Citing reliability and corrosion concerns, Dominion East Ohio has filed an application with the Public Utilities Commission of Ohio (PUCO) seeking approval to implement a “major” natural gas pipeline replacement program. Over a 25-year span, Dominion hopes to replace nearly 20% of the company’s 21,000-mile pipeline system.

Dominion also told PUCO that it wants to assume responsibility for the service lines that run from the curb to the customer’s meter. Customers currently own those service lines and are responsible for the cost of any needed repairs or replacement.

“A focused and prioritized replacement of approximately 4,100 miles of Dominion’s system is needed to ensure continued safe and reliable natural gas service to customers in the future,” said Bruce C. Klink, president of Dominion East Ohio. “The pipelines recommended for replacement are older pipelines that are either cast [iron] or wrought iron or bare steel pipelines that do not have the coating or corrosion protection used today.”

The total cost of the program is expected to exceed $2.6 billion in 2007 dollars. If it is approved, Dominion estimates that the additional cost to residential customers will be $1.12 per month beginning in November 2009. Thereafter there would be annual adjustments of no more than 90 cents per month. The program would result in an approximate 1% increase in annual bills. The cost to customers would be spread out over many decades because of the 25-year time frame of the replacement program and accounting that spreads those costs over an expected service life that lasts many decades.

Under its proposal, Dominion would become responsible for installing new service lines and for repairing or replacing existing service lines if they are found to be leaking. Those costs would be accumulated with the other costs of the pipeline replacement program and included in a monthly charge spread among all customers beginning late next year.

Dominion cited precedent for implementing its program, noting that the PUCO has approved an accelerated mainline replacement program at Duke Energy Ohio in Cincinnati that shares many of the same features proposed by Dominion. Among the benefits cited by the PUCO in a recent review of that program are the improvement in pipeline safety and a reduction in the cost of repairing leaks on the system. Like the Duke Energy Ohio program, Dominion said it will reduce its replacement program costs to be recovered by any savings from fewer leak repairs.

Dominion is asking the PUCO to consolidate the pipeline infrastructure replacement program with the company’s current rate case application to give the PUCO and other parties an opportunity to consider the two filings together.

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