Frequently Asked Questions
On October 27, 2016, the Pennsylvania Public Utility Commission (PUC) voted to approve a settlement between Columbia Gas of Pennsylvania and the parties in its base rate case originally filed on March 18, 2016. 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 settlement increases Columbia Gas’s annual revenues by $35 million.
1. What is a tariff?
A tariff is a collection of rules that defines the relationship between a utility and its customers. Tariffs are formally accepted or approved by the Commission and can only be changed by Commission order.
2. 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 7,400 miles of pipelines, regulator stations, meters, and other facilities. Base rate charges are 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 comprised 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 5% greater or 5% 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.
All of Columbia Gas of Pennsylvania’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.
3. What do you mean by a base rate adjustment?
A base rate adjustment is a change in the rates through which a utility recovers its operating costs and investments, and through which it recovers its PUC-approved earnings. Base rates are typically made up of usage charges, which vary depending upon how much a customer uses, and a fixed monthly customer charge. In this case, the PUC approved changes to Columbia Gas’s usage charges. The fixed monthly residential customer charged remains unchanged as a result of the approved settlement.
4. What does this mean for a customer’s bill?
Under the new rates that will go into effect on December 19, 2016, the total bill for an average residential customer who purchases 70 therms of gas per month from Columbia Gas will increase from $77.33 to $83.05, a 7.34 percent increase. The monthly customer charge remains the same at $16.75 per month.
It is important to note that, when adjusted for inflation, the total average customer bill will still be about 31 percent lower in 2017 than it was in 2006, even with these new rates.
5. Why does Columbia Gas need to adjust its rates?
As part of Columbia Gas of Pennsylvania’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 2007-2015, we invested nearly $1.1 billion to modernize and expand our distribution system in Pennsylvania. Of that amount, approximately $845 million was dedicated to replacing over 744 miles of priority pipe.
In 2016 alone, we plan to invest $210 million in Pennsylvania, with more than $160 million dedicated to the replacement of aging underground infrastructure throughout our 26-county service territory.
This settlement represents a reasonable return for the Company’s significant investment in Pennsylvania.
6. What do you mean by aging infrastructure? Are we safe?
After decades of providing service to our parents and grandparents, some of our pipes are nearing the end of their useful life and 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 is eventually needed.
Yes, our system is safe. However, we must be a prudent operator and follow the industry standard of replacing our unprotected bare steel, cast iron, and wrought iron facilities.
7. How is Columbia Gas working to reduce costs for customers?
Columbia Gas works efficiently in order to control the costs that it passes along to its customers. 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:
- We are making technological investments, such as investing in Automated Meter Reading technology, to reduce the costs associated with reading meters monthly.
- We have secured long-term contracts with our pipeline contractors, ensuring affordable and predictable rates for their services.
- We partner with our sister gas distribution companies in Ohio, Maryland, Kentucky, Virginia, Indiana, 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. Even with this rate adjustment, Columbia Gas of Pennsylvania’s total average residential customer bill is still about 31 percent lower than it was in 2006, when adjusted for inflation.
8. Doesn’t Columbia Gas already adjust my rates every quarter?
Not base rates. Every quarter, we file our quarterly gas cost adjustment for the natural gas commodity portion of your bill. Natural gas costs represent about a third of your total bill. We purchase our gas on the wholesale market and, under Pennsylvania law, pass those costs on to the customer without mark-up or profit.
9. When was the last time Columbia Gas asked to adjust its rates?
The most recent base rate adjustment was requested in March 2015 and implemented in December 2015. Columbia Gas continues to invest millions of dollars in its distribution system, and filing a rate adjustment with the Pennsylvania Public Utility Commission provides Columbia Gas with the opportunity to earn a fair return on its substantial investment.
10. Why is Columbia Gas requesting this increase so soon after the last rate adjustment?
Safety is Columbia Gas of Pennsylvania’s top priority, and we are committed to our continued investment in the safest possible natural gas delivery system for our customers and communities. This rate adjustment reflects a reasonable return for our aggressive investment in replacing and upgrading our natural gas distribution system.
Additionally, Columbia Gas is focused on safely operating and maintaining our pipeline system, meeting or exceeding all federal and state requirements. This base rate adjustment incorporates expenses associated with safety initiatives, including enhanced training and technological system improvements to reduce the amount of damage done to Columbia Gas of Pennsylvania’s distribution facilities by third parties, the number one risk to the safety of our system.
11. I already have trouble paying my bill. What can I do?
We are 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. Customers who are having trouble paying their bills are encouraged to contact us at 800-537-7431 in order to determine which of the following programs are available to them.
Budget Payment Plan
Available to all Columbia Gas customers, the Budget Payment Plan allows customers to spread annual gas costs 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 Gas of Pennsylvania’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 to identify and recommend 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.
12. What are the customer benefits in this rate adjustment settlement?
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 are dedicating more than $160 million in 2016 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 June 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 myriad other material purchases and support activities.
Customer Savings. As part of the settlement, customers will no longer be charged separate processing fees for bill payments using debit cards, credit cards, ACH, or walk-in locations.
13. Is this rate adjustment fair to Columbia Gas customers?
This is a fair and reasonable adjustment for the significant investment in Pennsylvania which will provide customers with a number of tangible benefits. Our continued investment enhances the safety and reliability of our natural gas delivery system.
14. When will this adjustment impact my bill?
New rates go into effect December 19, 2016.