innovative methods to extend service to new natural gas customers nasuca 2015 – philadelphia, pa...
TRANSCRIPT
Innovative Methods to Extend Service to
New Natural Gas Customers
NASUCA 2015 – Philadelphia, PA
David C. WeaverVice President, Regulatory
Affairs
EnergyAmerica’s
Natural Gas Utilities Deliver
AGL Resources
Innovative methods to extend natural gas service
Why is this topic important?•Sound state policy to extend service to underserved and unserved regions
• Natural gas supply is abundant • Long term prices are low and stable
•Customer Choice drives the decision to convert to natural gas
– Lower cost: Heating oil and propane conversions– Environmentally beneficial
•Direct use of gas more efficient than electricity generated from natural gas
Innovative methods to extend natural gas service
Where are the customers?•Customers seeking conversion from propane or heating oil•New growth corridors
• Long line main extensions to developing areas
•Near main extensions• Former natural gas customers• Customers in the “donut hole”• Located just beyond normal line extension
distance
Innovative methods to extend natural gas service
Public Policy topics•Business case for adding customers
• Every business wants to growth – utilities are no different
• Customer growth allows inflationary/people costs to be addressed without more frequent rate cases
•Each utility has a traditional line extension formula to meet new customer demand
• CIAC is not simply an economic decision, it’s a cash availability issue
Examples of Recent Initiatives
Innovative methods to extend natural gas service
Florida• Area Expansion Program (AEP)
• New Customers served from main extension ratably pay CIAC over 10 years
• Company can reset lower rates every 3 years to reflect customer growth
• Surcharged tied to the premise during 10 year payback period
Innovative methods to extend natural gas service
Georgia• Universal Service Fund (1997)
• Funded by Asset Management proceeds and interruptible revenues
• STRIDE Integrated Customer Growth Program (i-CGP)(2010)• Strategic Growth Corridors• Supplemental Line Extension• Funded thru pre-approved surcharge on all
firm customers
Innovative methods to extend natural gas service
Mississippi• Two state LDC’s have deployed supplemental growth
riders to extend mains for industrial projects• Investments capped at $5mm/year above normal run
rate capital deployment. Utility earns additional 3% above authorized ROE
• Customers repay investment via rider over 10 years that is trued up and reallocated each year
Innovative methods to extend natural gas service
Pennsylvania• Leatherstocking Gas
• Regional community build-out fee capped @$3/Mcf for 10 years as a means to get shale gas to more cities.
• UGI “GET Gas” program• $15 mm/year to install mains and services to
extend service to unserved regions• Surcharge over 10 year payback period
• Columbia Gas, Peoples Gas, and Equitable • Programs add between $35 and $100 month to
customer bills to finance CIAC
Innovative methods to extend natural gas service
Connecticut• Three LDCs have plan to connect 280,0oo
customers over 10 years• Rates calculated over a 25 year payback
• Near mains: 10% rate premium• Remote locations: 30% rate premium
• For regional extension, 60% of prospective customers must commit upfront
• Rate cap at 5% annual increase, or 15% increase over 10 year program
Kyle RogersVice President, State AffairsAmerican Gas Association202) [email protected]
David C. WeaverVice President, Regulatory AffairsAGL Resources(404) [email protected]
Thank you!
Thank you!
Follow up questions:
Kyle Rogers David C. Weaver State Affairs VP, Reg Affairs
American Gas Association AGL Resources
(202) 744-5371 (404) 584-3173