N.Y. ESCO: Give Utilities 20% Rate of Return for Expanding Natural Gas Lines, Service

A New York ESCO has proposed that the New York PSC grant local distribution companies expanding natural gas service a rate of return of 20% for new gas plant associated with the expansion of natural gas service to new customers.

Specifically, Empire Natural Gas Corporation said that, "[t]here are many important communities in upstate New York who do not have natural gas as an option for a fuel choice."

"Utilities have the option to file for new franchise areas. However, this has proven to be a very lengthy process to say the least and has been met with limited success," Empire Natural Gas Corporation said.

"We propose that in order to alleviate this current situation, the New York Public Service Commission authorizes all utilities to increase the rate of return to twenty percent for at least 20 years on any New Gas Plant required to serve new customers effective April 1, 2013," Empire Natural Gas Corporation said.

"We propose that New Gas Plant be defined as follows: Gas Mains (Transmission and Distribution), Gas Services, Regulating & Compression Stations, and Compressed Natural Gas Fueling Stations," Empire Natural Gas Corporation said.

Additionally, Empire Natural Gas Corporation said that in regard to new gas service, the PSC should revise the free installation to extend to the first 300 feet, from 100 feet.

"New York State must give the utilities more incentive to expand their natural gas systems. The higher rate of return is more than justified since there is greater risk extending to new communities. Once their gas system is expanded, it may take several years before they get customers to spend the money to convert to natural gas and realize the full benefits. The certainty of earning a twenty percent rate of return for twenty years should help relieve some of the risk concerns," Empire Natural Gas Corporation said.

"The benefits for adopting such a policy would be to reduce the imports of foreign oil and source locally produced gas. This would have a very positive impact on our federal and state budgets. In addition the policy would create construction jobs in New York State. Ultimately the people of New York State would be the big winners for this new policy for natural gas expansion," Empire Natural Gas Corporation said.

Case 12-G-0297