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Columbia Gas Files for $37.8 million Rate Increase

After only a few months of collecting the newly increased rates from its 2010 Rate Case, Columbia Gas of Pennsylvania is back before the Pennsylvania Public Utility Commission seeking an additional $37.8 million in annual revenue.

Columbia’s January 14, 2011 filing is notable for more than the timing of the filing, however.  Columbia has proposed a distribution system improvement charge, often referred-to as a “DSIC”.  The DSIC, which has been held to be unavailable to natural gas utilities under 66 Pa C.S. § 1307(a), would allow Columbia to collected a return of and a return on its investment in plant–between base rate cases–by means of a surcharge mechanism.  Columbia also has proposed a levelized distribution charge that would allow it to collect the costs of operating its system on a non-volumetric basis.  This concept is known as de-coupling.  Columbia argues in its filing that without decoupling, its revenue stream is tied to volumes of gas delivered, which are subject to variance for reasons beyond the control of the Company; while at the same time, its operating costs are unrelated to the volume of gas delivered. Columbia argues that the current rate methodology puts the company at risk, and therefore, Columbia seeks to de-couple its revenue stream from the volume delivered, providing it with far more stable revenues.  Rate requests of this magnitude are nearly always  suspended and investigated  for seven months by an order of the Commission issued under, 66 Pa. C.S. § 1308(d), and this case will most likely be assigned to an Administrative Law Judge for hearings.

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