STATEMENT FROM CARL. M. CARLOTTI, PRESIDENT OF NATIONAL FUEL GAS
DISTRIBUTION CORPORATION ON THE NEW YORK STATE PUBLIC SERVICE COMMISSION
DELIVERY RATE INCREASE DECISION
(April 20, 2017) WILLIAMSVILLE, N.Y. -- “This is the first
delivery rate increase sought by our Utility segment in almost a decade. While
prices for goods and services have risen generally over this period, the
Utility has held delivery rates steady, without increase, since 2008. Coupled
with the drop in natural gas prices, this has significantly benefitted our
Utility customers without compromising our high standards for safety and
customer service. In 2008, the average annual residential bill for our
residential customers, including gas costs, was $1,685. By way of comparison,
the average annual residential bill last year, 8 years later, was only $703,
declining 58 percent over that period. National Fuel has the lowest residential
gas delivery rates in New York state.
It is rare for a major utility to be able to operate with no
rate increase for such an unusually long time. Yet during the same time frame,
the Company has provided levels of safety and customer service that are
exemplary, while affording robust low-income programs that benefitted a
significant number of our customers.
The New York State Public Service Commission’s decision
today approves a total delivery rate increase of $5.9 million. As a result, the
average National Fuel residential customer increase (for those on budget
billing and assuming normal weather) will be approximately $1.10 per month,
totaling $13.21 for the entire year. The Commission’s decision directs the
increase to go into effect on May 1, 2017.
According to two recent New York State Public Service
Commission audits of the Company’s operations, it was demonstrated that
National Fuel is a well-managed, cost-conscious, goal-driven and
safety-oriented utility that consistently provides superior service and
reliability for its customers. Additional audit findings determined that the
Company’s productivity and efficiency far exceeded that of its utility peers.
National Fuel’s efficiency achievements are evidenced by its
ability to effectively manage Operating & Maintenance (O & M) costs.
When compared to O & M costs of two decades ago, we have shown a reduction
of more than $9.8 million. If inflation is considered, the relevant O & M
expense level would have been more than $74 million greater than the level
projected for the coming rate year. Cost control efforts were accomplished
while continuing to ensure high levels of service and safety, as National Fuel
leads the state in many service and safety metrics.
National Fuel has invested more than $100 million in its New
York utility system over the past year for system enhancements and
modernization, to provide homes and businesses in WNY with reliable delivery of
low cost, clean burning natural gas. National Fuel’s total investments in its
New York utility system is more than $400 million since 2008. The NYS PSC is
required by regulation, to ensure that all publicly-owned utilities are
entitled to receive ‘just and reasonable’ compensation in the form of a fair
return on equity (ROE) to compensate for the substantial investments needed to
provide such service to customers.
While the Company appreciates the Commission’s thoughtful
approach to a variety of complex issues presented in this case, certain aspects
of today’s decision are problematic. By using an unprecedented low Return on
Equity (ROE) in determining our rates in this case, the NYS PSC is effectively stating
that utility infrastructure investments in this region of the state should not
be considered as valuable as similar investments by other utilities across the
rest of the state and country. The imposed 8.7 percent ROE is the lowest in the
state while all the Company’s utility peers across NYS have been awarded at
least 9.0 percent, and ROEs nationally are 60 to 100 basis points higher. As a
leader in utility safety and customer service, with gas costs and rates among
the lowest across New York, and with robust low-income programs to help its
payment-challenged customers, we believe the NYS PSC should fairly recognize
the truly efficient utilities that provide exemplary safety and customer
service performance with market-based ROEs. The Commission’s decision to
establish a 42.9 percent equity ratio that is inconsistent with the NYS PSC’s
standard 48 percent equity ratio uniformly adopted for other gas and electric
utilities in the state is also problematic.
We will comply with the Commission’s Order and the new rates
will be effective on May 1, 2017. We remain committed to strong customer
service, and the safe, reliable delivery of natural gas to our valued 528,000
Western New York utility customers.”
