State regulators are reviewing a proposal that would allow Columbia Gas of Virginia to raise its non-gas rates and charges, which would add about $6 to the average residential customer’s monthly bill.
If approved, that would take that average bill from $76.26 to $82.47, up 8%. Columbia Gas says an average residential customer uses 5.1 dekatherms of gas per month.
The proposal represents a compromise that would allow the company to earn $40.7 million more each year to cover capital investments and other expenses.
The proposal was filed last week with the State Corporation Commission, which regulates utilities in Virginia and will ultimately decide at some point whether to approve or reject the proposal.
The SCC allowed Columbia Gas to raise its rates and charges on an interim basis as of Oct. 1, subject to refunds. The company’s last authorized revenue increase was effective as of October 2022.
An SCC official held a hearing on Tuesday in which various attorneys participated but no members of the public signed up to comment.
The staff of the SCC, the federal government’s executive agencies and the Virginia Industrial Gas Users’ Association, whose members are large Columbia Gas customers, joined the utility in signing the compromise.
“We very much appreciate everyone’s cooperation,” Vishwa Link, an attorney representing Columbia Gas, said during Tuesday’s hearing.
Non-gas base rates and charges cover operations, maintenance and capital expenses and are separate from the cost of gas.
By law, the Chester-based company must pass the cost of gas on to its customers without profit. Natural gas prices can vary based on factors including production, weather and world events such as the war in Ukraine. Such factors contributed to a surge in prices two years ago that has since abated.
The compromise proposal represents a smaller increase than Columbia Gas asked for in April, when it applied to the SCC for permission to earn $52.56 million more each year. That would have increased the average residential bill by about $9.
In its initial application, Columbia Gas said it continues to grow and needs more revenue for “ongoing capital investments to accommodate pipeline and facility safety and modernization and to accommodate sustained demand for natural gas.”
It also sought a return on equity — essentially, a utility’s profit margin — of 10.85%. The compromise agreement would allow 9.75%. The company noted that in 2023 its earnings fell below its currently authorized range of 9.2% to 10.2%.
The Virginia Attorney General’s Office’s consumer counsel division did not sign the compromise but also does not oppose it, Assistant Attorney General Carew Bartley said during Tuesday’s hearing.
Bartley noted that the compromise would raise the average residential bill by $3 less than under the original proposal and that the additional revenue would be spread evenly across all types of customers so residential users would not bear a disproportionate share.
“Consumer counsel recognizes that the stipulated increase is going to be an unwelcome additional burden for customers,” Bartley said. “However, the proposed stipulation does appear to be an outcome supported by the evidence in the record, and it does provide several benefits to ratepayers as compared to the company’s pre-filed proposal.”
Meanwhile, state regulators are reviewing a separate proposal under which Roanoke Gas would be allowed to earn $4.08 million more each year, a 5% increase, which would add $4.02 to its average residential customer’s monthly bill.
Columbia Gas serves 290,000 residential, commercial and industrial customers in 98 cities, towns and counties throughout Virginia, including in the Lynchburg region, part of Southside, and Alleghany and Giles counties. It is a subsidiary of Merrillville, Indiana-based NiSource (NYSE:NI).