New CT customers to pick up most of tab for natural gas conversions

The Public Utilities Regulatory Authority Friday signed off on the final version of a plan to convert 280,000 homes and businesses to natural gas heat from oil and other fuels over the next 10 years. The gas conversion plan is the cornerstone of the state’s Comprehensive Energy Strategy unveiled just over a year ago and officially approved by the legislature in the last session.

The reliance on widespread gas conversion has been embraced by both Gov. Dannel P. Malloy and Department of Energy and Environmental Protection Commissioner Dan Esty as a way to reduce individual energy costs and lower carbon emissions. Gas is cleaner than the more widely used oil heat, though it is still a non-renewable fossil fuel.

It has also dropped significantly in price, though in the year since the plan was announced, it has risen steadily and is projected by the Energy Information Agency arm of the federal Department of Energy to continue going up.

Two factions normally at odds – fuel oil dealers and environmentalists – have not wildly embraced the plan. Oil dealers are likely to lose business as a result and have fought it since its inception. Environmentalists are concerned about an over-reliance on natural gas, though they favor the energy efficiency components of the broader energy strategy.

One of the biggest concerns has been how to pay for the gas line build-out. That bill falls primarily on new customers. A draft version had put the biggest burden on businesses, but in the final version, new residential and business gas customers will pay the same surcharge rates for 10 years.

New customers already on gas mains will pay a rate of 10 percent of the distribution component of their bill, which is 40 percent to 60 percent of the overall bill. New customers more than 150 feet from a main, will pay 30 percent of the distribution component.

The final version also put some of the cost on existing customers by removing a credit they have been receiving on gas bills. That money will now go toward expansion costs.

“The existing ratepayers need to pay a fair share,” Esty said earlier this week, objecting to language in the draft plan. “They’ve benefited from past infrastructure investments, and have also seen huge decreases in their bill over the past couple of years as the price of natural gas has come down.”

Among other areas of concern, the biggest is the issue of “capacity.” That refers to the fact that the existing interstate pipelines bringing natural gas into Connecticut are full – in no small part due to the large amounts of gas needed by power plants.

Concern was expressed in the plan about additional capacity being added in time to handle more gas customers.

“Gas pipeline capacity into the New England region is limited, and this has caused prices to spike in the winter when gas is needed both to heat homes and run power plants,” Malloy said in a statement. “The gas expansion plan called for in my Comprehensive Energy Strategy will benefit both gas and electric customers in the near-term, by helping to expand gas capacity into Connecticut.”

In addition to costs associated with additional gas lines, home and business owners face the cost of retrofiting or replacing their heating equipment. The plan provides several loan and rebate programs to help them do that.

 

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