State utility regulators will begin hearings Tuesday on a plan by the state’s three natural gas utilities to expand their footprint in Connecticut.
In June, Southern Connecticut Gas, Connecticut Natural Gas, and Yankee Gas submitted a joint proposal to expand 900 miles of natural gas lines to 280,000 customers over the next 10 years. The expansion is part of Gov. Dannel P. Malloy’s “Comprehensive Energy Strategy” legislation that was approved earlier this year by the General Assembly.
The legislation encourages expansion, but no taxpayer funds are being used to support the construction of the gas mains or residential conversion from oil to natural gas. There had been a proposal to offer a $500 tax credit to residents who converted, but it was eliminated from the final version of the legislation.
The three gas companies are ready to make their case to the Public Utility Regulatory Authority after responding to the Department of Energy and Environmental Protection, which suggested charges to the plan.
“Yankee Gas President Rodney Powell will be providing opening remarks and we look forward to participating in the hearings,” Mitch Gross, a spokesman for Yankee Gas, said Monday.
Michael West, a spokesman for Southern Connecticut Gas and Connecticut Natural Gas, which are both owned by UIL Holdings Corporation, said the utilities are looking forward to participating in the process.
The proposal, which proponents say will benefit residents by rewarding them with lower energy costs in most instances, has critics.
Consumer Counsel Elin Katz’s office hired experts who plan to tell regulators that the plan will increase rates up to 3 percent per year and force existing ratepayers to pay more for capacity at the same time their capacity is diminished.
Only 31 percent of Connecticut homes heat with gas today, compared with 47 percent in Massachusetts and 48 percent in Rhode Island. The percentage of commercial and industrial entities with access to gas is only slightly higher. Of the 300,000 residents and businesses Malloy hopes to reach, about 217,000 are within 150 feet of existing gas lines now but still are not heating with gas. The cost savings are less for the remaining 83,000 customers who are not close to a gas main.
Southern Connecticut Gas and Connecticut Natural Gas are estimating that they will increase their customer base by 11,000 in 2013, 14,000 in 2014, and 20,100 in 2016. Yankee Gas anticipates increasing its customer base by 4,700 in 2013, 5,207 in 2014, and 7,067 by 2016.
But such aggressive expansion has consumer advocates worried.
“The ongoing construction seeks to replace an aggressive 531 miles of aged cast iron and bare steel infrastructure while at the same time, the companies are planning on installing over $1.7 billion in new mains, services, and meters over the next 10 years including services to 155,000 on-main customers and 85,000 off-main customers,” Rebecca Bachelder, president of BlueFlame Consulting, said in her testimony. “It is important to ramp up at a rate that will allow contractors to hire new qualified people without sacrificing quality or driving up labor rates, as all of the Northeast states are in the midst of aggressive infrastructure replacement programs and adding new customers. They are all competing for skilled labor to install gas mains and services.”
In one of the filings, Yankee Gas acknowledged the need for a qualified workforce and said it was already working to achieve that goal.
“The plan will require a ramping-up of utility resources as well as the resources of the private contractors that will be supporting the expansion efforts,” it said in response to questions from DEEP.
But it’s not only a matter of a qualified workforce. Another consultant for the Office of Consumer Counsel worried about how much natural gas would be available for all the new customers. In his testimony, C. John Meeske, president of Energy Market Decisions and a consultant for the Consumer Counsel, said that all three companies are planning on having significant quantities of natural gas capacity available by November 2016.
“However, before that new capacity arrives, for the next three years, delivery capacity is tight,” Meeske said. “If there should be a mechanical equipment failure (e.g., a vaporizer will not start, an interstate pipeline has a compressor station force majeure, etc.), the companies appear to be operating very close to the ‘razor’s’ edge.”
“Further, if for whatever reason new pipeline capacity is delayed beyond the start of 2016-17 winter, capacity deficits will be a serious issue for one or more companies depending upon which pipeline is late,” he added.
West disputed that statement.
“Our companies have an appropriate plan in place to handle natural gas growth and do not have concerns about our ability to serve current and new natural gas customers with safe and reliable service,” West said Monday evening.
Chris Herb, president of the Connecticut Energy Marketers Association, which represents 600 home heating oil and propane dealers, has panned this plan since late last year. On Monday, he maintained his disapproval.
“There is no need to build new pipelines and pass the cost onto customers who will be asked to share the costs of converting others,” Herb said. “That means that a senior citizen who lives in New Britain, who already paid to have her home hooked up to natural gas, will now have to pay for a millionaire in Greenwich to convert his home. The only way for the utilities to make money is to build new pipelines.”
The hearings with regulators, which includes public comment, will be held 9:30 a.m. Tuesday, Sept. 10; 10:30 a.m., Sept. 11.; 9:30 a.m. Sept. 12; 10:30 a.m. Sept. 16; 9:30 a.m. Sept. 17; and 10:30 a.m. Sept. 18.
All the meetings will be held at 10 Franklin Square, New Britain.