Higher bills from Peoples Natural Gas coming down the line
Customers of Peoples Natural Gas Co. will see costs increase for infrastructure improvement on their bills sooner rather than later.
Under Act 11, a state law signed by Gov. Tom Corbett last February, utility companies can attempt to recoup their costs for putting in new lines and other infrastructure without seeking an overall rate increase.
People's sister company, Peoples TWP LLC — formerly T.W. Phillips — is considering going through the same process to allow Peoples TWP to do the same thing, a spokesman said.
Jennifer Kocher, Pennsylvania Public Utility Commission (PUC) press secretary, said when a utility replaced deteriorating lines and infrastructure, it paid for the improvements up front. Then it had to file for a rate increase to recoup the cost of the improvements from its customers.
Kocher said that process could take as long as nine months before a decision was reached and cost a utility as much as $1 million in legal fees.
The new law now allows all utilities to file for a distribution system improvement charge (DSIC), which applies only to the cost of infrastructure improvements. That can be decided in one to two months.
She said until the new law was enacted, only water companies could recoup their costs that way.
“The idea is to give the utility more cash flow so they can continue to do the work,” Kocher said.
Joe Gregorini, Peoples vice president for rates and regulatory affairs, said natural gas bills are in two parts: one for the cost of the gas and the other for procuring it. He said Act 11 caps the rate of recovery at 5 percent of the non-gas portion of the bill each month. A simpler way to figure it, he said, is taking half of that percentage, or 2.5 percent, and applying it to the entire bill.
He said the average monthly Peoples residential gas bill is $78, so 2.5 percent of that comes to about $1.95.
He emphasized that would be at the maximum allowed, but the actual rate billed likely would be lower.
“The other option is to file a costly base rate increase,” Gregorini said. “Based on the DSIC, it will be a much more gradual approach (for consumers).
“What we are allowed to recover is the depreciation on that investment and the rate of return,” he said. “We don't get dollar-for-dollar recovery on every infrastructure expense we incur.”
Gregorini said the company submitted a five-year, long-range infrastructure plan on Jan. 23, which is required before a DSIC can be filed. He said company officials are putting the finishing touches on the DSIC and expect to file it by the end of the week.
“The customer has a right to file a formal complaint, but the issues are so much narrower with the DSIC than it is for the base rate case,” he said, noting that it applies only to infrastructure costs.
“We are putting in pipeline at an unprecedented rate and that has to be paid for, so we have to do this,” said Barry Kukovich, spokesman for Peoples.
He said the company replaced nearly 50 miles of pipeline last year.
“We replaced all our cast iron lines,” he said. “Cast iron is generally the oldest pipe that a company will have in its system.”
Expediting reimbursement of those costs, Kukovich said, allows utilities to move ahead with replacing other deteriorating lines, which can pose hazards to consumers and Peoples employees.
He said the company now will be replacing steel pipe with the same plastic pipe used to replace the iron lines.
“Plastic pipe, being flexible, you don't have to worry about the freeze-thaw cycle, you don't have to worry about rust,” he said.
Tom Yerace is a staff writer for Trib Total Media. He can be reached at 724-226-4675 or email@example.com.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Puppy, pals come to rescue of Lower Burrell firefighters
- Body found in Allegheny River in Harrison
- Police investigate reports bus driver allowed Fox Chapel students to change clothes
- Christmas parade gets warm welcome in Saxonburg
- Vandergrift man fatally shot in New Kensington
- South Butler students push composting as a way to slow food waste
- Retirements help trim Arnold budget
- Apollo-Ridge closer to naming buildings, facilities
- Second-graders at Fawn Elementary School hold forth on origin, meaning of Thanksgiving
- Springdale Township neighbors at odds over drone