decoupling – that might be appropriate to remove any disincentives
that would keep utilities across the state from promoting customer
conservation.
“While it didn’t come through for National Fuel, by withdrawing
it (surcharge) we were able to reach this settlement. We are happy
the PUC is still considering it (conservation efforts) in a
statewide manner,” National Fuel’s Senior Manager of Corporate
Communications Nancy Taylor said. “We still will be billing for
fixed costs on a variable basis.”
As it stands, National Fuel’s delivery service charges will
increase by $14.3 million. The average customer will experience a
rate hike of $5.39, from $120.08 to $125.47 a month, starting Jan.
1 if the agreement is approved by the PUC.
The agreement would also preclude National Fuel from filing
another delivery service cost increase until January 2008,
according to Taylor, which is a typical procedure. National Fuel’s
current residential customer rate structure will remain unchanged,
officials said.
Prior to the case, officials said the company has hiked its
delivery service charges less than 5 percent since 1995.
The proposed surcharge – announced by the National Fuel in June
– was met with great consternation by residents who are serviced by
the utility. The exact amount of the surcharge was never known, but
was slated to be based on a formula involving the price of gas, the
number of homes served and the average amount of gas used per
household.
Local state lawmakers and the PUC received hundreds of resident
complaints about the proposed action, causing a series of public
hearings to be held across the region and an investigation by the
PUC into the matter. The administrative law judges in the case had
until March to make a final decision on the surcharge.
“This is certainly good news if they withdraw the surcharge,”
state Rep. Martin Causer, R-Turtlepoint, said. “Finally, the
company realized the error of its ways. I think it was completely
wrong to impose that in the first place. It went way
overboard.”
The lawmaker said he was still concerned, however, with National
Fuel’s 4 percent delivery service charge increase.
“Most people probably aren’t seeing a four percent cost of
living increase,” Causer said. “It’s still a concern for people
trying to pay their gas bills, but at least this is a step in the
right direction to rescind that surcharge.”
There could be some relief coming in the next few weeks though,
according to Taylor. The company has the opportunity to apply for a
change in rates every quarter; that will occur again on Nov. 1.
“The good news is, because of lower gas costs and if everything
stays as it is, it appears rates will still be lower this winter,”
Taylor said. She did not indicate what the exact decrease could
be.
In August, the company indicated the rates for customers would
drop almost $24 a month to the $120 figure.
“Any rate decrease is good, but we’ll keep our eye on it,”
Causer said.
In regards to a settlement being reached quickly, Taylor said
the PUC “encourages settlements. We are always pleased when there
is an agreement.”
Taylor said the energy efficiency proposal in the case was
basically a revenue decoupling mechanism by the company, meaning
there was an effort to decouple its recovery of fixed costs from
customer usage.
“We are highly encouraged by our regulatory bodies to encourage
conservation,” Taylor said. “The way the rate structures are now,
utilities have a disincentive from doing that. When rates are
established, there is an assumption made that there will be a
certain amount of sales. If that changes dramatically, it changes
the level of recovery for a utility.”
According to Taylor, natural gas companies are different than
television and telephone utilities because the later two send
customers a flat bill, whereas as gas companies bill for its
services through customer usage.
There was no word on when a final decision on the agreement
could be reached by the PUC.
The major parties in the case included the PUC’s Office of Trial
Staff, Office of Consumer Advocate, Office of Small Business
Advocate, the Community Action Association of Pennsylvania and
National Fuel.
National Fuel serves more than 215,000 customers in 14 counties
across northwestern Pennsylvania, including McKean County.
