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Published: Thursday, 2/23/2006

Utility asks higher gas rates for conservation

BY JON CHAVEZ
BLADE BUSINESS WRITER

In a winter of sky-high natural gas prices, area residents have been quick to adopt numerous methods to conserve gas usage and cut their burgeoning bills.

But in a case that one day could affect all Ohio homeowners, a Dayton area gas utility wants state regulators to let it charge more if its customers cut their gas usage through conservation.

The company, Vectren Energy Delivery of Ohio, of Evansville, Ind., also wants to start a $2.35 million program to provide advice on conserving gas, but have it paid for by its customers.

The request, pending regulatory hearings and action, is so unusual it is being watched by industry observers and the state's other gas utilities, including Columbia Gas of Ohio and Dominion East Gas Co., which provide service in northwest Ohio.

"What they're saying, basically, is they are admitting that conservation doesn't serve them well," said Alan Schriber, chairman of the Public Utilities Commission of Ohio.

"They make no money on gas. The only thing they make money on is distribution of gas and when people conserve, the meter spins slower and the less money they make."

Gas utilities can charge for funneling money through their pipes, but they collect less when gas usage declines.

A spokesman said Vectren estimates its customer usage this year is down 5 percent due to conservation. Columbia Gas has said its usage is down perhaps 6 percent and Dominion East is down 4 percent.

A Columbia Gas spokesman said the utility is looking at the Vectren case, but views conservation as a temporary solution. The answer to high gas prices, he said, is more supplies of new gas.

Vectren proposes to charge customers if they conserve gas through better insulation or other factors at home. The charge would not allow if usage is less because of warmer weather decreased usage. It would use historical temperatures to determine whether usage declines were due to conservation.

"All we're asking is if the weather was normal, here's what we would have sold to customers," said Bob Heidorn, vice president and general counsel for Vectren.

The company has a similar filing pending with the Indiana Utility Regulatory Commission.

Similar proposals have been approved in Oregon, North Carolina, and Maryland, according to the American Gas Association, an industry trade group.

Vectren and other utilities are facing a stark reality as prices of gas - upon which utilities do not make a profit - have skyrocketed, Mr. Heidorn said.

"We are trying to get everybody to use less gas, but every (amount) less that we sell, we're cutting our own throats," he said. The company's fixed costs don't decrease, he added.

Dayton area residents have voice greater objection to the proposal to set up the conservation marketing program and charge customers to run it.

One angry resident wrote to the PUCO about the proposal: "Have you people lost your mind? I am not paying for the program they want to educate me on saving energy."

Mr. Schriber does not expect the issue to be resolved until next winter, especially since the utility is essentially asking for guaranteed revenues.

The Ohio Consumers' Counsel, the agency charged with defending customer interests, is behind the Vectren plan. A spokesman said the agency wants to encourage conservation.

Contact Jon Chavez at:

jchavez@theblade.com

or 419-724-6128.


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