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Columbia Gas of Pennsylvania agrees to lower rate hike

| Wednesday, May 29, 2013, 12:01 a.m.

The region's largest gas utility will increase rates by more than 16 percent per month for its average customers starting on July 1 as it ramps up funding for pipeline improvements across the state.

Columbia Gas of Pennsylvania Inc. got most — but not all — of what it wanted from state utility commissioners, who agreed last week to allow $55.25 million in total rate increases. The company is doubling what it spends every year replacing old pipe to $140 million.

To help, it asked for $77.3 million, a 21 percent increase, but settled for less after five months of negotiations with state officials and consumer advocates.

“This is a sizeable increase for Columbia,” said Tanya J. McCloskey, the state's acting consumer advocate. “When we looked at the work that they were doing and other expenses in the company, we felt (it) was reasonable.”

Columbia's system has some cast iron and bare steel pipes — the oldest and most vulnerable to leaks and corrosion — and so it pushed for one of the region's most aggressive improvement projects, company spokesman Russell Bedell said.

New laws added to the increase. Columbia is the first utility in the state to switch to rules allowing it to raise money in advance of pipeline work, inflating this increase, he said.

“With this transition, it's almost like filing two rate increases at one time,” he said. “In the long run, we anticipate (it) will ultimately result in ... lower rate increases.”

Responding to periodic explosions and leaky pipes nationwide, natural gas suppliers and safety regulators have worked to improve the system nationwide. Peoples TWP last month asked the state Public Utility Commission for a 30 percent increase to support its work, which would send its average customers' bills above $100 a month.

The state established a fee — called the distribution system improvement charge — to provide a smaller, regular infusion of cash devoted to pipeline work. Columbia is the first gas utility to win approval for that charge, which started at 50 cents a month for average households. Applied in April, that fee will decrease when Columbia's larger rate increase takes effect in July, officials said.

The average Columbia customer will pay about $78 a month. That's on 73 therms of natural gas, Bedell said.

Gas prices have risen this year and if that continues, it could lead to another slight price increase when utilities adjust their commodity costs for the three months starting on Aug. 1.

Columbia initially asked to raise its average bills to $82.92 a month. The Office of Consumer Advocate determined it sought a price increase nearly double what was needed, McCloskey said.

Columbia overestimated costs, including staff salaries, hires, performance bonuses and service charges it paid to other branches of its parent company, she said.

“In this day and age, when families are still trying to recover from the Great Recession, any increase on the expense side is something a family feels and has to account for,” said Jim Guffey, executive director at South Hills Interfaith Ministries, which assists needy families with bills. “A lot of folks got in the hole, and they're still trying to dig out. ... There is no nominal increase.”

Timothy Puko is a staff writer for Trib Total Media. He can be reached at 412-320-7991 or tpuko@tribweb.com.

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