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Cuomo: WNY National Fuel Customers Get Rate Freeze

Buffalo, NY(WBEN) Governor Cuomo says a proposal has been approved where National Fuel customers in Western New York are getting a break on natural gas bills.

Cuomo says a rate freeze takes effect immediately through September of next year. The proposal also calls for $5.5 million in refunds to customers and provide $2 million toward home-weatherization projects and a furnace replacement program for low-income customers in the Buffalo region.

In addition to the rate freeze, the joint proposal adopted today by the State Public Service Commission provides National Fuel Gas’ 481,679 residential customers a one-time refund. Most of the company’s commercial and industrial customers will also get refunds. In all, approximately $1.77 million would be refunded to non-residential customers, and $3.73 million to residential customers. The new rate agreement covers 516,386 customers in total.

“This agreement is an outstanding victory for ratepayers in Western New York,” Governor Cuomo said. “Our State’s consumers deserve utilities that work with their best interests in mind, and I applaud all parties involved in this agreement for coming together to deliver refunds a rate freeze for residents and businesses in the area.”

In early 2013, the Commission found that rates being charged to NFG’s customers might be higher than necessary. As a result, the Commission directed a full examination of the company’s rates. Following hearings, the Commission ordered that NFG’s rates be made temporary subject to refund. Over the course of 2013, parties engaged in further discovery and participated in settlement discussions. This effort culminated in today’s adoption of the joint proposal.

In addition to the rate freeze and funding programs for low-income customers, the joint proposal provides an additional $12.50 per month discount for eligible low-income customers during winter heating months; funding a new pilot gas expansion program; improving gas safety metrics; increasing financial risk for shareholders for failing to meet performance standards; establishing a collaborative to investigate expanding a low-income gas supply program; increasing spending on removal of leak prone pipe by $8.2 million annually; and providing $1 million annually in rates to support economic development in Western New York.

National Fuel has released this statement:

Last year, the New York State Public Service Commission (PSC) initiated a review of National Fuel’s rates and services to determine their continuing reasonableness.  The PSC routinely investigates utility rates and earnings because New York State utilities do not set their own rates and earnings levels.  The last time the PSC did a similar review for National Fuel was in 2007.   Delivery rates have not changed since then and under the settlement agreement approved today, rates will continue unchanged for National Fuel customers.
The settlement approved today by the PSC is a product of many months of negotiations involving PSC Staff, multiple consumer advocate groups from Buffalo and Albany representing low-income, industrial and commercial customers and National Fuel.  The parties who signed the settlement agreement believe that its terms and conditions propose a fair and reasonable rate plan that will provide benefits for all stakeholders.  Under the terms of the settlement, National Fuel’s delivery rates will continue unchanged at least through September 30, 2015.  National Fuel has not requested a rate increase in more than seven years.  This delivery rate stability would not have been achievable without National Fuel’s continued efforts to control cost increases, even while maintaining safe and reliable service.
In addition to delivery rate stability, the settlement provides a mechanism that will have the Utility allocate a share of savings it achieves, through efficient utility operations or other means, for the benefit of customers or to offset other costs.
As part of the settlement, the parties also agreed that the Company will share its past efficiency savings by funding $7.5 million to be allocated between customer refunds, in the amount of $5.5 million, and with the balance funding low-income efficiency and conservation programs as follows:  $1,750,000 will be allocated as incremental funding for the Company’s Low Income Usage Reduction Program, an area weatherization program administered by NYSERDA under the existing EmPower NY Program, and $250,000 will be allocated to a furnace replacement program for HEAP-eligible customers.  Customers will receive the $5.5 million refund, in the form of a one-time bill credit of $7.74 per residential customer and differing amounts for non-residential customers, applied to customer bills beginning this June.
The approved rate plan also increases enrollment in low-income rate programs with a new targeted rate that provides HEAP customers with a bill credit of $12.50 per month for the five months of January through May, for up to three years beginning in 2015.
The agreement supports National Fuel’s ongoing investment in safety and infrastructure improvements, and, as sought by the Company, increases funding for pipeline modernization.  The Company commits to undertake storm hardening measures where necessary and feasible, and pipeline safety measures, always a priority with National Fuel, are enhanced.  The settlement stipulates increased funding for National Fuel’s area development program, which provides grants for projects that produce jobs, attract and retain business, provide job training and promote redevelopment in National Fuel's service area.  The agreement also provides a plan to explore measures that will promote the expansion of utility infrastructure to serve customers in rural areas who want to replace more costly heating fuels with natural gas. 
The agreement among all parties is a compromise that balances competing interests, while no one party in the discussions held more or less influence.  Certainly there was give and take from all parties involved with the net result being an agreement that clearly benefits National Fuel customers.   Every party contributed to the outcome, and no party can, or should, claim that but for that party's efforts, the end result would not have been achievable.

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