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.