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2018
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Yellow Springs Public Notices

NOTICE OF APPLICATION FOR AUTHORITY TO INCREASE RATES FOR ITS GAS DISTRIBUTION SERVICE

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NOTICE OF APPLICATION FOR AUTHORITY
TO INCREASE RATES FOR ITS GAS DISTRIBUTION SERVICE
NOTICE OF APPLICATION FOR AUTHORITY TO INCREASE RATES FOR ITS GAS DISTRIBUTION AND FOR APPROVAL OF AN ALTERNATIVE RATE PLAN SERVICE
AND FOR VECTREN ENERGY DELIVERY OF OHIO, INC.RATE PLAN
APPROVAL OF AN ALTERNATIVE
PUCO CASE NOS. 18-0298-GA-AIR & 18-0299-GA-ALT
VECTREN ENERGY DELIVERY OF OHIO, INC.

In accordance with Section 4909.19, Revised Code, Vectren Energy Delivery of Ohio, Inc. hereby gives notice that on March 30, 2018, it filed an Application with the Public Utilities Commission of Ohio
(Commission) requesting authority to increase the rates and charges for natural gas distribution services to its customers. VEDO has also applied, under Section 4929.05, Revised Code, for approval of an
alternative rate plan including four elements.

This notice describes the substance of the Application. Any interested party, however, desiring complete, detailed information with respect to any affected rates, charges, regulations, and practices may inspect
a copy of the Application and supporting schedules at the offices of the Commission at 180 East Broad Street, Columbus, Ohio 43215, or at the business office of VEDO at 1335 E. Dayton-Yellow Springs
Road, Fairborn, Ohio 45324, during normal business hours. The Application and supporting documents may also be viewed by visiting the Commission’s website at http://www.puco.ohio.gov, selecting DIS,
inputting 18-0298 in the case lookup box, and selecting the date the Application was filed.

A notice of intent to file this Application to increase rates and a copy of the proposed rates were filed with the Commission and also mailed to the mayors and legislative authorities of the communities located
within the areas served by VEDO on February 21, 2018.

The Application, which contains proposed revisions to VEDO’s Tariff for Gas Service, affects the rates and charges for, and various terms and conditions applicable to, natural gas service to all customers of VEDO served within all or portions of Auglaize, Butler, Champaign, Clark, Clinton, Darke, Fayette, Greene, Highland, Logan, Madison, Miami, Montgomery, Pickaway, Preble, Shelby and Warren Counties in Ohio. The Application states that the current rates and charges do not provide a just and reasonable rate of return on VEDO’s used and useful property as of December 31, 2017, the date certain in this case.

The Application states that VEDO requires the proposed revenue increase to provide an opportunity to earn a fair return on its assets and to recover its costs of operation.

Any person, firm, corporation, or association may file, pursuant to Section 4909.19 of the Revised Code, an objection to such proposed increased rates by alleging that such proposals are unjust and discriminatory or unreasonable. Recommendations that differ from the Application may be made by the Staff of the Commission or by intervening parties and may be adopted by the Commission.

VEDO is proposing that base rates include $5.6 million per year dedicated to energy efficiency programs to assist customers. VEDO is also proposing various revisions to non-rate terms and conditions contained in its Tariff for Gas Service, including modifications to the terms and conditions applicable to transportation service and its Choice program.

The increase in the operating revenue requested by VEDO for its various rate schedules is as follows:

Rate 310 – 11.41 percent inclusive of gas costs Rate 311 – 24.49 percent exclusive of gas costs

Rate 315 – 24.44 percent exclusive of gas costs Rate 320 – 3.54 percent inclusive of gas costs

Rate 321 – 17.66 percent exclusive of gas costs Rate 325 – 17.95 percent exclusive of gas costs

Rate 345 – 15.14 percent exclusive of gas costs Rate 360 – 10.30 percent exclusive of gas costs

VEDO is also seeking approval of an Alternative Rate Plan that includes the following four elements.

Distribution Replacement Rider. VEDO proposes continuing and expanding the accelerated replacement of bare steel, cast iron, and other targeted infrastructure at least until the end of 2023, along with the
annual recovery of associated costs. VEDO proposes that fixed DRR charge per month applicable to its residential customers be capped in each annual DRR filing at the following levels:

Annual Period Residential Rate Cap (per customer, per month)

September 1, 2019 – August 31, 2020 $2.50

September 1, 2020 – August 31, 2021 $5.00

September 1, 2021 – August 31, 2022 $7.50

September 1, 2022 – August 31, 2023 $10.00

September 1, 2023 – August 31, 2024 $12.00

September 1, 2024 – August 31, 2025 $13.75

Multi-Family Housing Pilot Program. To increase the opportunity for residents of multi-family housing units to enjoy the benefits of natural gas, VEDO proposes an incentive to qualifying developers and
owners of multi-family buildings to cover certain costs related to natural gas piping and venting in those buildings.

SFV Rate Design. Under straight fixed variable (SFV) rates, a utility’s costs of distributing natural gas are recovered through a fixed monthly charge, and are not based on the amount of gas consumed. VE-
DO’s residential customers have been subject to SFV rates for nearly 10 years, and this will not change under VEDO’s base-rate proposal. VEDO proposes in the alternative rate plan to expand SFV rates to
small non-residential customers. VEDO proposes a fixed monthly charge of $46.19 per meter, regardless of usage, for Group 1 Customers served under Rate 320, Rate 321, and Rate 325.

Energy adjustment at the time of customer billing. VEDO proposes to adjust customers’ usage each month for billing purposes to reflect the variability in the energy content of the gas they consume. Current-
ly, customer bills are based solely on the volume (Ccf) of natural gas consumed. The energy content adjustment, referred to as the “Energy Conversion Factor,” will be updated monthly.

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