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BALTIMORE – Columbia Gas of Maryland’s request to expand its costly gas system replacement program should be denied, the Office of People’s Counsel argued in a filing with the Public Service Commission last week. Columbia’s effort to expand its program for accelerated cost recovery to include additional kinds of pipes and investments is contrary to the law’s intent, OPC said.
Columbia—Maryland’s third largest gas distribution utility, owned by Indiana-based energy conglomerate NiSource—has replaced almost all of the aging pipe it previously identified as leak-prone, OPC’s filing explained, causing its rates to more than triple over the past decade as a result of investor-friendly accelerated cost recovery.
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“Columbia’s proposal to drastically expand its gas infrastructure replacement program serves only the interests of its owner, NiSource—not its customers’ interests or the State’s,” Maryland People’s Counsel David S. Lapp said. “Columbia’s escalating rates have drastically increased customers’ bills and heightened the risk that customers or taxpayers will be stuck with hundreds of millions of dollars in investments at risk because of competition from highly efficient electric technologies, even aside from gas customer fuel-switching to electricity inspired by the State’s climate policy. It’s time to slow the bleeding.”
OPC’s filing responded to Columbia Gas’s proposal for a third five-year plan to take advantage of the financial rewards the legislature provided utilities for replacing gas infrastructure under the Strategic Infrastructure Development and Enhancement (STRIDE) law. To obtain those rewards, the STRIDE law permits utilities to file five-year plans and allows for Commission approval based on whether the plans are “reasonable and prudent.” The utility’s second five-year plan ended last year. Its proposed third five-year plan would cost more than $85 million, at an ultimate customer cost of about $300 million over 40 or more years after including the company’s return on the investment.
Over the course of the past ten years, the Commission has approved bare steel, cast iron, and wrought iron as the priority pipes for replacement in Columbia’s STRIDE programs. The Commission approved Columbia’s first STRIDE plan in 2014 based on the company’s long-term plans to finish that replacement by the end of 2026, which the company was on track to do. This past STRIDE work has contributed to a 121 percent increase in the average Columbia customer’s gas bill since STRIDE began, OPC’s filing explains.
Instead of ending its accelerated cost recovery program, however, Columbia’s new proposal would delay completing the replacement of its remaining bare steel pipes, add new types of plastic pipe for replacement, and add other new types of investments for which it wants accelerated cost recovery. For example, Columbia asks to include investments in telemetry—a technology that relates more to system monitoring and leak detection than replacement of aging infrastructure, which is the goal of the STRIDE law.
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Aside from the significant expansion in program scope, OPC’s filing describes flaws in Columbia’s “risk analysis,” project selection process, and requested budget. Its risk analysis would give similar weight to pipes replaced recently as to much older pipes, and its project selection largely disregards that flawed risk analysis in favor of projects that appear to be arbitrarily selected, according to OPC’s filing. Finally, OPC points out that Columbia itself acknowledges that its budget was developed to hit the maximum budget allowed by the STRIDE statute, and Columbia already has a statutory responsibility under Maryland law to ensure its system is safe and reliable—even without accelerated payment for infrastructure replacement.
“Columbia wants to maximize its infrastructure budget, regardless of whether its spending plan is appropriate for customers,” Lapp said. “Maximizing the budget means more rate increases, when customers are already enduring massive rate increases from Columbia’s accelerated spending.”
The Maryland Office of People’s Counsel is an independent state agency that represents Maryland’s residential consumers of electric, natural gas, telecommunications, private water and certain transportation matters before the Public Service Commission, federal regulatory agencies and the courts.
