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Parties in Columbia Gas of Ohio distribution rate case agree to cut proposed increase by nearly half

Energy conservation programs will benefit consumers Higher fixed-customer charge still being contested

COLUMBUS, Ohio — October 24, 2008 — The Office of the Ohio Consumer’s Counsel (OCC), staff of the Public Utilities Commission of Ohio (PUCO), Columbia Gas of Ohio and other parties involved in Columbia’s request to increase rates to deliver natural gas today reached an agreement that will benefit residential consumers. It cuts the utility’s proposed $87.2 million increase by nearly half to $47.1 million. The agreement must have final approval from PUCO Commissioners before going into effect.

“We worked diligently to get the most possible benefits for residential consumers. We recognize the struggles ordinary families in Ohio are having paying for increased costs and a 46 percent reduction in the proposed increase in distribution rates will release some of the burden Columbia was seeking to recover from consumers,” said Janine Migden-Ostrander, Consumers’ Counsel. “In addition, we are pleased that Columbia is moving forward to implement a number of energy conservation programs that will assist customers in reducing the amount of natural gas that they use.”

The parties in the case agreed to the following:

Cap recovery costs for Columbia’s Infrastructure Replacement Program at five years. The parties agreed on a monthly fee per customer of $1.10 per month, which would increase by $1.10 the next year and by $1 each of the following three years to a maximum of $5.20 in 2013. The costs will cover the replacement of potentially faulty gas risers (approved by the PUCO in April), Columbia’s replacement of cast iron, wrought iron, unprotected coated steel and bare steel pipe in its distribution system, and the installation of automatic meter reading devices. Columbia agreed that it would encourage its contractors to retain Ohio laborers in support of the project;
Provide $1.85 million over the next five heating seasons (2008-09 through 2012-13) to assist low-income customers in the payment of bills when all other available funds have been exhausted;
Columbia shareholders will provide $1.15 million over four years to develop a pilot program to assist 6,000 non-PIPP eligible, low-income customers with their bills;
Establish four new programs to promote conservation and energy efficiency, as agreed to by the parties and approved by the PUCO in July; and
Improve customer service by allowing new customers to pay their security deposits in three monthly installments and providing information to help them distinguish between authorized and unauthorized payment agents.

The PUCO must still decide on the structure of Columbia’s distribution charge. The PUCO staff had recommended doubling the customer charge (from $6.50 to $13 per month) with another $6.50 increase the following year. The increase would be offset by a corresponding reduction in the usage-based portion of the natural gas bill, which would be eliminated the second year.

The OCC continues to oppose the change to the proposed rate structure, known as a “straight-fixed variable.” Consumers’ Counsel Janine Migden-Ostrander said, “It is unfair to load all of a utility’s delivery charges into one fixed rate that everyone must pay regardless of their income or the size of their home. This will have a harmful effect on low-income customers, especially during difficult economic times.”

The parties agreed, however, that Columbia will fund a comprehensive Demand Side Management /Conservation Program Evaluation study, which will include an evaluation of the effect of the new rate design on customers at all income levels, as well as study its impact on energy efficiency efforts.

Public hearings have been scheduled in eight locations during October and November which will offer customers the chance to appear before the PUCO and voice their opinions and concerns about the increase. The parties also agreed that in the event that public testimony reveals new issues not considered in the negotiations, efforts would be made to resolve them. The PUCO and other parties to the case have agreed to a process that encourages public testimony and could result in a decision shortly after the hearings have concluded.

Columbia is the largest natural gas utility in the state serving approximately 1.3 million customers in 64 of Ohio’s 88 counties and more than 1,000 communities.

About the Office of the Ohio Consumers' Counsel

The Office of the Ohio Consumers' Counsel (OCC), the residential utility consumer advocate, represents the interests of 4.5 million households in proceedings before state and federal regulators and in the courts. The state agency also educates consumers about electric, natural gas, telephone and water issues and resolves complaints from individuals. To receive utility information, brochures, schedule a presentation or file a utility complaint, residential consumers may call 1-877-PICKOCC (1-877-742-5622) toll free in Ohio or visit the OCC website at www.pickocc.org.