Dominion East Ohio raises charges to cover the poor

Submitted by Quest-News-Serv... on Wed, 03/31/2010 - 00:08.

The reason is that one of every 10 Dominion customers is now so poor that they have enrolled in a program that allows them to pay 10 percent of their monthly income rather than the actual bill.

Dominion East Ohio raises charges to cover the poor

By John Funk, The Plain Dealer           March 24, 2010, 6:14PM

The Cleveland-Akron metro area ranks fifth nationally for use of natural gas as the primary home heating source.
 
For more information

Dominion East Ohio's Application to increase PIPP charges (PDF)

Dominion's revised application to increase PIPP charges(PDF)

Public Utlities Commission of Ohio ruling on application (PDF)

Previous coverage

Jan. 27, 2010: If your natural gas prices adjust monthly you will pay less in February

Jan. 4, 2010: Total SA latest to make a play for U.S. natural gas

Dec. 11, 2009: Natural gas prices are expected to remain low through the winter

CLEVELAND, Ohio -- Natural gas prices have been running at seven-year lows, but Dominion East Ohio gas customers will see higher bills.
 
The reason is that one of every 10 Dominion customers is now so poor that they have enrolled in a program that allows them to pay 10 percent of their monthly income rather than the actual bill.
 
What this means is that the other nine customers have to pick up the difference.
 
Dominion since February 2006 has added a charge of about 561/2 cents per 1,000 cubic feet to its delivery rate to pay for the Percentage of Income Payment Plan, or PIPP, which is administered by the Ohio Department of Development.
 
The PIPP charge is going to triple to $1.71 per Mcf for the next 12 months. It shows up on the bill as part of the delivery charge, which will increase to $2.96 per Mcf.
 
Columbia Gas of Ohio in March 2009 set its PIPP charge at 6.1 cents per 100 cubic feet (60 cents per Mcf). The number of Columbia customers enrolled in PIPP has for unknown reasons recently declined, a spokesman said. The company has no plans to ask for an increase, he said.
 
But among Dominion's customers, PIPP enrollment has increased by about 25 percent since 2006, according to records the company filed with the Public Utilities Commission of Ohio.
 
Dominion's PIPP fund was deep in the red by the end of 2009 and would be awash in $258 million of red ink by the end of this year unless rates were raised, Dominion said it a request to the PUCO.
 
The commission on Wednesday approved Dominion's request to triple the charge in order to pay off the arrearage and make the program solvent by Dec. 31
 
The company had offered as an alternative to double the current charge, but at that rate, it would have taken three years to pay off the rolling debt and include half million dollars in extra interest from carrying the debt forward.
 
The company said it did not seek an increase in PIPP charges earlier because natural gas prices were too high and the effect on already-high customer bills would have been more severe than it will now be in the next 12 months.
 
Energy analysts at the PUCO, at Dominion and across the nation see today's low gas prices remaining in place over the coming year, averaging about $5 per million BTUs, or 1 Mcf, on the New York Mercantile Exchange. At $5, Dominion's monthly variable standard choice offer would be about $6.20 per Mcf.
 
The PUCO on Wednesday also ordered an immediate audit of Dominion's three years of record-keeping on PIPP arrearage and told the company from now on to submit annual reports on the PIPP program, including whether it needs an increase or whether a decrease is in order.
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