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Ohio Gas Company's application to increase distribution rates

September 26, 2017

Ohio Gas Company filed an application with the Public Utilities Commission of Ohio (PUCO) on May 31, 2017 to increase its rates for natural gas distribution service.  The last time that Ohio Gas Company was authorized to increase its distribution rates for delivery of natural gas service was in 1985.

What are natural gas distribution rates?

Natural gas bills are comprised of two main parts – cost of the natural gas and the cost of distributing the natural gas to homes.

The distribution rate pays for all the things that Ohio Gas Company must do to deliver natural gas to its customers, including installing and maintaining natural gas pipelines, reading natural gas meters, processing bills and taking customer service calls.

The cost of natural gas, which annually makes up 70 percent of customers bills, is not a part of this rate case.  This cost is passed through to customers on a dollar-for-dollar basis with no mark-up or profit going to the utility company. 

What is the PUCO’s role in setting distribution rates?

According to Ohio law, a public utility is allowed to recover its operating expenses, plus a reasonable return on its infrastructure investments from customers. When a utility requests a rate increase from the PUCO, several steps are taken to review the company’s financial condition and ensure that the company is fulfilling its obligations to customers.

When evaluating proposed rates, the PUCO’s staff looks at whether the proposed rates will provide the company with adequate operating revenue according to Ohio law. In general, the cost of providing service to customers includes operating expenses (i.e. labor, supplies, maintenance of infrastructure and equipment, depreciation expense and taxes) and a return on the company’s infrastructure investment are used to calculate the company’s revenue requirement. The revenue requirement is the amount of money a company is allowed to collect from its customers during a given year.

What did Ohio Gas Company request in its application?

Ohio Gas Company requested an increase in total annual revenues of $3,237,346.  This represents an increase in the monthly customer charge from its current level of $5.45 to $10.91. 

If a customer consumed 100 hundred cubic feet (Ccf) of natural gas, the percentage increase in the customer’s total bill would be 6.44 percent over current charges.

Ohio Gas Company also proposed a new rider that would collect expenses associated with the Ohio gross receipts tax and increase certain one-time charges, including charges for reconnection; field collection of bills; checks returned for insufficient funds; new charges for meter relocations; installation of excess flow valves; and investigation fees associated with tampering and fraud.

What happens next?

PUCO staff performs an investigation of the facts and issues raised in the application.  The PUCO staff will then prepare a report which advises the PUCO commissioners of the staff’s recommendations. The Commission is not bound by the staff recommendations and may implement some of the staff’s suggestions and reject others.

How can I make my voice heard?

A local public hearing will be scheduled to allow members of the public to express their views regarding the application. Learn how to testify at a public hearing.

Customers may submit comments to the PUCO at 180 E. Broad St., Columbus, OH 43215.  Letters should include the case number 17-1139-GA-AIR.

To better understand the PUCO rate case process, please click here

If you would like to know more about the PUCO or have utility-related questions or concerns, contact the PUCO at (800) 686-PUCO (7826) or visit us online at www.PUCO.ohio.gov