If you look at your monthly gas bill, you’ll find a whole litany of charges. There’s the charge for the amount of gas you used. There’s a tax. And there are other fixed charges, like riders to cover capital improvement costs.
And those fixed charges have been rising.
“The Ohio commission over the years has shown support for these, switching over from more of a volume-based charge to more of a fixed charge to consumers,” said Mike Haugh, director of analytical services for the Ohio Consumers' Counsel, a group that advocates for residential utility customers.
Fixed fees can add up, especially for people using minimal amounts of gas and those who don’t need service all year. No amount of turning down the thermostat can reduce those fees.
And now, Columbia Gas of Ohio wants utility regulators to approve new fixed rates for its 1.4 million customers – which would give Ohio’s largest natural gas distributor the highest fixed rates for natural gas in the state, with plans to grow even higher. They say it’s necessary to bring profits up to a healthy and sustainable level. Others warn these fees will continually rise as the price of the actual gas does, too.
“And that's really the scary part of this. It feels like we're on a never-ending cycle," Haugh said.
To understand the fee increase, take a look at your gas bill and the repeating, monthly fixed charges.
Residential Columbia Gas customers now pay $37 a month as a base fee. That includes a $16.75 customer charge and $20 in riders and taxes. Those riders pay for specific capital improvements and infrastructure replacement. Other riders on the bill are dependent on gas usage.
Haugh says, ideally, riders should pay for a specific project and then fall off as that thing is paid off.
“But what's not happening is we're not seeing the corresponding reduction in costs as a result of that," he said.
Now Columbia wants to take all of those charges and roll them into one $46 monthly customer charge. And, it’s asked to start tacking on additional riders after that. That could lead eventually to even higher fixed charges.
“No one's gone this brazen now with $46, and then up to $80 in five years. That's, that's a big jump and a big, you know, that's, that's tough for anyone to stomach," Haugh said.
It would be the highest fixed monthly cost in the state if granted.
Columbia Gas is owned by the Indiana-based company NiSource. It has natural gas companies in Indiana, Kentucky, Virginia, Maryland and Pennsylvania. They all recently asked for or were granted rate increases in the last year or so. But all those were for much less than Ohio’s, most are less than half. And Ohio has the largest share of the company’s customers.
Columbia Gas officials declined multiple requests to be interviewed for this story and answer specific questions. Instead, the company sent a statement saying it has not increased rates in more than a decade -- but that does not count those rider add-ons. And, the company says they’re making a rate of return in Ohio of 3%. They say their return on equity should be closer to 11% with a rate of return near 8%.
"Columbia Gas has prepared a detailed rate request that the Public Utilities Commission of Ohio is reviewing. This request includes evidence to support this increase and its benefits to customers," a statement from the company reads.
But, the increase is a bid to increase profits. Columbia’s application, if granted, would generate more than $200 million in additional annual revenue for the company. That’s about 20 times the increase that advocates like Haugh say would be appropriate.
The OCC recommends the Public Utilities Commission of Ohio limit an increase of the company's profits to $10 million. Haugh says the OCC doubts the idea that Columbia Gas is only making a profit of 2%.
“We don't think that's exactly correct,” he said.
In a staff report released after Columbia's application for the rate increase, the PUCO recommended limiting increases to the company's profits at $58 million and identified several instances they said the company bulked up its need for more cash.
Haugh says the company is both underestimating revenue and overestimating business expenses. The company says the funds are needed to upgrade aging infrastructure.
"Columbia is committed to our customers and the communities we proudly serve. To continue to provide safe, affordable and reliable natural gas service, we must continue to invest in our system to upgrade aging infrastructure, just as investments are made in bridges, roads and other infrastructure in our cities, towns and communities."
It is unclear what the dollar amount of the increase would be in the lower suggestions from the PUCO or OCC are adopted by the commission.
An evidentiary hearing on the case is scheduled for Tuesday, but Columbia gas has asked the PUCO to move the hearing to October as closed-door negotiations with the regulators and consumer advocates negotiate. Visit the docket for the latest information on the case.
Financial documents for parent company NiSource show the company’s returns are doing well, with several metrics at the highest they’ve been in a 12-year period. Shareholder returns are at 10% to 12%. The company’s NET PROFIT in the first half of 2022 was at nearly half a billion dollars. That’s up by more than $100 million over the same time in 2021. In an earnings statement released this month, the company predicts sustained annual growth through the next few years.
This is part one of Renee Fox’s three-part series exploring Columbia Gas of Ohio's record-high rate increase request within the state's regulatory environment.
