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a long, tough battle with the natural gas
utilities after state regulators gave their
preliminary approval to a plan to grow the
state’s natural gas customer base.
Chris Herb, President of the Connecticut
Energy Marketers Association (CEMA), said
that the state Public Utilities Regulatory
Authority (PURA) tentatively approved a
plan by Yankee Gas, Connecticut Natural
Gas, and Southern Connecticut Gas to
expand their pipelines by 900 miles and
convert 280,000 homes and businesses to
natural gas.
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While PURA gave its preliminary
approval to the plan, it also required utility
shareholders to assume more financial
exposure than they had proposed for their
expansion projects. If the utilities do not meet
certain performance standards, PURA will
require them to pay for the cost of the project,
according to Herb. This is important because
the utilities are totally averse to paying for
the expansion of their infrastructure, he
explained. “Any requirement that would lead
to the gas company using their own capital
will halt their efforts to expand,” he said.
“It is the opposite of build-it-and-they-
will-come,” said Herb. He said the utilities
wanted to be able to bring pipelines to a
neighborhood without assuming financial
risk, but PURA said shareholders would be
on the hook for any portion of those costs
that are not covered by conversions.
“The good news is that we will not see
a reckless expansion, because the share-
holders are responsible when customers
are not converted,” he added. “We would
rather that this not happen, but at least
there is some semblance of sanity in what
the state is allowing.”
Natural Gas
Homeowners and businesses that want
to convert to natural gas will have to pay
higher rates and pay for a new heating
system if this plan is approved, CEMA wrote
in a recent announcement. “It is clear in this
decision that natural gas rates will be on the
rise and that does not take into consider-
ation any future commodity cost increases,”
CEMA stated. “The rate increases only
include the cost of infrastructure and not
the cost of the gas.”
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The draft decision would enable the
utilities to impose costs on ratepayers as
follows: Businesses and multi-family dwell-
ings that convert to gas would see a 50
percent rate increase; homeowners more
than 150 feet off a main would pay 30
percent higher rates; and homeowners less
than 150 feet off a gas main would pay 10
percent more. Existing gas customers will
also shoulder a portion of the cost through
higher rates.
“Our position from Day One was that
we wanted no taxpayer money used for
this expansion,” Herb explained. “We suc-
ceeded on that, but now we are concerned
about the use of existing ratepayer money.
Current customers already paid for the
existing infrastructure, and they should not
be charged for the new expansion. We’ve
made those objections clear to the state.
We hope the pay structure will be discussed
in the final version.”
“In our industry, if we pick up a new
customer heating with one form of energy
and they want to convert, they have to
pay for it, and that is our expectation with
natural gas,” he added. “They should have
to pay for all of it. We want a level playing
field. We don’t expect the government to
interfere in a free market. When existing
ratepayers subsidize new ones, you’ve cre-
ated a false pricing system that makes it
more conducive to convert.”
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Herb said the natural gas expansion
plan would be executed as a series of
local projects, and CEMA is prepared to
dig in its heels on every one. “If you go
on to the front page of our website, you’ll
see a button that says ‘Report natural gas
activity.’ Whenever there is a new project,
we will hear about it, and we will do a street
fight. We will go into every neighborhood
where there is pipeline expansion activity
and inform the customers about the true
cost of converting. We’re going to talk
about the Oilheat story and how we can
serve them better,” he explained. “We’ll do
this through a range of media, including
direct mail and Internet. Of course,
CEMA works closely with the American
Energy Coalition, so we’ll draw on their
resources, too.
“We’ll fight the utilities everyplace they
are. We’re good at that kind of thing, and
I am confident we will come out the win-
ners.”
Asked how serious the threat is to
CEMA members, Herb said, “It’s hard to
tell. We were pleased that the regulators
built in provisions that would require
shareholder contributions. That is one of
our main thrusts. We believe shareholders
should pay for the growth of the utilities.
If our members want to expand, they have
to buy the trucks, hire the people, do a
business plan and obtain the financing. We
believe those things should be paid for by
the owners, and we are pleased to see some
recognition of that.”
PURA was expected to announce its
final decision in late November.
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