For Immediate Release - February 28, 2014

DPU Cuts Proposed New Charges for Bay State Gas Company Customers by 36 Percent

Decision reduces revenue request by $10.9 million

BOSTON – Friday, February 28, 2014 – The Department of Public Utilities (DPU) issued an order today reducing the distribution rate increase Bay State Gas Company proposed for its more than 304,000 customers in the Springfield, Brockton, and Lawrence areas.  The DPU's order reduces Bay State Gas Company’s request by $10.8 million – from the requested $30.1 million increase to $19.3 million.

The typical residential heating customer, using 150 therms per month, can expect a distribution rate increase of approximately $6.50 per month, or slightly less than 3 percent; and the typical residential non-heating customer, using 15 therms per month, can expect an increase of approximately $3.00 per month, or 9 percent.

Distribution rates are the only portion of a customer’s bill the DPU regulates. The DPU does not regulate the gas supply portion of the bill, which is a direct pass-through to the customer.  In a separate proceeding, the Company proposed to pass an additional $51 million in gas supply costs through to customers during the next two months, which would have resulted in a monthly increase of approximately $75 for the typical residential heating customer just for gas supply.  In order to mitigate the impacts of this increase on customers, the DPU directed Bay State to recover only 50 percent of these costs and seek recovery of the remaining costs in a future filing, resulting in a monthly increase for gas supply of approximately $37 per month for two months only for the typical residential heating customer.

Throughout the Northeast, due partially to the cold winter and increased demand, gas prices have been rising.  This kind of increase and volatility in fossil fuel prices underscores the importance of the Patrick Administration’s energy efficiency and renewable energy initiatives.

Bay State Gas Company sold its Energy Products & Services (“EP&S”) business line to AGL Resources in January 2013.  The Department directed the company to return to ratepayers over five years the approximately $18 million gain on the sale so that customers will realize a $3.6 million annual credit.  The Department also disallowed the company’s proposal to retain 50 percent of its labor related to the sale, installation, and repair of domestic water and home-heating equipment expenses in distribution rates.

“At a time when the economy is still in recovery mode, the DPU is conscious of what every dollar means to customers,” said DPU Chair Ann G. Berwick. “The DPU’s decision is advantageous to customers because they will experience a simplified flat rate design, and the company will receive sufficient revenues to maintain safe and reliable service.”

The DPU also renewed its commitment to reducing methane emissions in the Commonwealth by continuing Bay State’s favorable rate treatment for replacing at least 38 miles of leak prone infrastructure each year.

The DPU also provided benefits for ratepayers by allowing a much smaller return on equity than the company proposed—9.55 percent instead of the 11.45 percent proposed by the company.

The DPU’s findings follow a ten-month proceeding that included three public hearings in Bay State Gas Company’s territory, 12 days of evidentiary hearings, and review of more than 2,600 exhibits.

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