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Regulators Give Final Approval to Connecticut NatGas Expansion Plan

Connecticut's Public Utilities Regulatory Authority (PURA) Friday gave final approval to a plan that would allow three investor-owned utilities to carry out a large-scale expansion of natural gas service throughout the state, adding 280,000 customers over the next 10 years.

In its 69-page decision, PURA approved a new hurdle rate model, established new rate and recovery mechanisms and instituted an annual reconciliation/reporting process for Connecticut Natural Gas Corp. (CNGC), the Southern Connecticut Gas Co. and the Yankee Gas Services Co. The decision will "allow for more timely review and recovery of prudent expenditures related to natural gas expansion activity," PURA said.

Gov. Dannel Malloy signed legislation to expand the state's gas distribution system in July. One month earlier, the three utilities submitted a joint gas expansion plan with PURA and the state Department of Energy and Environmental Protection (see Daily GPI, July 11; June 18).

"Approval of the natural gas expansion plan today is another major step forward in our effort to help our residents and businesses lower their energy bills by taking advantage of a cleaner, cheaper energy source," Malloy said Friday. "With this plan in place we will now expand opportunities for families and businesses to reduce their costs for heat and power by taking advantage of natural gas, which costs much less than oil and burns much cleaner. A greater percentage of homes and businesses in neighboring states benefit from the use of natural gas than do people in Connecticut. This has put us at a competitive disadvantage, but with this plan in place we will now move forward to change that.

"I was especially pleased to see that the final decision provided the natural gas utility companies with the approval they need to secure additional gas pipeline infrastructure and supplies to provide reliable service to their new customers. Gas pipeline capacity into the New England region is limited, and this has caused prices to spike in the winter when gas is needed both to heat homes and run power plants."

According to the plan presented by the companies, capacity would be obtained from three sources: long-term precedent agreements to purchase capacity from the Tennessee Gas Pipeline Connecticut Project and the Algonquin Gas Transmission AIM Project, both due to be in-service by Nov. 1, 2016; expansion of daily output from existing liquefied natural gas facilities connected to the CNG and Southern systems, which is anticipated to be in-service by Nov. 1, 2016; and use of existing capacity on the Iroquois Gas Transmission system.

The regulators had given the plan a preliminary stamp of approval earlier in the month (see Daily GPI, Nov. 7).

The plan targets two types of customers: "on-main," or those that currently have gas service available on their street but have not yet connected; and "off-main," those that are interested in gas service but are not close enough to existing facilities to connect.

According to PURA, CNGC and Southern -- both units of UIL Holdings Corp. -- have proposed converting 29,500 low-use, non-heating customers to heating by 2023. The two utilities would also add 113,700 on-main customers, plus 54,000 off-main customers, by that time. Yankee, a subsidiary of Northeast Utilities, has proposed converting 10,000 low-use customers to heating by 2023 and adding 41,296 on-main customers and 31,125 off-main customers.

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