dbeard@dominiopost.com
MORGANTOWN – The current count of letters of protest against the Hope Gas proposal to convert certain farm tap customers to propane or electricity is 73 – 71 in the case to convert them, two in the related case to abandon the gas lines in question.
The Public Service Commission has taken to heart the advice of PSC staff and the Consumer Advocate Division.
The CAD said in a recent filing: “After reviewing the extensive protests which have already been received in both cases, it is clearly apparent there is a high level of customer confusion which needs to be addressed before the cases proceed further.”
It continued, “Based on the protests and comments received, customers need reasonable access to basic information so they can determine for themselves how and if they are potentially impacted by the Company’s proposal.”
So the PSC on Thursday canceled a scheduled Dec.. 9 hearing in the farm tap case. It is consolidating the two cases.
And, of chief interest to the potentially affected customers, it is requiring Hope to hold three town hall-style meetings in convenient locations to explain its plans, answer questions, and present clear maps showing the lines in question and the affected customers.
PSC is accepting written comments through Dec. 9.
Recent filings in both cases offer some additional details on the issues. We’ll look at those after a quick review of what’s going on.
SUBHEAD: Case background
Hope Gas is proposing to abandon in place or transfer to other companies certain gathering pipelines – it is calling them Red Lines – that it previously acquired from Equitrans and Dominion Gathering and Processing. Hope bought about 3,000 miles of pipeline, it said, with about 14,800 farm-tap customers.
Hope said some of those lines – about 1,068 miles – are no longer necessary or useful, and that providing safe, reliable, economic service to the farm-tap customers along those lines is in jeopardy because existing service “is either unsafe, unreliable, uneconomical, or any combination of the three.”
It wants to switch 479 farm-tap customers along those gathering system pipelines along with 150 farm-tap customers served off pipelines owned by Diversified and other companies to propane. The affected customers live in 22 counties, including Monongalia, Marion, Harrison and Wetzel.
Hope proposes to convert those customers to propane at its own expense, at about $10,000 per customer plus $2,000 for propane storage and house lines. Or, if the customer wishes, Hope would convert them to electric service provided by a local electric utility – the switch achieved also at Hope’s expense.
Regarding the 150 customers on Diversified and other third-party lines, Hope told CAD it is proposing to have the ability to convert up to 150 customers in the future, “if and only if, the pipeline operator cannot reliably or safely serve, supply falls below customer requirements, or pipeline operator is faced with excessive costs to replace or repair the pipeline, forcing Hope Gas to assume ownership of obsolete facilities.”
SUBHEAD: New highlights
Gas producer C.I. McKown & Son, speaking on behalf of the Gas & Oil Association of WV (GO-WV) told the PSC that gas from it and other producers flow along the lines. Without them, some of its wells would be uneconomical and may have to be plugged.
“If producer wells are plugged,” McKown said, “then there would be no gas for some of Hope’s customers, perhaps no gas for many gas users who are not Hope’s customers, and none to sell. Loss of any customers is a lost opportunity to sell natural gas, pay taxes, and employ people.”
Karen Macon, director of PSC’s Utilities Division, said the abandonment of 1,068 miles of pipeline should be handled as a pilot program. PSC should permit Hope to abandon any Red Lines that a producer or a farm tap customer. Of those lines, less than 10 segments – less than 100 miles – should be chosen as a pilot. This approach would allow all of the parties to address all the issue and develop a blueprint for future cases.
Hope’s proposal, she said, is completely unwieldy and far too complex to just allow Hope to convert up to 629 customers and abandon 1,068 miles with up to 6,000 wells attached.
David Dismukes, a consulting economist, speaking to the PSC on behalf of the CAD, addressed the issue of how and what converted customers should pay.
For those switching to propane, he said, Hope should only cover the conversion costs. The customers should secure a propane provider and pay it for the service.
He said, “By subsidizing propane customers, Hope would be incentivizing propane conversion over electrification to the detriment of the Company’s customers. Electrification allows Hope to focus on natural gas distribution service and avoid any complications that could arise from providing ancillary propane service.”
He continued, “The commission should be very concerned about the anti-competitive implications of Hope’s proposal to offer propane service to these farm-tap customers at rates below its own cost of service, despite what may appear to be well-intentioned policy reasons for this subsidized service. Rejecting the company’s customer conversion proposal will help mitigate these anti-competitive complications and avoid excessive subsidization.”
Alternately, he said, customers who convert to propane should be served with a new propane rate schedule (not the natural gas rates) that should be adjusted over time to minimize the impacts on them.
Propane is about twice as expensive as natural gas, he said, and 5% less efficient. Switching all 629 customers to propane would raise Hope’s costs from $708,841 to $1,657,216.
He said he prefers the idea of converting them to electricity, which would save the customers increased fuel costs.
Dismukes noted that the Red Lines include 265 customers who receive free gas from producers along the lines. “Since these customers are not served by Hope, they were not mentioned in the Company’s application, and it is unclear the extent to which the abandonment of redlines will impact these customers.”
Hope, meanwhile, told the PSC that “the time to act is now.” It said the Red Lines “must be abandoned to stop the continuing incurrence of increasing costs to operate and maintain those unnecessary facilities, which costs are paid for by Hope’s customers. … For Hope and the Commission to do anything less is to continue to waste Hope’s customers’ money.”
