Peoples Natural Gas is asking Pennsylvania regulators for significant rate increases starting later this year.
In a rate case filing made on Monday, the North Shore-based gas utility proposed a unified rate for all of its customers that would translate to a 19 percent increase for former Equitable Gas customers and 14.1 percent for all other Peoples’ accounts.
If approved — and often regulators allow lower increases than requested — former Equitable customers will see their average monthly bills rise from $70.79 to $84.73. For all other Peoples customers, the average monthly bill would go from $74.24 to $84.73.
The requested increase is substantial to account for Peoples’ ambitious pipeline replacement efforts, said company spokesman Barry Kukovich.
“It’s just a massive amount that’s needed to replace massive pipeline [projects],” he said.
The company has already spent about $600 million on its pipeline improvement program, according to Mr. Kukovich, and will likely spend some $200 million more in 2019.
“It’s just what’s needed,” he said of the proposed rate hike, which would amount to a revenue increase of $94.9 million.
Peoples asked for the new rates to take effect at the end of March, but the Pennsylvania Public Utility Commission will almost certainly initiate an investigation into the increase, which might drag out until the fall and would allow stakeholders to intervene in the case.
The gas company is in the process of being acquired by water utility Aqua America Inc., which must also be approved by the PUC.
In a statement, Peoples CEO Morgan O’Brien stressed not only the safety benefits of replacing old pipelines quickly but the environmental benefits, which the company recently touted at an event alongside Gov. Tom Wolf earlier this month. Peoples, which has already been deploying car-mounted methane sniffing sensors to search for gas leaks in its territory, said it would cut its methane emissions by 50 percent over the next year.
The percentage increases that Peoples is seeking in the recently filed case seemed “awfully large” to Todd Shipman, a utility credit analyst who runs a consultancy in Boston.
“I can’t remember the last time I’ve seen a double digit increase requested, much less granted,” he said. “You just don’t see that in this day and age.”
By comparison, when Columbia Gas of Pennsylvania filed its most recent rate case in March, it asked for a 9 percent rate hike. In December, the PUC approved a 4.5 percent increase.
But, Mr. Shipman added, it’s also not common for companies to wait longer than five years to refresh their rate structure.
Peoples bought Equitable Gas in 2013 and ran it as a separate division, under its own tariff that dates back to 2009. That means the last full rate case for those customers was a decade ago.
Peoples itself has not had a rate increase since 2012. It started accelerating its pipeline repair and replacement efforts in 2013, but funded that activity through a monthly customer surcharge called a distribution system improvement charge.
That mechanism is reset during a rate case. So customers won’t see that charge on their bills when new rates go into effect. But Peoples may turn to it again in the future, Mr. Kukovich, if the cost of its pipeline replacement plans outstrips projects or if it needs to accelerate the program again.
In a statement on Monday, Peoples said customers concerned about their ability to pay the increased rate may be eligible for assistance and can call 1-800-400- WARM or visit peoples-gas.com/help.
Anya Litvak: alitvak@post-gazette.com or 412-263-1455.
First Published: January 28, 2019, 10:10 p.m.
