Newsroom

Newsroom

Columbia Gas of Massachusetts files new rates with the DPU

Apr 13, 2018

(Westborough, MA) – Today, Columbia Gas of Massachusetts, a subsidiary of NiSource Inc. (NYSE: NI), filed a petition with the Massachusetts Department of Public Utilities (DPU) to increase annual revenues by $24.1 million, representing a 3.9 percent increase in current operating revenues. The request addresses increases in operating and maintenance costs incurred to comply with increasingly stringent federal and state regulatory mandates and capital costs incurred to upgrade gas infrastructure since the last time Columbia Gas changed its rates in 2016. The DPU decision is expected by February 28, 2019, with rates taking effect March 1, 2019.

The Columbia Gas request is reduced by the impact of the federal Tax Cuts and Jobs Act, which became effective on January 1, 2018. The request includes a proposal for a refund to customers of $9.1 million, beginning on the effective date of the revised rates, related to the benefit of the tax cut as of January 1, 2018. This $9.1 million refund will partially offset the $24.1 million increase in the first year the revised rates are in effect.

The Columbia Gas request for additional revenues conforms to the standard process through which a regulated utility seeks upgrades to its operating platform for the long-term benefit of customers. The Columbia Gas modernization efforts focus on eliminating the greatest areas of risk on its distribution system, including continuing efforts to build an organization to oversee the replacement of aging infrastructure. These efforts are designed to optimize the efficient distribution of gas and enhance quality assurance.

Replacing leak-prone infrastructure is a leading priority. However, it will take a number of years to eliminate the aging pipe from the gas distribution system. In view of this, the regulatory landscape is moving to a period of more stringent regulation, operations and maintenance activities, and active enforcement to assure the integrity of the distribution system through continuous improvement activities.

“Our core business is to build and maintain the infrastructure necessary to deliver natural gas in a safe, reliable and cost-efficient manner to our 321,000 customers in the 65 cities and towns we serve. Columbia Gas has responded diligently to directives from the Massachusetts Department of Public Utilities Pipeline Engineering and Safety Division and lessons learned from historical operations. We have made organizational and work practice changes to meet this important public safety challenge and our continuous improvement efforts have involved every aspect of the Company’s operations,” said Steve Bryant, President and Chief Operating Officer of Columbia Gas of Massachusetts. “These changes involve more work, and therefore, more labor and labor-related costs, including ongoing comprehensive employee training. A new state-of-the-art training facility built in Shrewsbury ensures that our workforce is obtaining the skills and capabilities necessary to achieve full compliance with pipeline safety regulations while executing best practices. To accommodate the resources needed to carry out the increasing volumes of construction activity, we are positioning a new construction facility in Wrentham to house construction resources, designed with features that optimize operating safety for employees and outside service contractors.”

The filing marks the beginning of the public process of rate setting for a utility, as required by the DPU.  Evidentiary hearings on the filing will be held within the next several months. If approved by the DPU, the change would impact the annual gas bill for a typical residential heating customer by an average of $4.95 per month, or 3.6 percent. The revised rates take effect March 1, 2019. In the first year after the rates take effect, the $9.1 million refund due to the Tax Cuts and Jobs Act will reduce the customer bill impact to an average of $2.80 per month, or 2 percent.

Columbia Gas operates one of the largest natural gas distribution systems in Massachusetts, with underground pipes of various vintages and material type spanning 5,000 miles. The Columbia Gas infrastructure replacement program targets nearly 700 remaining miles of aging natural gas pipe needing replacement, representing 14 percent of the Columbia Gas distribution system. During the replacement construction activity, approximately 37,000 customer service lines will also be replaced. Since 2009, Columbia Gas has replaced 500 miles of gas pipe. Bryant said, “In addition to protecting the public safety, the ongoing program to rebuild our infrastructure has provided a steady stream of good jobs and positive economic activity, which will continue for many years to come.”

The portion of a customer’s bill referred to as base rates only includes those costs associated with the delivery, distribution and customer services operations for Columbia Gas. Base rates typically represent approximately 35 percent of a customer’s total bill. The base rate increase being requested is not related to the cost of the supply of natural gas, which is directly passed through to the customer on a dollar-for-dollar basis. On behalf of its customers, Columbia Gas works with natural gas pipelines and suppliers to secure the best possible commodity prices, while maintaining reliable gas supply for customers during peak demand periods.

For more information on the DPU or any Columbia Gas filings, visit the DPU’s web site www.mass.gov/dpu.

Forward Looking Statement

    This press release contains forward-looking statements within the meaning of federal securities laws. Many factors govern whether any forward-looking statement contained herein will be or can be realized. Any one of those factors could cause actual results to differ materially from those projected. Examples of forward-looking statements in this press release include statements and expectations regarding NiSource's or any of its subsidiaries’ business, performance, growth, commitments, investment opportunities, and planned, identified, infrastructure or utility investments. All forward-looking statements are based on assumptions that management believes to be reasonable; however, there can be no assurance that actual results will not differ materially. Factors that could cause actual results to differ materially from the projections, forecasts, estimates, plans, expectations and strategy discussed in this press release include, among other things, NiSource's debt obligations; any changes in NiSource's credit rating; NiSource's ability to execute its growth strategy; changes in general economic, capital and commodity market conditions; pension funding obligations; economic regulation and the impact of regulatory rate reviews; NiSource's ability to obtain expected financial or regulatory outcomes; any damage to NiSource's reputation; compliance with environmental laws and the costs of associated liabilities; fluctuations in demand from residential and commercial customers; economic conditions of certain industries; the success of NIPSCO's electric generation strategy; the price of energy commodities and related transportation costs or an inability to obtain an adequate, reliable and cost-effective fuel supply to meet customer demands; the reliability of customers and suppliers to fulfill their payment and contractual obligations; potential impairments of goodwill or definite-lived intangible assets; changes in taxation and accounting principles; potential incidents and other operating risks associated with our business; the impact of an aging infrastructure; the impact of climate change; potential cyber-attacks; construction risks and natural gas costs and supply risks; extreme weather conditions; the attraction and retention of a qualified work force; advances in technology; the ability of NiSource's subsidiaries to generate cash; tax liabilities associated with the separation of Columbia Pipeline Group, Inc.; NiSource's ability to manage new initiatives and organizational changes; the performance of third-party suppliers and service providers; the availability of insurance to cover all significant losses and other matters set forth in Item 1A, "Risk Factors" section of NiSource's Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and in other filings with the Securities and Exchange Commission. NiSource expressly disclaims any duty to update, supplement or amend any of its forward-looking statements contained in this press release, whether as a result of new information, subsequent events or otherwise, except as required by applicable law.