Tel: 804.864.1100

Tel: 804.864.1100

Tag Archive: Natural gas

Virginia Commission Approves Settlement in Columbia Gas Rate Case

Results in Benefits for Competitive Suppliers

On March 17, 2017, the Virginia State Corporation Commission (“Commission”) entered a final order on a rate increase application filed last year by Columbia Gas of Virginia (“Columbia”). The Commission approved a comprehensive settlement (“Stipulation”) agreed to by Columbia, the Commission Staff, the Attorney General’ Office, and several intervening parties. We are very pleased that our firm was able to help negotiate a favorable settlement on behalf of a group of retail gas suppliers. The Stipulation approved by the Commission will reduce the fees associated with competitive gas service in Virginia and provide more operational flexibility for suppliers in several key areas.

In addition to requesting an increase to its revenue requirement, Columbia also requested several changes to its terms and conditions that would have adversely impacted both customers and suppliers in the competitive gas market. Our firm represented a group of competitive suppliers who provide gas transportation service to commercial customers in Columbia’s service territory. Among other issues, our clients were concerned that Columbia’s proposed changes to its terms and conditions would increase fees for gas transportation service and reduce suppliers’ ability to provide cost-effective service to customers. The Stipulation, however, resulted in several favorable tariff modifications, including reduced fees for daily gas transfer service and more reasonable penalties in the event suppliers over- or under-deliver natural gas on certain days.

The Stipulation approved by the Commission also authorized a total revenue requirement increase of $28.5 million and established a rate of return on common equity (“ROE”) of 9.5%. Columbia had originally requested a total revenue requirement increase of $37 million and an authorized ROE of 11.25%.

Please contact one of our regulatory attorneys for more information about this case, or should you have any questions about competitive energy markets in Virginia and the Mid-Atlantic.

Regulators Continue to Press on Consumer Rules

March 2017 Energy Update Brian Greene

The March Energy Update features Brian Greene explaining efforts in Delaware, Maryland and the District of Columbia to improve consumer protection rules that apply to selling commodities direct to consumers in the energy and natural gas markets.

Dominion Buying Gas Distributor Questar

Dominion Resources Inc. (“Dominion”) announced Monday, February 1, 2016, that it plans to purchase Utah-based Questar Corporation (“Questar”), a natural gas distributor, for approximately $4.4 billion in an all-cash deal.  Purchasing Questar will expand Dominion’s customer base to customers in Western states.  With Questar’s acquisition, Dominion would serve approximately 2.5 million electric customers and 2.3 million gas customers in seven states.  In addition, Dominion would operate more than 15,000 miles of natural gas transmission, gathering and storage pipelines.

The acquisition is set to close by the end of 2016, pending approval from Questar’s shareholders, the Federal Trade Commission, and, if needed, the Utah Public Service Commission and the Wyoming Public Service Commission.  The companies indicated they will also give information about the transaction to the Idaho Public Utilities Commission. After closing, Questar will remain headquartered in Salt Lake City, Utah, operating as a unit of Dominion.

If you have questions about the Dominion acquisition or utilities regulation in Virginia or the mid-Atlantic, please contact one of our energy lawyers.

Maryland PSC Lowers Retail Natural Gas Suppliers’ WGL Winter Collateral

Decision Relieves Retail Suppliers from Paying Excessive Collateral to WGL 

 

The Maryland Public Service Commission has granted a request by Washington Gas Light and two retail suppliers to lower the collateral for suppliers operating on WGL’s system for the winter season.  Click here for WGL’s initial filing and here for the supplemental filing that proposed an amendment to the WGL tariff.  This is a significant reduction that will help retail suppliers continue to bring competitive natural gas products and services to WGL’s Maryland customers.

A little background:  retail suppliers must post collateral twice per year (winter and summer) to operate on WGL’s system.  The purpose of the collateral is to protect WGL in the event a supplier defaults and does not deliver gas to WGL, and WGL is forced to buy gas on the wholesale market. WGL calculates each supplier’s collateral based on a formula in the tariff.  If a supplier does not post by October 15, it cannot continue to enroll new customers. If a supplier does not post by October 31, it will be booted out of the WGL choice program.

Without getting into a whole lot of boring detail here about the formula used to calculate collateral, I will just say that one of the biggest factors in the formula is the use of Transco Zone 6 Non-New York prices from the past three years.  The problem with employing the formula for this winter season was that last year’s extremely and unusually cold weather caused the Transco Z6 NNY prices to increase dramatically on certain days during the year.  Strict adherence to the tariff formula would have resulted in WGL collecting about $54 million in collateral this year as compared to about $4 million last year.  WGL recognized that $54 million in collateral is excessive.

The “new and improved” formula, which is in effect for this winter season only, reduces the Transco Z6 NNY price by eliminating every day during the past year when the price exceeded $20.00 per Dth.  That eliminated 13 days. Whereas the price last year was around $8.00 per Dth, it would have jumped to $25.21 this year.  Eliminating the 13 days brings the price back down into that $8.00 neighborhood.

How big of a deal is this?  Suppliers who posted $300,000 in collateral for last year’s winter season would have seen their collateral jump to between $2 million and $2.5 million, with no significant increase in customers or throughput. The only suppliers who would not have felt this pain would have been those who attained a certain credit rating from a ratings agency – something that most smaller suppliers have not attained.

Suppliers should be hearing from WGL in the next few days about their reduced collateral requirement.  Since most suppliers have already posted the larger amount, we suspect that they will be afforded a chance to amend their bonds or reduce their letters of credit, etc., to meet the new, lesser amount.

Finally, WGL and Maryland Commission Staff will monitor this year’s Transco Z6 NNY prices to see if last year really was an anomaly.  The Transco Z6 NNY price is actually an average of the past three years, so WGL would need to make a filing next year if last year’s prices continue to skew the formula and result in excessive collateral requirements.  Yes, that is right – the $25.21 is an average of the past three years’ prices, so you can imagine how high the 13 days were thatthrew the entire formula off-kilter.

GreeneHurlocker’s lawyers represented the Retail Energy Supply Association at the Maryland Public Service Commission with respect to this issue.

 

New Natural Gas Pipeline Announcement

Just Announced – On Tuesday, September 2, 2014, Dominion announced a joint venture with Duke Energy, Piedmont Natural Gas and AGL Resources to build a $5 billion natural gas pipeline that would stretch from West Virginia through southwest Virginia down to southern North Carolina. The proposed Atlantic Coast Pipeline would carry up to 1.5 billion cubic feet of natural gas per day, a tremendous throughput. Pending regulatory approvals from both FERC and state regulators, construction of the pipeline could begin in mid-2016, going into service as early as late 2018.

 

This project comes on the heels of EQT Corp. and NextEra Energy’s announcement in June 2014 that they plan to construct a 330-mile Mountain Valley Pipeline from West Virginia into southern Virginia.  The Mountain Valley Pipeline, pending regulatory approvals, is expected to be put into service sometime during the fourth quarter of 2018 and would provide at least 2 billion cubic feet of natural gas transmission capacity.

 

The Atlantic Coast Pipeline and Mountain Valley Pipeline would deliver natural gas to growing markets in Virginia and beyond, and would provide direct access to natural gas flowing from the Marcellus and Utica gas shale basins in West Virginia, Pennsylvania, and Ohio.

 

GreeneHurlocker works with many clients operating in areas that may be impacted by the construction and operation of the proposed pipeline. Please contact one of our energy lawyers if you have questions about the regulatory approvals or any other issues relating to this new pipeline.