Fuel Oil versus Natural Gas


Fuel oil trade groups in Connecticut and New York have been busy trying to convince regulators that expansion plans by natural gas companies should not be approved. They have scored some successes, leaders of trade groups in both states said. Connecticut’s Public Utilities Regulatory Authority (PURA) issued a draft ruling in November approving broad expansion of natural gas service throughout the state, but the result is that natural gas is going to cost more, said Christian Herb, president of the Connecticut Energy Marketers Association (CEMA), which represents fuel oil dealers and is based in Cromwell, Conn. ‘Basically what [regulators have] approved is a 50 percent rate increase on commercial and industrial businesses,” Herb said in an interview with Fuel Oil News.

For homeowners, depending on how far their residences are from a gas main, the rate increase could be anywhere from 10 to 30 percent, Herb estimated. ‘So I can tell you, without a doubt, that what this means for Connecticut is higher natural gas prices in the future.” The final ruling had not been issued as of this writing. Herb said it was unlikely to differ substantially from the draft. ‘I expect that the draft decision will hold up,” he said. Expansion of the natural gas distribution network in Connecticut is a goal of the ‘Comprehensive Energy Strategy” devised by the state’s Department of Energy and Environmental Protection. The strategy was approved earlier this year. Expansion plans filed last summer by Connecticut’s three investor-owned gas companies ‘ Southern Connecticut Gas, Connecticut Natural Gas and Yankee Gas ‘ seek to convert 280,000 customers to natural gas over a ten-year period. The plans target customers who currently have gas available on their street, but have not yet connected (on-main customers) as well as those potential customers interested in gas service, but not close enough to existing gas facilities to connect (off-main customers).

The draft ruling notes that rate impacts to current customers should be kept to a minimum, while the companies work to expand the current gas system infrastructure to serve new customers. The gas companies will continue to be required to demonstrate that expansion activity reflects prudent and efficient management on their part, regulators said. In effect, according to Herb, ‘What the utilities asked for was to be able to shift all of the costs to their customers. ‘They wanted their rate payers to pay for the expansion, and they wanted to set it up in a way that people who were converting could do it virtually for free.” The natural gas companies ‘accomplished neither one of those goals in this draft decision,” Herb said. Instead, the draft decision puts the shareholder-owned natural gas companies in the position of having to pay toward the expansion, and it requires homeowners and business that switch to pay for their own equipment, Herb said. That will drive up the costs of expansion. ‘So the only thing I see about this is a natural gas future in Connecticut that will be more expensive than it is today,” Herb said. ‘Costs will be higher, which is not a bad thing for us.”

In New York State, meanwhile, the Oil Heat Institute of Long Island (OHILI) is battling a plan by natural gas companies to convert one million residences from fuel oil to natural gas, said Kevin Rooney, chief executive officer of the trade group, which is based in Hauppauge, N.Y. The plan called for the conversion of approximately 500,000 residences that are within 150 feet of a gas line, Rooney said, or already had gas in the home for uses other than heating the dwelling. Virtually all of the residences were in New York City, Westchester County (directly north of New York City) and Long Island, Rooney said. The plan also called for the conversion of another 500,000 residences that are more than 150 feet from a gas line, Rooney said. The plan requires approval from the New York State Public Service Commission. ‘We opposed it and we filed comments that were quite voluminous,” Rooney said. The ‘in-depth comments


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