Columbia Gas of Virginia’s proposed revision of its Rate Schedule TS-1 and TS-2 would negatively affect the way gas is transported, while harming competition within the state, according to concerned customers in a hearing last week. The hearing held Sept. 3 before the Virginia State Corporation Commission (VSCC) found “unanimous opposition” from 15 Columbia customers, according to Compass Energy Services Inc., a marketer affected by Columbia’s action.

During the preliminary hearing, transportation customers testified to the problems they would have managing their energy costs if they were forced back onto tariff rates, and the problems they would have finding the time to manage their gas usage on a daily basis with the new restrictions.

Testifying on behalf of the Virginia Industrial Gas Users’ Association (VIGUA), Nicholas Phillips Jr. called the utility’s proposed TS-1/TS-2 rates “unduly harsh,” because they would completely change banking and balancing service and the reasons for which it was originally designed, while eliminating necessary types and levels of service. He added that the move would remove choice and result in cost and rate increases to customers.

Columbia Gas’ proposed changes include:

During testimony, Stand Energy Corp. and the Virginia Industrial Gas Users Association said the proposed bank tolerance reduction from its current range of 0-5% to 0-1% would significantly reduce transportation customers’ abilities to manage gas supplies.

“The reduction being proposed in this case represents an 80% decrease in the bank tolerance levels that will be available to transportation customers,” the commission staff said. “As such, the staff can also understand the customer’s concerns regarding this proposal. Such a drastic reduction could cause operational difficulties or result in significant operational changes for many of these customers.” The staff added that it advises that Columbia Gas of Virginia compromise with a bank tolerance of 3%.

However, Compass Energy said it thinks that even a 3% bank tolerance is too restrictive for most small players. “On a de facto basis, if the commission allows these new regulations to take affect, Columbia Gas of Virginia is going to take an awful lot of customers and move them back onto their tariff service, which I think is Columbia’s intent,” said Chris Ziegler, president of Richmond,VA-based Compass Energy Services.

Ziegler added that he hopes that the commission acts upon the proposed changes before the first of November when Columbia’s new tariff would go into affect subject to refund. “We think it is a very radical change that we think Columbia has not presented adequate support for. It will serve to reduce competition for natural gas in Virginia…backpedaling from a healthy competitive atmosphere in the energy industry is never a good thing, particularly in today’s environment. People are not going to stay in the market if their customers are constantly being lost to tariff.”

Phillips with VIGUA added that this type of rate change is actually a rate increase, so Columbia should file proper notice and follow rate case procedures to allow affected customers a reasonable opportunity to participate. Complete cost back-up and revenue impact, including a comparison of aggregate revenue to aggregate cost of service for all jurisdictional classes of service, should be required.

In his testimony, Phillips said, “CGV’s [Columbia Gas of Virginia] proposed changes for Rates TS-1/TS-2 are not related to the Choice Program and should be denied in their entirety. CGV should not be allowed to increase costs to customers through rate changes presented in this Choice filing. CGV’s proposed changes to existing transportation service should not be allowed in this filing.”

A formal VSCC hearing where the commission staff and Columbia Gas of Virginia will testify is scheduled for Sept. 26.

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