Summit, towns defend natural gas rate hike

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CUMBERLAND — Summit Natural Gas of Maine is proposing a rate increase of more than 150 percent starting Oct. 1.

But the utility says the new rate will still be lower than what consumers were charged when it entered the market.

Summit is asking for a hike from 26.3 cents per therm to 66.5 cents per therm. The company is required by the Maine Public Utilities Commission to adjust the cost of gas each year, and the rate is based on variables including market forecasts, Summit spokeswoman Lizzy Reinholt said in an interview Sept. 9.

Summit’s price per therm – a unit of heat by which natural gas is measured – was 74.86 cents in October 2013, and 87.73 cents in October 2014, according to Reinholt.

“We’re not allowed to make a profit off the cost of gas,” Reinholt said.”… Part-way through the year, if we realize that we’ve been overcharging, because demand is down or what have you, we do another adjustment to make sure that we pass that savings on to customers so that we aren’t turning a profit.”

Customers paid 83 cents per therm last fall and early winter, Reinhold said – 25 percent more than the latest increase. She noted that “unseasonably warm temperatures and other variables” caused Summit to make a mid-season adjustment down to 26.3 cents, but said the company made it clear to customers that the reduced cost was temporary, and that it would change again in October.

A typical customer, using 701 therms, paid $1,204 at 83 cents per therm during last winter’s heating season, while that same customer – burning the same amount during the same time – would pay $1,084 at 66 cents, according to Reinholt.

Gas bills include two components: distribution and commodity, the latter of which is changing in this case. The PUC sets the distribution fee, currently 87 cents per therm, Reinholt said. The distribution and commodity fees added together make up the total cost per therm.

That cost, multiplied by the number of therms used, determines what the consumer pays, plus a facility charge and state tax.

Unitil, another natural gas provider in southern Maine, has a current gas charge for residential heat of 41.95 cents, according to its website – or nearly 25 cents less than Summit’s proposed new rate.

But spokesman Alex O’Meara said Unitil is also requesting a gas cost increase from the PUC – to 73 cents for the winter season, or about 6 1/2 cents more than Summit.

“At Summit we always strive for a predictable and reliable pricing pattern,” Summit’s Reinholt said. “(But) there are always variables outside of our control, such as weather or natural gas markets that can cause some fluctuation. If there is another mid-season price change this winter we will notify all our customers to ensure they are aware of the change.”

The PUC’s decision on the change is expected Oct. 4. If approved, the adjustment would probably be retroactive to Oct. 1. Propane and oil dealers, who exist in a competitive marketplace are not public utilities, do not require PUC approval for price changes.

The PUC as of Monday morning logged nine public comments about the increase on the proposal’s case page.

“I think it’s outrageous the price increases on natural gas,” Anne Hyland of Falmouth wrote. “I should have stayed with oil! Every time I turn around the price is increased. Is there anything we can do about this?”

“This rate increase is hard to understand,” said Allen Browne of Falmouth. “We were led to believe the original rate was reasonable and would then vary reasonably. … I hope there will be transparency as to why the increase and where this money is going. I encourage the commission to carefully consider whether this should be approved.”

Butler Carmichael of Falmouth added, “From a consumer perspective, this proposed rate does not align with historic annual increases and for those of us who trusted the lower heating cost promise, we are now being blindsided with this increase. This should be considered in The Commission’s analysis of Summit’s overall service quality to the customer.”

Summit’s operations were already underway in other parts of Maine when Summit broke ground in May 2014 at the Cumberland Fairgrounds to expand gas lines from a natural gas pipeline already running through the western part of Cumberland to Falmouth and Yarmouth.

Falmouth Town Manager Nathan Poore, who worked with Cumberland Town Manager Bill Shane and Yarmouth Town Manager Nat Tupper to bring Summit to the area, said in an interview Monday, said the proposed rate is “not much different” than it was when initial rates were estimated in 2013.

Since then, the price of oil has “has come down substantially,” Poore noted.

While there was discussion at one point about creating a “blended” rate – an average of seasonal rates – so that consumers would not experience cost fluctuations throughout the year, “the PUC didn’t want to handle it that way,” Poore said.

Referring to critics who suggest the hike is Summit’s attempt to recovery increased construction expenses, “this has nothing to do with the delivery charge, which would address any of those types of system costs,” Poore said.

A notice Summit sent to consumers offered them the opportunity to participate in the PUC proceeding in several ways, and offered the Maine Office of the Public Advocate, which represents the ratepayer, as another source of additional information.

Some consumers misunderstand that the increase in the price of gas is just a component of their overall bill, Public Advocate Tim Schneider said in an interview Monday.

“Because it’s only a subset of the overall bill, it’s a much smaller increase,” he noted.

The PUC “wanted to get money back in customers’ hands as soon as possible,” Schneider said, “… which just means that customers get some whiplash this time of year when the rates go back to what are effectively normal rates.”

Alex Lear can be reached at 781-3661 ext. 113 or alear@theforecaster.net. Follow him on Twitter: @learics.

Workers install Summit Natural Gas lines outside a Cumberland home Aug. 1. The utility is proposing an increase in the cost of gas next month of more 150 percent.

Summit Natural Gas of Maine is proposing an increase in the cost of gas next month of more 150 percent, but the new amount would actually be less than what consumers were charged earlier this year, according to the utility.

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A Maine native and Colby College graduate, Alex has been covering coastal communities since 2001, and currently handles Bath, Topsham, Cumberland, and North Yarmouth. He and his wife, Lauren, live in the Portland area, and Alex recently released his third album of original music.
  • Mainer1

    This is exactly why you don’t want Natural gas. You have only one supplier who will charge exorbitant rates because there is no competition. The consumer has no choice but to pay up and up they will.