State utility regulators gave preliminary approval Wednesday to a plan by the state’s three natural gas utilities to greatly expand their natural gas operations in Connecticut.
In a draft ruling, the Public Utilities Regulatory Authority approved a joint proposal by Southern Connecticut Gas, Connecticut Natural Gas, and Yankee Gas 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 approved earlier this year by the General Assembly.
The 10-year plan seeks to reduce upfront costs for homeowners and businesses who want to convert to natural gas systems. Rather than paying an upfront cost, the ruling would create a new, higher rate for new natural gas customers to incrementally cover the costs over 10 years. After that period the new customers would return to paying standard rates.
Regulators called for a premium increase of 10 percent on the distribution half of gas bills for new customers who live on gas mains, a 30 percent increase for those who live off-main, and a 50 percent increase for some businesses and multifamily homes located off gas mains.
In a Wednesday statement, Malloy praised the regulators’ decision as pro-consumer.
“The action today by utility regulators is great news for Connecticut consumers. Part of our plan to provide cleaner, cheaper and more reliable energy is to expand natural gas service to people who are interested in lowering their energy costs. The approval of this expansion and our efforts to increase energy efficiency will mean lower monthly bills, a more competitive posture for our businesses, and new jobs and improved air quality,” he said.
Oil companies that have opposed the plan disagreed. Chris Herb, president of the Connecticut Energy Marketers Association that represents 600 home heating oil and propane dealers, said the proposal benefits large utility companies while hurting small oil companies.
“This tainted plan will increase energy costs for everyone and not lower them. Meanwhile, our family-run home heating oil companies, which have always played by the rules for generations, will be forced to close-up shop and some 4,000 people could be out of work. And when utilities are the only game in town, prices will increase even more but by then, it will be too late,” he said.
Herb said the plan amounted to government intrusion into business affairs and likened it to the Affordable Care Act.
In their draft decision, regulators said it may be impossible to avoid some increases in rates.
“The Authority is very concerned about the potential rate impact of the plan. While some rate impact may be inevitable, the Authority wants to ensure that any increases in rates for existing customers are minimized as much as practical while at the same time expanding the current gas system infrastructure to serve new customers,” the decision reads.
Regulators are planning to make a final decision on the proposal by Nov. 21. They are accepting written comments on their draft decision until Nov. 12 and will hear oral arguments on the case on Nov. 14.
The natural gas draft ruling was one of two pieces of energy policy touted by the Malloy administration Wednesday. The administration also pointed to an annual energy efficiency scorecard by the American Council for an Energy Efficient Economy, which ranked Connecticut as the fifth most efficient state.
The scorecard credited the state’s recently-passed energy legislation with helping to “close the gap” with other states. This year Connecticut ranked behind just Massachusetts, New York, California, and Oregon.
“Our state’s ranking this year recognizes our focus on capturing the benefits of energy efficiency to lower monthly electric and natural gas bills for families and businesses,” Malloy said in a statement. “Energy efficiency is at the heart of my Comprehensive Energy Strategy because the cheapest energy is the energy that we don’t use through efficiency measures we all can undertake — with every dollar spent on efficiency returning nearly $2.40 in savings on energy bills.”