Columbia Gas residential customers could see their gas bills increase by an average of $6 per month as soon as two days after Christmas if the Kentucky Public Service Commission approves the company’s rate adjustment.
Columbia Gas of Kentucky officials testified at a hearing before the commission Tuesday, discussing adjustments to the proposed increase in delivery charges. The increase would be divided among the fixed monthly customer charge and the volumetric rate.
If approved, the customer monthly charge would increase from $15 per month to $16 per month and the current delivery charge of $2.2666 per Mcf (1,000 cubic feet) would increase to $3.5927 per Mcf.
According to Columbia Gas of Kentucky spokeswoman Lisa Smith, the increase would be $6.09 on an average residential customer’s monthly bill and an increase of $24.34 on an average commercial customer’s monthly bill. The increase would bring $13.4 million in revenue.
“The proposed settlement enhances our existing support for low-income customers through the WinterCare and Energy Assistance programs by increasing shareholder contributions,” Smith said. “We anticipate a decision from the PSC by year-end.”
The average increase is based on an average residential customer consumption of 5.5 Mcf and the average commercial customer consumption of 32.4 Mcf, Smith said.
When asked the reason for the rate increases, Smith said it is safety.
“Our customers and our communities depend on the safety and reliability of our system and the people who stand ready to serve them 24 hours a day, seven days a week,” Smith said. “This request centers around a continued investment in safety.”
Robert Cicero, who serves on the three-person commission, said a large part of the expense used to support the increase appears to be related to salary changes and staffing — an increase of 22 new hires for the staff specifically for Kentucky. Cicero asked about reasons for the hiring surge.
Company President Herbert Miller echoed Smith’s comments on safety.
“First and foremost is our safety concerns,” Miller said. “The response time it takes for us to respond to an emergency is declining. We are finding and repairing more leaks in our pipelines. So, we are responding to safety concerns. All the metrics we look at toward safety are improving.”
But Franklin County resident George Arvin shook his head at Tuesday’s hearing when Miller talked about safety issues.
Arvin spoke during the public-comment section of the hearing, disagreeing with the volumetric increase.
“Nowhere can we find an explanation by Columbia Gas about the purpose of the current $15 month resident charge. Apparently, this is guaranteed revenue of $180 per year per customer that appears to be unallocated as to its purpose and use by the gas company,” Arvin said. “The stipulated agreement indicates a willingness on the parts of the negotiators to accept an increase from $15 per customer per month to $16 per customer per month, which is an increase of 6.67 percent.”
Arvin pointed out the requested increase isn’t coming from a small company serving 30 counties in the state but Columbia’s Indiana-based parent company NiSouce.
“The current rate (volumetric rate) for delivery is $2.2666; on page two of the settlement agreement this rates changes to $3.592 — gentlemen, commissioners — that’s an increase of 58.5 percent in the delivery rate,” Arvin said. “In this period of modest inflation and stagnant wage growth, there is no justification whatsoever for any fixed-cost increase. Keep this in mind, gentlemen, when you are weighing this: A customer cannot conserve gas and lower a fixed cost. They can only conserve and lower a variable cost.
“We (Arvin and his wife) request the commission to approve no change in the fixed customer charge for residential customers. We propose a residential (delivery charge) of $2.3345 instead of the $3.5927.”
Columbia Gas of Kentucky entered into the settlement agreement after conferences with the Attorney General’s Office; the Lexington-Fayette Urban County Government; the Kentucky Industrial Utility Customers; and the Community Action Council for Lexington-Fayette, Bourbon, Harrison and Nicholas Counties, Inc. for the adjustments.
According to Andrew Melnykovych, communications director for PSC, the Columbia Gas case was filed in May and the commission has 10 months to make a ruling. The PSC could accept or reject the proposed adjustments in the settlement or accept the settlement with modifications, which would require all the parties to accept the PSC’s changes or face the prospect of reopening the case.
By Brad Bowman
The State Journal
