Effective on March 1, 2019, Norwich Public Utilities (NPU) will increase its Purchased Gas Adjustment (PGA), which will have an impact on the bills of all our natural gas customers. The adjustment in our PGA is NOT an increase to NPU’s rates but is an increase in the cost of bringing natural gas to Norwich.
This adjustment is due to construction delays with two major natural gas pipeline projects that are being supported by NPU:
- Millennium (MPC) Eastern Expansion in New York
- Algonquin (AGT) Atlantic Bridge Expansion
These large-scale projects have been delayed by several months as a result of engineering and logistical issues related with construction. As a result of these delays, our pipeline capacity costs have increased, which have resulted in a $3.36 million increase in our wholesale gas supply costs over the next two years.
The increased costs associated with these delays are beyond the control of NPU – and the increase in the PGA will only be used to pay for the incremental cost of bringing natural gas to Norwich.
We have determined that the practical and least expensive option is to increase the PGA to 13 cents per CCF of natural gas. A CCF is a measure of natural gas equal to the amount of gas equal to 100 cubic feet.
As a result, the change to our PGA charge will result in an increase of $5.32 per month for a residential customer using 54 CCF of natural gas, between March 1, 2019 and June, 2021 (28 months).
Two other options considered by NPU would have had more dramatic impact on customers. These options would have resulted in:
- An increase of nearly $16.00 per month over the course of a year.
- An increase of more than $12.00 per month for sixteen months.
Our PGA charge is currently 3.2 cents per CCF of natural gas used. Over the past ten years, this charge has been between negative 4 cents per CCF and $1.185 per CCF, with a ten-year average of $0.20 cents per CCF.
When the construction delays are resolved and the projects are complete, the cost of transporting the natural gas to Norwich will be more stable, which will improve our forecasting and provide for greater predictability in our rates going forward.
It is important to keep in mind that the cost for a customer to use natural gas is made up of several components, including:
- The cost of the commodity, which is impacted by the amount of natural gas you use.
- The cost for bringing the natural gas from various locations around the country to Norwich Public Utilities.
- The cost of investing in and maintaining our infrastructure – gate stations, piping beneath the streets, regulator stations, service lines into your home, and various other equipment used by NPU employees.
Wages and benefits for the NPU personnel involved in every step in the process, from installing and repairing our infrastructure, to calculating our bills, determining our rates, and in putting together information like this for the public.
Frequently asked questions about changes to NPU’s natural gas bills
Q: Why has my NPU natural gas bill increased?
A: Our costs for bringing natural gas to Norwich have increased as a result of construction delays with two major natural gas pipeline projects that are being supported by NPU.
- Millennium (MPC) Eastern Expansion in New York
- Algonquin (AGT) Atlantic Bridge Expansion
The delays to these projects have impacted NPU’s pipeline capacity, which has increased the cost in bringing natural gas to Norwich.
Q: How much will the increase on my bill be?
A: The change to our Purchased Gas Adjustment (PGA) will vary based on natural gas consumption. For example, it will result in an increase of $5.32 per month for a residential customer using 54 CCFs of natural gas.
Q: What is the Purchased Gas Adjustment charge on my NPU bill?
A: The PGA is a charge that reflects the cost of bringing our natural gas from its origin through the pipeline infrastructure throughout the United States to Norwich. These costs fluctuate on a regular basis, and NPU adjusts our PGA periodically.
Q: How much is the PGA going to increase?
A: NPU is increasing our PGA charge to 12.9 cents per CCF of natural from 3.2 cents per CCF. A CCF is a measure of natural gas equal to 100 cubic feet.
Over the past ten years, this charge has been between negative $0.0395 cents per CCF and $1.185 per CCF, with a ten-year average of $0.20 cents per CCF.
Q: When will this increase take effect?
A: The new PGA charge will be in place on March 1, 2019.
Q: Did NPU consider any other options of adjusting the PGA?
A: NPU considered two other options that would have resulted in larger monthly increases for natural gas customers:
- An increase of $16 a month over the course of a year.
- An increase of $12 a month over the course of sixteen months.
Ultimately, it was determined that a more modest increase over a longer duration was the more practical approach to take.
Q: Why is NPU involved with these two natural gas pipeline projects?
A: Investing in natural gas pipeline projects provides NPU with lower-cost natural gas and a more stable supply for our customers. As demand for natural gas increases, it is essential for NPU to have the right level of exposure to the natural gas marketplace.