For Immediate Release - December 10, 2013

AG Opposes $30.1 Million Rate Increase Request From Columbia Gas

Proposed Rate Hike is Third Request in Last Four Years; Includes Costs for New Corporate Jet and Executive Retreats at Luxury Health Resort

BOSTON – Citing lavish spending practices, like the lease of a new corporate jet and executive retreats at a luxury spa resort, Attorney General Martha Coakley has formally opposed a $30.1 million rate increase request by Columbia Gas.

“Despite receiving a rate increase just last year, Columbia Gas is yet again seeking to pass millions more in unwarranted costs on to Massachusetts ratepayers,” AG Coakley said. “As we’ve argued before, this company’s latest rate request goes well beyond what is justified.”

AG Coakley filed a reply brief this week with the Department of Public Utilities (DPU) in strong opposition of the request. AG Coakley is requesting that the DPU reject costs that her office argues are unwarranted, and instead decrease the proposed rate request by $24.6 million to $5.5 million. AG Coakley’s initial brief against the rate hike was filed on November 15.

Bay State Gas Company does business as Columbia Gas of Massachusetts and provides natural gas service to approximately 295,000 residential, commercial, and industrial customers in Massachusetts. The company’s latest proposed increase is nearly 17 percent more than the company’s current rates charged to consumers.

According to the AG’s brief, Columbia Gas has been transferring significant revenues from its operations to its public utility holding company, Indiana-based NiSource, Inc., and to other unregulated affiliates, artificially increasing the company’s claimed expenses. NiSource and its affiliates are engaged in natural gas transmission, storage, and distribution in Indiana, Ohio, Kentucky, Pennsylvania, Maryland, Massachusetts and Virginia.

AG Coakley has argued that NiSource’s charges for accounting, finance, information technology, and other administrative services are unreasonable because they have increased Columbia Gas’ administrative costs approximately 280 percent higher than the Massachusetts utility average.

In November 2012, the company was awarded a rate increase of $7.8 million, which included charges by NiSource for chartering jets, a lavish expense that cost ratepayers an average $6,354 per passenger per flight. In that case, AG Coakley argued that the DPU should limit its recovery of airplane travel, and that ratepayers only be required to reimburse coach service for airplane flights.

According to the AG’s brief last month, Columbia Gas’ request includes even higher costs from its corporate parent for its executive private and chartered airplanes, along with executive junkets to a spa resort in Lenox called Canyon Ranch.

The DPU must issue a ruling on Columbia Gas’ new rate hike request by March 1, 2014.

The AG’s Office of Ratepayer Advocacy serves as the utility ratepayer advocate and is authorized to intervene in administrative and judicial proceedings on behalf of consumers in connection with any matter involving the rates, charges, prices or tariffs of any natural gas distribution company doing business in the Commonwealth.

Assistant Attorneys General Joseph W. Rogers, John J. Geary, Ronald J. Ritchie, Erik Bennett, and Nathan Forster of the Attorney General’s Office of Ratepayer Advocacy handled this case.

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