A proposal by Vectren Energy Delivery of Ohio to shift natural gas charges from a usage-based to a fixed customer rate will disproportionately increase bills to low-income, low usage customers and make it more difficult for them to maintain affordable natural gas service, the Office of the Ohio Consumers’ Counsel (OCC), said in testimony filed on July 23 at the Public Utilities Commission of Ohio (PUCO).
The PUCO staff has recommended approval of Vectren’s request to raise the current customer charge from $7 to $16.75, during the winter months of November 1-April 30, 2009 while lowering the volumetric charge. A $10 customer charge would be in effect only during the lower-usage months of May-October, 2009. Overall, Vectren is requesting a rate increase of $27 million, and the OCC believes it should only be $3 million.
The OCC opposes raising the flat-rate customer charge, stating that this change will have an adverse effect on lower-usage, lower income customers and also have a negative impact on energy efficiency efforts by creating a disincentive to use less gas. Shifting to a higher fixed-rate customer charge, known as the “straight fixed variable rate design” (SFV) will negatively affect customers who can least afford to sustain such an increase, based on the testimony filed by the OCC with the PUCO.
In addition, adoption of the SFV rate design will adversely affect senior customers in smaller homes who tend to use less natural gas but who would end up paying the same fixed rate as higher usage customers in larger homes. The testimony concluded that the difficulty in affording a higher rate is also affecting more moderate income levels.
“Increasing a flat-rate customer charge creates an undue hardship for people who can least afford it,” said Janine Migden-Ostrander, Consumers’ Counsel. “Not only does this approach discourage residents from conserving energy, but research supports the conclusion that the low-income and elderly population will be put more at risk by adopting this approach.”
The OCC has also filed objections with the PUCO stating that Vectren has failed to prove that it needs to increase its rates to the magnitude it requested, stating that the company has overstated some of its costs and investments.
The OCC encourages individual customers to share their opinions with the PUCO by writing letters. All letters and envelopes should reference Case Number 07-1080-GA-AIR. Letters should be sent to:
Public Utilities Commission of Ohio
Attn: Docketing Division
180 E. Broad Street
Columbus, OH 43215
The OCC also hopes Vectren customers will attend one or more of the following public hearings scheduled during the first week of September:
Sidney – 201 W. Poplar Street
Sidney Municipal Building, Council Chambers
Wednesday, Sept. 3, 2008 at 6 p.m.
Dayton – 101 W. Third Street
Dayton Municipal Building, Council Chambers
Thursday, Sept. 4, 2008 at 2 p.m. and 6 p.m.
Washington Court House – 1179 S. Elm Street
Fayette County Commission on Aging
Monday, Sept. 8, 2008 at 6 p.m.
For more information, visit the OCC website at www.pickocc.org.