LANSING – Utilities
would be allowed to spread the cost among ratepayers of improving and expanding
natural gas infrastructure to unserved and underserved areas under a bill the
House Energy Policy Committee debated Wednesday.
Both
Consumers Energy and DTE Energy spoke in support of HB
4303
, which would permit the utilities to
submit an Infrastructure Expansion Investment Plan with the Public Service
Commission to provide the infrastructure necessary to expand into unserved or
underserved areas.
Under the
bill, the amount allowed to be spent annually on new infrastructure would be $5
million or 25 percent of the utility’s annual spending on replacing cast iron,
unprotected steel and vintage plastic pipe.
The plan
submitted to the PSC would have to include a one-year projection of
infrastructure expansion investments to expand natural gas into unserved or
underserved areas; a proposed mechanism that provides for recovery of the incremental
revenue requirement; all expected costs and benefits associated with the
investments, including the amount of customers who will be provided access to
natural gas; and a projection of the investment support infrastructure
expansion for up to five years.
The PSC
would then have to conduct a contested hearing within 180 days after the
utility files the plan, and would either approve, disapprove or amend the
proposal.
Dan
Brudzynski, vice president of gas sales and supply with DTE Energy, said the bill
would provide more fairness for consumers. He said currently even though all
customers benefit from new infrastructure, only the new customers pay that
cost.
He also said
the state would benefit greatly from an increase in natural gas as it has the
capabilities to store it, and then costs would remain lower if there was a
weather emergency.
Holly Bowers
with Consumers Energy said the cost of natural gas is projected to stay low for
the foreseeable future. She said the bills will help ensure the lack of natural
gas supply does not hinder economic development in the state.
Robert Kosowski (D-Westland) asked the utilities why consumers in areas of
the state with a reliable natural gas supply would be open to sharing the cost
of improvements and new infrastructure.
Bowers said
a “spur” in economic development would benefit all consumers.
Ed McBroom (R-Vulcan) asked what would happen to those who still would not
have natural gas access, saying the lack of alternative energy suppliers would
decrease after the expansion.
Bowers said
currently there are 850,000 people without natural gas access, and the proposal
would only lead to between 60,000 and 70,000 residents having access.
Wayne
Kohley, president of Excel Propane Company, said he opposes the bill because it
allows utilities to expand natural gas infrastructure when it is not cost effective
by sharing the cost among all its consumers.
Kohley said
he supports natural gas expansion when it is cost effective, but he said the
bill would likely lead to the end of his business and other similar businesses
in the state.
Mike
Berkowitz with the Sierra Club Michigan Chapter submitted written testimony
opposing the bill, saying current infrastructure should be updated before
utilities begin major expansions.
Currently,
if a customer would like natural gas service in an area that is not served, the
customer or group of customers is required to pay those costs.
Also under
the bill, the PSC would be required to evaluate the assumptions underlying the
investment decision by the utility and indicate costs included in the
projections that it would be unlikely to allow the utility to recover from
consumers.
The utility
with an approved plan would have to file annually with the PSC an
Infrastructure Expansion Recovery Mechanism, which the PSC would then have to
conduct a contested hearing on to determine if a utility actually expanded
server and compare the actual investment with the investment in the plan.
The
committee did not vote on the bill.
This story
was published by Gongwer News Service. To subscribe, click on www.gongwer.com
