Sep. 27—Customers of Summit Natural Gas of Maine will see their fuel bills rise sharply this winter, following action Tuesday at the Public Utilities Commission.
For an average home, a bill would more than double, from $78.54 to $163.58. The utility regulators approved Summit's request for an annual "cost of gas adjustment" of $2.29 per therm, a unit of heat energy. The average Maine home uses 71 therms per month.
The spike is the latest reflection of how uncertainty in worldwide energy markets could make heating a home or business in Maine even more expensive this winter than last year. And the increase comes as another rate request moves along at the PUC: a multi-year increase in Summit's distribution rates for natural gas.
Unlike that pricing, however, the rate approved Tuesday represents a pass-through cost that doesn't add profit for Summit. The rate is based on ongoing estimates of the cost of buying enough fuel to supply homes and businesses.
Those costs are rising, driven in part by volatility in global markets linked to Russia's war in Ukraine and tight energy supplies in Europe this winter. These and other factors are affecting wholesale gas supply prices in New England, resulting in higher retail prices for customers of Maine's four gas distribution companies, according to the PUC.
"Unfortunately," said Philip Bartlett, the PUC's chair, "natural gas prices are volatile and have increased sharply over the last year. The cost of gas paid by consumers is directly related to the global market for natural gas."
For instance: Unitil, Maine's largest natural gas provider known as Northern Utilities, has its supply rate adjusted twice a year, reflecting higher and lower wholesale costs during cold and warm weather. It's now proposing a winter rate of $1.23 per therm.
That would result in a nearly 20 percent increase in a total bill for a typical home heating customer using 626 therms. The bill would rise by $204, to $1,284 over the period, according to documents filed at the PUC. The commissioners are expected to rule on the request Nov 1.
Comparing supply rate changes for Bangor Gas and Maine Natural Gas is more complicated, however, because those rates are adjusted monthly. The PUC has approved the cost of gas adjustment for Maine Natural Gas; the commission has yet to deliberate the request for Bangor Gas. The agency was unable to provide side-by-side comparisons on Tuesday.
Supply costs are passed through to customers after the amounts are reviewed by the PUC to assure they won't lead to a profit, or a loss, for the utility. But because it's only an estimate based on projected market prices, the actual cost is reconciled during the next season, to make sure the company doesn't collect too much, or too little, revenue from customers.
In the Summit case, the Office of Public Advocate pushed back on Summit's proposed rate and suggested instead that the PUC defer the balance over two years, as well as take other measures to help reduce customer rate shock this winter. Summit objected to that approach, saying the public advocate was attempting to include unrelated costs of supply from a wholesale pipeline project.
The PUC's staff attorneys who reviewed Summit's proposal sided with the utility. They suggested the commissioners approve the cost of gas adjustment for a period starting Oct. 1 and running through September 2023. The PUC staff also concluded that deferring recovery of the past balance wouldn't offer much relief, and worried about the impact if wholesale natural gas prices don't come down.
"Given the projected sustained high futures prices and interest on those balances," they wrote, "extending deferral may impose an unwelcome burden on ratepayers next year if prices remain high."
As part of the case, Summit can file in midwinter to adjust rates if there's a significant change in wholesale prices brought on by warmer weather or a drop in market costs, for instance.
"We understand how this can impact customers and we continually take measures to secure the most reliable and lowest price possible," said Justina Pimentel, a Summit executive.
The company is reaching out to customers to help them with conservation strategies and payment assistance programs, she added.
After Tuesday's deliberations, the public advocate's office said the PUC missed an opportunity to reduce the impact on customers during the upcoming heating season.
"We are disappointed that the commission did not implement our recommendations," said Nanette Ardry, the senior counsel.
MORE POTENTIAL PAIN
For Summit customers, the cost of gas adjustment will increase the pain if the PUC also agrees to the company's request to boost its distribution rate.
To pay for operations and investment, Summit has told the PUC it needs a seven-year plan that would increase rates by 30 percent in the first year, and possibly up to 15 percent each year after that.
The PUC scheduled two public hearings this month to gather input. The first was held last week in Cumberland; the second is Thursday at 6 p.m., at the PUC's headquarters in Hallowell. No date has been set yet for deliberations.
Summit has come under scrutiny because of a series of shortfalls.
The company has spent more than $329 million on capital investments in Maine. But Summit has hooked up fewer than 5,200 customers and has the highest natural gas rates in the state.
That stands in contrast to ambitions set out 10 years ago. Colorado-based Summit came to Maine with the promise of transforming Maine's oil-dependent heating fuels market and bolstering the energy-dependent manufacturing base with a cleaner-burning, domestic fuel.
Summit laid out plans for the most aggressive natural gas distribution project in the state's history. The company pledged to connect 15,000 homes and businesses in the Kennebec Valley and Portland's northern suburbs with natural gas, which at the time was half the price of heating oil.
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