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2018 Columbia Gas of Pennsylvania Rate Case
Frequently Asked Questions (FAQs) - Settlement

On December 6, 2018, the Pennsylvania Public Utility Commission (PUC) voted to approve a settlement among Columbia Gas of Pennsylvania and the parties in its base rate case originally filed on March 16, 2018. This settlement enables Columbia Gas to continue to make substantial capital investments to its distribution system including the accelerated replacement of aging pipe and system upgrades needed to ensure service reliability and pipeline safety. The approved rate adjustment increases annual revenues by $26 million.

What is a base rate case?

Columbia Gas sought approval from the PUC to adjust the system charge and distribution usage charges, which are commonly referred to as base rates.

Unlike most companies, which can change the price of their product/service without outside approval, regulated energy providers—like Columbia Gas—must submit a detailed request to change their base rates. The request includes evidence to support the increase and demonstrate how it benefits customers.

The process—referred to as a regulatory rate review or rate case—must be decided by the Pennsylvania Public Utility Commission (PUC).

Customers have a voice in the review process in multiple ways, including through written comments, public hearings, and various consumer advocacy organizations that participate in the proceedings.

This rate case review is public. All of the documents that were part of this rate case can be found on the PUC’s website here.

What are base rates?

Base rates generate the revenue needed to recover the costs to repair, upgrade, and operate Columbia Gas of Pennsylvania’s natural gas delivery system. This system includes approximately 7,500 miles of pipelines, regulator stations, meters and other facilities. This charge is separate from natural gas commodity costs, which generally make up about a third of the total bill. As a regulated utility, Columbia Gas purchases gas on the wholesale market and, under Pennsylvania law, passes those natural gas costs on to the customer without mark-up or profit.

Base rates are made up of a customer charge, a usage-based distribution charge (per therm rate) and a Weather Normalization Adjustment (WNA).

  • The customer charge is a flat rate customers pay on each bill regardless of how much gas Columbia Gas delivers to their home or business.
  • The distribution usage charge is based on how much gas Columbia Gas delivers to their home or business.
  • A WNA is an adjustment on the distribution portion of a customer’s bill to reflect normal weather levels if temperatures are 3% greater or 3% lower than normal during the winter heating season.

The Gas Commodity Charge, which is separate from base rate charges, recovers the cost of the natural gas used by a customer. Natural gas costs, which make up around a third of the total bill, are passed through to customers on a dollar-for-dollar basis. Under Pennsylvania law, utilities cannot profit on the gas commodity charge.

The customer charge and the distribution usage charge are the only source of revenue for Columbia Gas. All of Columbia Gas’s investments in pipes, meters and all of its expenses that support safe and reliable gas service – including responding to gas-related emergencies – are recovered through the customer charge and distribution usage charge.

What does this mean for my bill?

Under the new rates that will go into effect on December 16, 2018, the total bill for an average residential customer who purchases 70 therms of gas per month from Columbia Gas will increase from $91.63 to $95.74, a 4.49 percent increase.

The average total bill for a residential customer will still be about 32 percent lower than it was in 2009, when adjusted for inflation.

Why does Columbia Gas need to adjust its rates?

As part of Columbia Gas’s commitment to safety, expedited investments to upgrade aging infrastructure are required to enhance the safe and reliable distribution system that Columbia Gas currently operates.

From 2007 to 2017, we invested over $1.6 billion to modernize and expand our distribution system in Pennsylvania. Of that amount, approximately $1.2 billion was dedicated to replacing over 922 miles of priority pipe.

In 2018, we plan to invest $263 million in Pennsylvania, with more than $190 million dedicated to upgrading aging underground infrastructure throughout the 26 Pennsylvania counties where we provide natural gas service.

This settlement represents a reasonable return for the Company’s significant investment in Pennsylvania.

What do you mean by aging infrastructure? Are we safe?

Yes, our system is safe, as evidenced by our ability to address leaks appropriately, as well as other operational improvements including more frequent leakage surveys and better emergency leak response. However, we must be a prudent operator and address the systemic problem of replacing our unprotected bare steel, cast iron, and wrought iron facilities.

After decades of providing service to our parents and grandparents, some of our pipes must be replaced to ensure continued safe and reliable service. These pipelines served us well, but it has come to the point where it is more cost effective for us to replace the pipe now, rather than repair the pipe only to replace it in the near future. Much like other types of infrastructure such as roads and bridges, deterioration occurs over time and repairs or replacement are eventually needed.

How is Columbia Gas trying to reduce costs for customers?

Columbia Gas is working more efficiently than it has in the past. We have taken the following steps to save money and will continue to look for additional ways to make the most cost-effective decisions for our customers:

  • Technological investments, such as investing in Automated Meter Reading technology, to reduce the costs associated with reading meters monthly.
  • Long-term contracts with our pipeline contractors, which ensure affordable and predictable rates for their services.
  • Partnerships with our sister gas distribution companies in Ohio, Maryland, Kentucky, Virginia, and Massachusetts, as well as our parent company NiSource, to save money through consolidated, in-house services as well as to gain economies of scale through the ordering of supplies, materials, and contractors.

Our approach is working. The average total bill for a residential customer will still be about 32 percent lower than it was in 2009, when adjusted for inflation.

Doesn’t Columbia Gas already adjust my rates every quarter?

No, not base rates. Every quarter, Columbia Gas files its quarterly gas cost adjustment for the natural gas commodity portion of your bill. Natural gas costs represent about a third of your total bill. Columbia Gas purchases its gas on the wholesale market and, under Pennsylvania law, passes those costs on to the customer without mark-up or profit.

When was the last time Columbia Gas asked to adjust its rates?

Columbia Gas last filed for a rate adjustment in March 2016.

Why is Columbia Gas requesting this increase so soon after the last rate adjustment?

Safety is Columbia Gas’s number one priority, and we are committed to our continued investment in the safest possible natural gas delivery system for our customers and communities. Columbia Gas is investing over $190 million to replace aging pipe in 2018 alone. This rate settlement represents a reasonable return for this investment in replacing and upgrading our natural gas distribution system.

I already have trouble paying my bill. What can I do?

Columbia Gas is committed to providing our low-income customers with the tools, resources, and programs to stay safe and warm in their homes. These programs help customers mitigate the impact of a rate adjustment.

Budget Payment Plan
Available to all Columbia Gas customers, the Budget Payment Plan allows customers to spread annual bills evenly across the year instead of paying account balances each month, helping to eliminate high winter bills. The budget year begins in May, but customers can enroll any time during the year.

Low Income Home Energy Assistance Program (LIHEAP)
Columbia Gas serves as a link to federal energy assistance funds which provide help with residential heating costs. These energy grants do not have to be repaid by the customer. Enrollment guidelines, which are revised each new heating season, are based on household size and income.

Customer Assistance Program (CAP)
The Customer Assistance Program offers affordable payment plans for residential customers with low incomes and long-term bill payment difficulties. CAP features reduced monthly payments for current bills for income-eligible customers, as well as debt forgiveness for prior balances.

Customer Assistance, Referral & Evaluation Services (CARES)
The CARES program helps customers who have a true inability to pay their utility bills and are facing additional challenges.

Dollar Energy Fund
The Dollar Energy Fund is an independent, non-profit organization that provides assistance to people who are on low or fixed incomes.

WarmWise: Low Income Usage Reduction Program
Formally called “Warm Choice,” Columbia’s Low Income Usage Reduction Program (LIURP) provides income-eligible customers with no-charge home weatherization assistance to help reduce annual heating costs. LIURP identifies improved home weatherization opportunities in the home and then installs the most cost effective measures to reduce consumption.

WarmWise: Audits & Rebates
Audits & Rebates offers a free, comprehensive in-home energy audit identifying and recommending energy saving improvements throughout the home to income-qualified customers. Customers can also choose to take advantage of rebates for energy saving improvements.

Crisis – Emergency Energy Assistance
A component of the Low Income Home Energy Assistance Program (LIHEAP), Crisis Emergency Energy Assistance provides funds for customers in emergency situations and who are in danger of losing their heat.

Are there any customer benefits in this rate adjustment?

Infrastructure Upgrades. We are enhancing the safety of our system through our pipeline replacement program. We will continue to be a leader in pipeline replacement in Pennsylvania and invest millions of dollars each year to replace aging distribution pipelines. We remain committed to providing safe, reliable, and efficient natural gas distribution service, and we plan to dedicate more than $190 million in 2018 just to replace aging infrastructure.

System Reliability. Upgrades to the system with plastic and cathodically protected steel pipe not only maintain safety, but also provide an upgraded system design ensuring more reliable service during extreme cold temperatures. The new system also provides more flexibility in adding new, high efficiency equipment and allows for the installation of smaller, less expensive interior piping system for customers.

Pipeline Maintenance Enhancements. System maintenance practices will further improve the safe and reliable delivery of natural gas, such as enhanced training (including a new training facility that opened in mid-2016) and system improvements to reduce the amount of damage done to our distribution facilities by external parties, the number one risk to the safety of our system.

Job Creation. Our pipeline replacement program is adding jobs, both full-time employees (engineers, engineering technicians, land agents and construction inspectors) as well as contractors who perform the actual pipe replacement (including laborers, equipment operators, crew leaders and support staff), and associated support services such as paving, traffic control, trucking, sand and gravel and a myriad of other material purchases and support activities.

Is this rate increase fair to Columbia Gas customers?

Columbia Gas views this as a fair and reasonable adjustment of rates for the significant investment in Pennsylvania. Our continued investment enhances the safety and reliability of our natural gas delivery system.

When will this adjustment impact my bill?

New rates will go into effect on December 16, 2018.

Do the new rates take tax reform into account?

Yes. Tax calculations for the new customer rates in this adjustment reflect Pennsylvania law and federal law, including the Tax Cuts and Jobs Act of 2017 (“TCJA”) which was signed into law December 22, 2017.

As part of this rate adjustment settlement, the difference between taxes collected from Columbia Gas customers at the previous 35% tax rate from January 1, 2018 through December 16, 2018 and the new 21% rate will be returned to customers over an 18-month period beginning December 16 as a negative surcharge (credit) on customer bills.