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Connecticut NatGas Expansion to Cost LDCs $2.26B
Connecticut Gov. Dannel Malloy’s energy plan, which calls for the construction of 900 miles of natural gas mains and a host of financial and regulatory changes to make gas available to as many as 300,000 homes and businesses, would cost the state’s natural gas local distribution companies (LDC) $2.26 billion, according to the state’s Public Utilities Regulatory Authority (PURA).
LDCs have made it clear that the expansion “could not be done without increasing customer rates or charges,” PURA said in comments filed with the Connecticut Department of Energy and Environmental Protection. The average LDC customer bill at the end of the seven-year expansion would be 37% higher than it is today, PURA said.
“The substantial proposed expansion of the natural gas system could result in an additional increase of $2.26 billion in rate base and may not occur without funding from all natural gas ratepayers and potentially all state residents,” PURA said.
Malloy unveiled the 184-page draft 2012 Comprehensive Energy Strategy (CES) in October, saying the state was “not well positioned to take advantage of the emerging natural gas opportunity” (see NGI, Oct. 8, 2012).
“Only 31% of Connecticut homes heat with gas today, compared with 47% in Massachusetts and 48% in Rhode Island,” Malloy said at the time. “The percentage of commercial and industrial entities with access to gas is only slightly higher.”
The draft proposes to make natural gas available to as many as 300,000 additional Connecticut homes and businesses over the next seven years, beginning with roughly 217,000 customers already connected to gas mains but not heating with gas. Funding for the plan would come through $3 billion of private capital, $1.4 billion to be paid by some combination of new gas customers, all gas ratepayers and bond funding, and $815 million to be financed by gas companies, according to the draft.
PURA also warned that “there are not construction crews in Connecticut to implement the proposed expansion plan as described in the CES. The LDC’s indicated that it could take a year to train new construction crews, plus contractors from outside the state want long-term contracts before committing to a project…the Authority estimates that the LDCs would need to add approximately 200 new crews to install the 900 miles of new main and 305,000 services, which would increase cost and impact rate payers.”
The draft CES “is a positive first step toward a comprehensive energy policy” for the state, PURA concluded, but, “as with any document that attempts to address such an expansive topic as energy policy, there needs to be flexibility both in design and execution, both drawing on constructive stakeholder input that takes into consideration the views and recommendations from all affected parties.”
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