Columbia Gas customers may pay more
By Jeremy Boren
Published: Thursday, Feb. 2, 2012
The British thermal units are coming.
Columbia Gas of Pennsylvania is employing them in a mid-winter change to the way it charges 413,000 customers for the natural gas they use to heat their homes and businesses. Natural gas and consumer advocacy experts say the move deserves careful scrutiny because it could cause gas bills to begin fluctuating month to month.
Beginning this month, bills will reflect the amount of heating energy consumed, measured in British thermal units -- or Btus -- rather than the volume of natural gas, measured in cubic feet.
"My suggestion for the average consumer is this a very good time to start shopping around," said Kent Moors, an energy expert at Duquesne University.
Natural gas contains different amounts of energy depending on its geographic origin and chemical composition. Columbia Gas will measure the energy content of the gas flowing in eight distribution regions it created in the 26 counties it serves across the state and increase or decrease customers' bills to reflect the energy level of the gas in their region.
"Under the current volumetric billing system, customers pay different rates to achieve the same result, and we don't think that's fair," said Mark Kempic, Columbia's director of rates and regulatory affairs. "To be fair to customers, we have to sell gas based on the heat content rather than the volume."
Kempic said Columbia is not increasing rates. But as a result of the change, some customers will have their average monthly bill increase by up to 5 percent or decrease by 1 to 2 percent. The average monthly bill for a single-family home is about $70 -- meaning a 5 percent increase would increase a bill $3.50 a month.
The Public Utility Commission approved the change in October, making Columbia the second natural gas utility in the state to use so-called "therm billing," PUC spokeswoman Jennifer Kocher said. The other is UGI Central Penn Gas in Clinton County.
It's a growing trend among natural gas providers, Moors said.
Equitable Gas is considering a similar change but hasn't made a decision, spokesman Chris Waitlevertch said. Equitable serves about 242,000 residential customers in 10 counties. Peoples Gas has no plans to change, said spokesman Barry Kukovich. Peoples serves 325,00 residential customers in 16 counties.
Moors suspects the timing of the billing change is linked to plummeting natural gas prices amid fears of oversupply and lower-than-normal consumption because of above-normal temperatures. Both factors are squeezing profit margins, Moors said.
November, December and January average temperatures were 4 to 5 degrees warmer than usual.
"It tends to maximize the profits of the distribution company, which is why they're doing it," Moors said. "Some zones have been overpaying for gas per (unit), while others have actually gotten a discount."
Kempic said Columbia Gas isn't trying to increase profits.
Moors said once customers begin receiving bills under the new system, they should compare them to unit rates in the same month during previous years.
Pennsylvania allows electricity and natural gas customers to switch providers if they wish. He said many customers might not notice the change in their bills because, overall, they're lower due to the warm weather and falling gas prices.
Sonny Popowsky, Consumer Advocate of Pennsylvania, said his office reviewed and approves of the change.
"People are going to have to get used to the different terminology, but I think it will allow Columbia to bill people equally across the state," Popowsky said.
Dennis Buffington, a Penn State engineering professor, said customers should approach the billing change with some skepticism, and watch for significant price spikes.
"If it deviates significantly by more than 3 percent, then they are taking the opportunity to increase the price," Buffington said.
Charis Mincavage, a lawyer who represents a group of four large Columbia Gas commercial customers, said her clients will be closely monitoring how the company implements the new pricing system.
"Hopefully it will work out, but the concern is what if they can't get a calculation in a given month because something broke down• How do you know that the gas you're getting has the correct adjustment?" Mincavage said.
Columbia Gas will use a device known as a gas chromatograph to determine the quality of natural gas in eight regions statewide. The measure of quality is dubbed as the Btu conversion factor, which is multiplied by the volume of gas consumed. The end result is the number of "therms" consumed.
Measurements in each of the eight regions will be taken monthly.
"We'll guarantee that we'll maintain fairness," Kempic said.
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