WESTBOROUGH — Columbia Gas of Massachusetts, a subsidiary of NiSource Inc., last week filed a petition with the Mass. Department of Public Utilities (DPU) to increase annual revenues by $24.1 million, representing a 3.9% increase in current operating revenues.
If approved by the DPU, the change would impact the annual gas bill for a typical residential heating customer by an average of $4.95 per month, or 3.6%. The revised rates take effect March 1, 2019. In the first year after the rates take effect, the $9.1 million refund due to the Tax Cuts and Jobs Act will reduce the customer bill impact to an average of $2.80 per month, or 2%.
The request addresses increases in operating and maintenance costs incurred to comply with increasingly stringent federal and state regulatory mandates and capital costs incurred to upgrade gas infrastructure since the last time Columbia Gas changed its rates in 2016. The DPU decision is expected by Feb. 28, 2019, with rates taking effect March 1, 2019.
The Columbia Gas request is reduced by the impact of the federal Tax Cuts and Jobs Act, which became effective on Jan. 1, 2018. The request includes a proposal for a refund to customers of $9.1 million, beginning on the effective date of the revised rates, related to the benefit of the tax cut as of Jan. 1, 2018. This $9.1 million refund will partially offset the $24.1 million increase in the first year the revised rates are in effect.
The Columbia Gas request for additional revenues conforms to the standard process through which a regulated utility seeks upgrades to its operating platform for the long-term benefit of customers, the company said in a prepared statement announcing the request. The Columbia Gas modernization efforts focus on eliminating the greatest areas of risk on its distribution system, including continuing efforts to build an organization to oversee the replacement of aging infrastructure. These efforts are designed to optimize the efficient distribution of gas and enhance quality assurance.
Replacing leak-prone infrastructure is a leading priority. However, it will take a number of years to eliminate the aging pipe from the gas distribution system, the company said. In view of this, the regulatory landscape is moving to a period of more stringent regulation, operations and maintenance activities, and active enforcement to assure the integrity of the distribution system through continuous improvement activities. “Our core business is to build and maintain the infrastructure necessary to deliver natural gas in a safe, reliable and cost-efficient manner to our 321,000 customers in the 65 cities and towns we serve,” said Steve Bryant, President and Chief Operating Officer of Columbia Gas of Massachusetts. “Columbia Gas has responded diligently to directives from the Mass. Department of Public Utilities Pipeline Engineering and Safety Division and lessons learned from historical operations. We have made organizational and work practice changes to meet this important public safety challenge and our continuous improvement efforts have involved every aspect of the Company’s operations.
“These changes involve more work, and therefore, more labor and labor-related costs, including ongoing comprehensive employee training,” he went on. “A new state-of-the-art training facility built in Shrewsbury ensures that our workforce is obtaining the skills and capabilities necessary to achieve full compliance with pipeline safety regulations while executing best practices. To accommodate the resources needed to carry out the increasing volumes of construction activity, we are positioning a new Construction facility in Wrentham to house construction resources, designed with features that optimize operating safety for employees and outside service contractors.”
The filing marks the beginning of the public process of rate setting for a utility, as required by the DPU. Evidentiary hearings on the filing will be held within the next several months.