Dominion East Ohio wants to more than double the cost it charges residential customers to replace aging pipelines in the next five years — and a consumer advocate agency is crying foul.
Customers currently pay $6.70 per month to fund a massive 25-year pipeline replacement plan, which began in 2008.
Dominion has a proposal pending in front of the Public Utilities Commission of Ohio — which has the regulatory agency’s staff approval — to increase the $6.70 per month fee incrementally over the next five years. With bills beginning in 2018, the fee would be as high as $9.86 a month and potentially rise to as high as $17.20 per month in the fifth year.
A separate proposal included in Dominion’s current rate plan and awaiting PUCO approval would increase the $6.70 monthly fee by $1.42 to $8.12 per month beginning this May.
The pipeline replacement fee is part of $24.83 in fixed monthly charges that all customers currently pay, regardless of their natural gas supplier. Other fixed portions of the bill include $17.58 for such things as meter reading and billing and 55 cents for automated meters.
All Dominion customers also pay a fee, based on usage, to deliver the gas to their homes and then a separate rate for the actual gas.
The $6.70 monthly charge originally was 72 cents per month in 2010, but Dominion got permission to raise that fee by $1 a year. In 2011, Dominion filed and received permission to increase the cost, saying its costs have been higher. By law, utilities are allowed to recover their actual costs from customers, with approval of the Public Utilities Commission of Ohio, or PUCO.
Facing opposition
The Office of the Ohio Consumers’ Counsel, the state’s residential utility advocate, has filed a brief against the proposal, saying Dominion should be denied the increases, calling for a review of Dominion’s expenses and revenues. The consumer advocacy group is asking the PUCO for a five-year extension to a current cap that allows Dominion to increase the monthly fee by roughly $1.40 each year.
To raise rates from $6.70 now to $17.20 in five years “is a lot of money for 1.1 million Dominion consumers to pay,” the agency said in the filing. “Instead of imposing these high rate increases on consumers now, the [PUCO] should first review Dominion’s operations to ensure that customers will not be charged for excessive profits.”
“Adding $17.20 to residential consumers’ monthly bills is unjust and unreasonable and will not contribute to reasonable prices for customers,” the agency said.
What Dominion says
In its own brief with the PUCO, Dominion says the increases are needed and “does not reflect mismanagement or inefficiency, but the simple fact that a dollar today does not go as far as a dollar in 2007, when the original estimates of the cost of the [pipeline] program and time frame for completion were developed.
“Replacing nearly 5,600 miles of bare-steel, cast-iron, and ineffectively coated pipeline — enough to stretch from Alaska to Venezuela — requires labor and materials far beyond what [Dominion] can provide itself,” the utility said.
Dominion said without the increases, the company’s 25-year program will take 35 years or more to complete.
Dominion Director of Regulatory and Pricing Vicki Friscic said labor costs have become high, especially in light of the shale gas boom and with the project moving to the more urban areas of the utility’s territories, which also contribute to higher labor costs.
In its opposition brief, the Office of the Ohio Consumers’ Counsel said also Dominion’s factors it claims are causing the cost increases are “short-lived.”
The agency said its expert said “labor costs are likely to see a drop at the same time as the price of oil and gas drops” and called it “premature to set customers rates at such an inflated level.”
The agency also asks the PUCO for a review of Dominion’s program costs and profits.
Friscic said Dominion’s processes have essentially been audited by the PUCO staff and the utility has agreed to eliminate a clause that would have only offered credit from savings by the company back to consumers after it reached $1.5 million. Now, any savings the company finds will be credited to customers in the annual rate and Friscic said “we’ve already passed back millions of dollars” in recent years.
Decisions on Dominion’s proposals are expected by next month.
Betty Lin-Fisher can be reached at 330-996-3724 or blinfisher@thebeaconjournal.com. Follow her @blinfisherABJ on Twitter or www.facebook.com/BettyLinFisherABJ and see all her stories at www.ohio.com/betty.