MORGANTOWN — As the Public Service Commission mulls a rate hike request from Hope Gas, a PSC staffer recommended this week that the PSC approve the hike and explained the legal basis behind the recommendation.
The rate hike is for its Pipeline Replacement and Expansion (PREP) program. State code allows the PSC “to approve cost recovery of projects to replace, upgrade, and expand natural gas utility infrastructure that are deemed to be just and reasonable and in the public interest.”
The total proposed hike of $66,537,753 covers two Hope programs: its General Program for its core distribution system and its Gathering Program for gathering facilities. Hope estimates that the proposed rate hike will raise the monthly residential bill by $6.45 per month — 5.84%.
PSC Utilities Analyst Cristine Watson supported the proposal in testimony delivered this week.
She explained that the state Legislature believed that in order for gas utilities to attract the capital necessary to undertake infrastructure investment, they should be permitted to recover the incremental rate of return, related income taxes, depreciation and property taxes associated with the investment without waiting for a full base-rate application case.
After the PSC approves a gas utility’s infrastructure program, she said, state law requires them to annually petition for recovery of new investment costs — plus or minus any under-recovery or over-recovery (meaning taking in less or more than the actual cost).
Watson told the PSC she recommends that it approve the proposed rates, subject to “true up,” which is aligning the final approved rates to the actual costs.
Watson noted that Hope reported over-recovery in two areas for 2022: $348,272 for its general distribution system (minus business taxes) and $132,964 for its gathering system.
The 2022 combined cost for the two programs was $60,076,977 — roughly $57.8 million for General Program and $2.3 million for the Gathering Program.
For 2023, Hope estimates costs of $64,037,753 for the General Program and $2,500,000 for the Gathering Program. For 2024, its Gathering Program projection remains the same, while the General Program comes in at $1 less — $64,037,752.
On Friday, in light of Watson’s testimony, Hope asked the PSC to cancel the Sept. 1 hearing on the rate hike proposal and issue an order approving it. Hope said its attorneys will submit a proposed order to that effect.
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