Source: Washington Gas
A bill before the Maryland General Assembly would help speed up critical natural gas infrastructure replacement projects. Washington Gas consumers say they are willing to pay a surcharge to reinforce the pipeline system throughout the state. Over 20 states have passed similar measures that allow gas companies to file plans and seek approval from regulators to recover pipeline replacement costs between traditional base rate cases which tend to be infrequent and expensive. Federal pipeline safety regulators are urging states to approve more expedited ways to facilitate the nation’s pipeline replacement programs.
The Maryland Strategic Infrastructure Development and Enhancement Program (STRIDE), is a bill pending before the Maryland General Assembly that would allow gas companies to place a surcharge to pay for infrastructure costs on a real-time basis. The surcharge must be approved by regulators. The U.S. Department of Transportation’s Pipeline and Hazardous Material Safety Administration (PHMSA) has expressed support for alternative ratemaking methodology, such as that included in the STRIDE bill, that would provide for expedited replacement programs for aging pipelines.
“Throughout our 160 year history, Washington Gas has met or exceeded the challenges of maintaining and operating one of the safest natural gas distribution systems in the industry,” added Adrian Chapman, President and Chief Operating Officer at WGL Holdings and Washington Gas. “Now, however, with new technologies, an increasingly older pipeline system and increased federal industry standards for pipeline safety, we need to replace and reinforce our system more rapidly.”
In a statewide poll among registered voters in Maryland, 63 percent would favor a monthly surcharge of no more than $2 to make repairs and replacements to improve the current underground pipeline system. The poll included feedback from a total of 816 registered voters. Of the total, 63 percent of supporters, 40 percent “strongly favor” and 23 percent “somewhat favor” such an approach to paying for underground pipeline repairs and replacements. The poll was commissioned by Washington Gas. 1.
“An investment in Maryland’s natural gas infrastructure is an investment in the state’s future – its residents and its businesses,” said Doug Staebler, Vice President of Operations at Washington Gas. “The polling results demonstrate to us that natural gas customers in Maryland are willing, along with us, to do their part to secure the state’s natural gas infrastructure future.”
In each region of the state, a clear majority of voters said they would favor this approach to pipeline repairs and replacement. In some areas, the favorability margin was almost 3 to 1.
Traditional ratemaking requires natural gas utilities like Washington Gas to include infrastructure replacement costs in base rate cases that, by their nature, are inefficient means to pay for infrastructure replacement. Under this model, utilities must incur multimillion dollar infrastructure replacement and maintenance expenses up front and can only recover those costs if, and when, a rate case is filed.
In a letter to top state elected officials, PHMSA emphasized the importance that gas operators be able to take “prompt remedial steps to correct threats to pipeline systems and safety” and noted that the Maryland bill could provide a means to reduce such risk and improve safety.
Headquartered in Washington, D.C., Washington Gas is a wholly-owned subsidiary of WGL Holdings, Inc. (NYSE: WGL). The parent company holds a group of energy-related retail businesses that focus primarily on retail energy-marketing and commercial heating, ventilating and air conditioning services.