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Consumer, environmental groups slam proposed utility increase

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Posted at 10:00 AM, Dec 25, 2022
and last updated 2022-12-25 10:00:01-05

The following article was originally published in the Ohio Capital Journal and published on News5Cleveland.com under a content-sharing agreement.

Several environmental and consumer groups called a press conference Wednesday in front of Columbia Gas’s Columbus headquarters to give the company a lump of coal for Christmas.

Their issue? Columbia Gas and some other stakeholders have agreed to allow Columbia to increase its fixed charges by more than 50% — up to $57 a month by 2027. The possible $21-a-month increase would be shouldered by all customers equally, whether you live in an 8,000-square-foot mansion on a five-acre lot, or if you live in a 500-square-foot apartment in a crowded neighborhood.

The Public Utilities Commission of Ohio will still have to sign off on the increase, which Columbia says it needs to upgrade its infrastructure.

The company had asked to increase its fixed charges up to $80 a month. But in an agreement with other interested parties, it is asking instead to increase such charges to a maximum of $67 a month.

Columbia says it needs the increase to improve aging infrastructure. But the groups gathered outside Columbia headquarters Wednesday said the company is unfairly trying to line its pockets at customer expense.

“We are met on the shortest day of the year, at the coldest time of the year, in a season that should be festive,” said Tom Bullock, executive director of the Citizens Utility Board of Ohio. “But we’re here to talk about a trick being played on customers that’s not so festive at all.”

Columbia said the increase is needed to upgrade its gas distribution system.

In an email, Columbia spokesman Eric Hardgrove on Tuesday said “it has been nearly 15 years since Columbia Gas of Ohio filed for a base rate increase. Columbia Gas of Ohio filed a stipulation on Oct. 31 in the company’s pending rate case with the Public Utilities Commission of Ohio. This stipulation benefits Columbia’s ratepayers and is in the public interest by bringing a compromised resolution to this proceeding with a majority of the parties. Pending PUCO approval, a typical residential customer’s bill will increase by $3.76 per month.”

Hardgrove made a similar statement last month. But pressed on how much fixed charges might rise after five years, he conceded “that the maximum increase over the next five years can be no more than $56.51.”

Natural gas prices have been hovering near five-year highs for most of 2022, adding an unwelcome bump to Ohians’ heating bills amid other inflation just as a burst of Siberian air is arriving.

The increase Columbia is asking would be in addition to those charges. Currently $37 a month, the increase would raise monthly fixed charges regardless of season or how much gas one consumes.

And for customers at the low end of the income spectrum the additional charges will bite the hardest.

“What can you do with 21 bucks a month? Pay for groceries, medications, maybe a fun Christmas with your kid. Or Columbia Gas has an idea: start giving them $21 bucks a month more — for nothing,” said Rachel Belz, CEO of Ohio Citizen Action.

She added, “Why can we say it’s for nothing? Because Columbia Gas wants you to pay that extra $21 per month before you ever turn on your gas furnace or gas stove. Before you even use any gas at all.”

Critics of the proposed agreement also said it would gut programs intended to reduce gas usage through measures such as more efficient appliances and better insulation. Belz suggested that with a dramatic increase in fixed costs, Columbia would be guaranteeing a revenue stream as people reduce the amount of natural gas they burn each month.

“The gas folks need to remember that their product isn’t as foundational as they presume; it is not the only choice for consumers,” she said. “Or perhaps they do and this increase is because they are reading the writing on the wall.”

While it might be worried about future revenue, the current earnings of Columbia’s parent company, NiSource Inc., seem robust. It brought in $550 million in net income on $4 billion in total revenue during the nine months ending Sept. 30, according to its financial statements. That’s a 14% profit margin for a company that operates regulated monopolies — in which profits are all but guaranteed.

And while NiSource’s earnings appear healthy, an independent analysis indicates that increasing fixed charges in the way Columbia is proposing disproportionately harms low-income consumers. In 2016, Synapse Energy Economics examined for the Consumers Union the effect such charges tacked onto electric bills have for low-income consumers.

“Data from the Energy Information Administration show that in nearly every state, low-income customers consume less electricity than other residential customers, on average,” the report said. “Because fixed charges tend to increase bills for low-usage customers while decreasing them for high-use customers, fixed charges raise bills most for those who can least afford the increase.”

At Wednesday’s event, Dion Mensah, a fellow at the Ohio Environmental Council, noted that despite billions in profit, Ohio’s gas and electric utilities haven’t been shy about shutting off customers for non-payment of bills — even at the height of the pandemic. The Capital Journal in May reported that between June 2020 and May 2021, Columbia Gas shut off the second-most of seven such Ohio utilities, almost 40,000 customers.

“The proposed increase in fixed rates harms poor and low to moderate-income families, communities of color, people with disabilities and other groups that are historically under-resourced, ignored and bear the brunt of injustices in our energy system,” Mensah said. “The legacies of redlining and disinvestment leave these same communities in survival mode as we try to manage day-to-day needs.”

The proposed rate increase would be charged equally even though it seems clear that the per-home infrastructure cost is greater for bigger, more spread-out residences than it is for smaller, more densely packed ones. That’s because Columbia would have to lay more feet of bigger gas lines to accommodate the volumes used in the bigger, spread-out homes.

Even so, the Ohio Consumers’ Counsel, the state’s ratepayer-financed consumer watchdog, is supporting Columbia’s proposed increase. The agency last month said that the agreement was good for customers because its 50% increase in fixed charges is less than the more than 120% increase Columbia originally requested.

But the Office of Consumers’ Counsel agreed to the stipulation even though its own staff has questioned the need for any increase — and why it would fall equally on all customers regardless of income, population density or consumption.

“I still don’t understand why a consumer who lives in a 5,000 square-foot house, heats with gas, has a gas water heater, and a multitude of gas appliances should pay the same distribution bill as a consumer living in a 500 square-foot apartment with gas heat,” Bob Fortney, rate design and cost-of-service analyst for the agency said as part of the proceedings leading up to the agreement OCC made with Columbia.

Asked why the state’s official consumer representative entered into the agreement even though its own staff had such issues with it, the agency responded with a lengthy off-the-record statement. On the record, the Office of Consumers’ Counsel said the agreed fixed-rate hike proposal was the best deal it could get after tough negotiations with Columbia Gas.

“We were fully prepared to litigate against Columbia’s rate increase request at the PUCO, on behalf of a million Columbia Gas consumers and their families,” spokeswoman Merrilee Embs said in an email. “But there was a half-year of tough negotiating between the Consumers’ Counsel, Columbia Gas, the PUCO Staff and others. Some breakthroughs in the talks finally led to a settlement on Columbia’s charges for its massive replacement of old gas pipes and other costs. Groups with an environmental bent may be dissatisfied with the result. However, under Ohio regulation as it currently exists, we negotiated with others to achieve the best obtainable result for consumers’ natural gas bills.”