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Columbia Gas of Pennsylvania Seeks Rate Increase For Millions in Upgrades

Columbia Gas of Pennsylvania has filed a request with the state's Public Utility Commission (PUC) asking for a $46.2 million annual revenue increase to help fund $186 million in infrastructure and safety upgrades that it has planned for its 26-county service area this year.

Columbia, a subsidiary of one of the nation's largest utility companies, NiSource Inc., is hoping to raise its rates for residential, commercial and industrial natural gas customers by 4-9%.

The company serves more than 400,000 customers in western and southeastern Pennsylvania. Columbia officials said if the rate increase is approved, average residential bills, adjusted for inflation, would still be 17% lower than they were in 2006 before a flood of cheap locally produced Marcellus and Utica shale gas hit the market.

Columbia plans to spend $144 million this year to upgrade its aging underground distribution network in the state. It's also seeking a rate increase to enhance pipeline safety with a number of initiatives, including training for new regulatory standards. The company has already invested more than $900 million over the last seven years to modernize and expand its distribution system in Pennsylvania. President Mark Kempic said the largest investments ever made in that infrastructure came in 2013 and 2014.

The move also comes after Columbia Pipeline Partners LP, NiSource's midstream master limited partnership (MLP), set records in February when it sold 46.8 million common units and raised about $1.1 billion in the largest such initial public offering in history (see Shale Daily, Feb. 9).

The MLP is part of a broader plan to separate NiSource and its Columbia Pipeline Group (CPG) into two separately traded companies (see Shale Daily, Sept. 30, 2014). Under that plan, CPG would own nearly all of NiSource's natural gas transmission, midstream and storage assets, while NiSource would retain its regulated gas utilities, which serve more than 3.4 million customers in seven states, in addition to its electric power services in northern Indiana.

NiSource has also said it plans to spend up to $30 billion over the next two decades to make upgrades at the utilities level in its other service areas. Columbia Gas, which filed its request with the PUC last week, said general proceedings can take up to nine months and the company expects that, if approved, the new rates would be effective by the end of this year.

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