DPU CUTS PROPOSED NEW CHARGES FOR BAY STATE GAS COMPANY CUSTOMERS BY $21M; RESIDENTIAL CUSTOMER BILLS WILL ACTUALLY DECREASE
DPU Order Also Encourages Greater Investments in Pipeline Safety
BOSTON – Friday, November 2, 2012 – The Department of Public Utilities (DPU) issued an order late yesterday substantially reducing the distribution rate increase Bay State Gas Company proposed for its more than 295,000 customers in the Springfield, Brockton, and Lawrence areas. The DPU's order reduces Bay State Gas Company’s request by more than $21 million – from the requested $29 million increase to $7.8 million. The DPU’s order cuts Bay State’s proposed increase by 73 percent.
This distribution rate increase combines with the decrease in the cost of gas for Bay State’s customers, also approved by the DPU and effective yesterday. As a result, customers will actually see a decrease in their gas bills this winter. The typical residential heating customer, using 150 therms per month, will save approximately $19 per month, or 10 percent; and the typical residential non-heating customer, using 15 therms per month, can expect a bill decrease of about 18 cents per month, or slightly less than 1 percent.
“The DPU’s actions will save Bay State Gas Company customers money every month on their gas bills,” said Chair Ann G. Berwick. “At a time when the economy is still in recovery mode, the DPU is conscious of what every dollar means to customers.”
In denying the amount requested by the Company, the DPU determined that Bay State’s proposal to include the estimated costs of future capital projects in its rate base was inconsistent with DPU precedent. The Company’s proposal would have allowed it to recover capital project expenditures in rates before the Department had determined whether those expenditures were prudent or useful. In an effort to enhance the safety and integrity of the Company’s gas pipeline system, the DPU did allow, and even encouraged, Bay State to add small cast iron and wrought iron pipes to an accelerated pipeline replacement program that will reduce gas leaks.
The DPU also provided benefits for ratepayers by allowing a much smaller return on equity than the company proposed—9.45 percent instead of the 11.75 percent proposed by the company.
The DPU’s findings follow a six-month proceeding that included three public hearings in Bay State Gas Company’s territory, 14 days of evidentiary hearings, and review of more than 2,400 exhibits.