Columbia Gas seizure for $200 million comes amid growing company profits

If you look at your monthly gas bill, you’ll find a whole litany of charges. There is a charge for the amount of gas you have used. There is a tax. And there are other fixed charges, like riders to cover capital improvement costs.

And those fixed costs have increased.

“Over the years, the Ohio commission has shown support for these, moving from a volume-based charge to a more fixed charge for consumers,” said Mike Haugh, director of analytical services for the Ohio Consumers’ Counsel, a group that advocates for residential utility customers.

Fixed charges can add up, especially for people using minimal amounts of gas and those who don’t need year-round service. No lowering of the thermostat can reduce these costs.

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 the natural gas from the state, with even higher growth plans. They say there is a need to bring profits back to a healthy and sustainable level. Others warn that these fees will continually rise, as will the price of gas itself.

“And that’s really the scary part of it all. It’s like we’re in an endless cycle,” Haugh said.

To understand the increased charges, take a look at your gas bill and the recurring monthly fixed charges.

Columbia Gas residential customers now pay $37 per month as a base fee. This includes a customer fee of $16.75 and $20 riders and taxes. These users pay for specific capital improvements and infrastructure replacement. Other riders on the bill depend on gas usage.

Haugh says that ideally riders should pay for a specific project and then drop as that thing gets paid.

“But what’s not happening is we’re not seeing the corresponding cost reduction as a result of that,” he said.

A comparison of rate increase proposals provided by the Ohio Consumers’ Counsel.

Now Columbia wants to take all of those fees and bundle them into one monthly fee of $46. And, it is requested to start firing additional runners after that. This could eventually lead to even higher fixed charges.

“Nobody’s gotten so cheeky now with $46 and then up to $80 in five years. That’s, that’s a big leap and a big, you know, it’s hard for anyone to digest,” said Haugh.

It would be the highest fixed monthly cost in the state if granted.

Columbia Gas is owned by Indiana-based NiSource. It owns natural gas companies in Indiana, Kentucky, Virginia, Maryland and Pennsylvania. They have all recently requested or obtained rate increases in the past year or so. But all of those were for much less than those in Ohio, most are less than half. And Ohio has the largest share of the company’s customers.

Columbia Gas officials declined multiple requests to interview for this story and to answer specific questions. Instead, the company sent out a statement saying it hadn’t raised prices in over a decade — but that doesn’t count those add-ons. And, the company says it achieves a rate of return in Ohio of just 2%. They say it should be closer to 11%.

“Columbia Gas has prepared a detailed rate application which the Ohio Public Utilities Commission is reviewing. This application includes supporting evidence for this increase and its benefits to customers,” a statement said. company statement.

But, the increase is an attempt to increase profits. Columbia’s request, if successful, would generate more than $200 million in additional annual profits for the company. That’s about 20 times the increase that proponents like Haugh say would be appropriate.

The The OCC recommends the Ohio Public Utilities Commission limits an increase in company profits to $10 million. Haugh says the OCC doubts the idea that Columbia Gas is only making a 2% profit.

“We don’t think that’s entirely correct,” he said.

In a staff report released after Columbia’s rate increase application, the PUCO recommended limiting the company’s profit increases to $58 million and identified several instances where the company increased its need for more cash.

Haugh says the company both understates its revenue and overstates its expenses. The company says the funds are needed to modernize aging infrastructure.

“Columbia is committed to its 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 network to upgrade aging infrastructure, just as investments are made in bridges, roads and other infrastructure in our cities, villages and communities.

It’s unclear what the dollar amount of the increase would be in the lower PUCO or OCC suggestions adopted by the commission.

An evidentiary hearing on the case is scheduled for Tuesday, but Columbia Gas has asked PUCO to move the hearing to October as closed-door negotiations with regulators and consumer advocates negotiate. Visit the role for the latest information on the case.

Financial documents for the parent company NiSource show that the company’s returns are doing well, with several metrics at their highest in a 12-year period. Returns for shareholders are 10% to 12%. The company’s NET PROFIT in the first half of 2022 was nearly half a billion dollars. This represents an increase of more than $100 million from the same period in 2021. In an income statement released this month, the company forecasts sustained annual growth over the next few years.

This is the first part of Renee Fox’s three-part series exploring Columbia Gas of Ohio’s demand for record rate increases in the state’s regulatory environment.