MORGANTOWN – Hope Gas responded this week to criticisms leveled last week against its rate-hike proposal for its Pipeline Replacement and Expansion Program – PREP.
Daniel Truman, director of Construction and Project Management for Hope Gas, submitted rebuttal testimony to the Public Service Commission in response to testimony filed by several parties last week.
Hope has proposed about $30 million in investment for pipeline acquired from Equitrans and another $3 million for pipeline acquired from Dominion. Hope’s gathering facilities total about 2,987 miles of pipeline, he said.
Ronald G. Stalnaker, president of Stalnaker Energy, had testified to the PSC on behalf of the Producers Issues Committee of the Gas and Oil Association of WV. He said Hope’s projected costs to replace some existing lines are excessive. Hope estimates costs at $133.64 to $260.78 per foot. But Stalnaker Energy recently installed new plastic line at $4.61 per foot. Hope’s lowest estimate is 28 times higher than Stalnaker’s cost.
Truman responds that Stalnaker to when the line was installed and what industry or other legal or best practice standards they were required to adhere to, or to construction details. Hope must adhere to a multitude of industry standards and prudent industry practices.
“In other words, his testimony and examples here are of no assistance to Hope or the commission,” Truman said.
It doesn’t make sense, he said, to compare installation of 1,200 feet of 1.25-inch pipe with installation of 5- to 9-inch pipe in far different conditions.
“Hope has no interest in hiring producers to conduct pipeline repair and replacement of its gathering system pipelines,” he said. “Hope hires contractors who have the requisite experience, expertise, qualifications, employ qualified personnel, maintain adequate insurance coverage, and other licensing requirements.”
C.I, McKown II, president and owner of C.I. McKown & Son, also testified on behalf of the committee. He told the PSC that Hope’s proposed PREP rate hikes plus proposed hikes for producers – Production Gathering and Aggregation Services, PGAS – in its separate base rate case could affect producers who feed gas into Hope’s system.
If the PSC approves the hikes in the base rate case, he said, “There would be wide-spread shutting in of wells, and many producers would go out of business altogether.” He said Hope’s gathering PREP program should not be changed until the effects of a separate base rate case are clear, and the rates in that case should be far lower than what Hope is proposing. Hope’s current PREP surcharge for producers should remain unchanged.
Truman responded that McKown’s background and experience do not include constructing, operating or maintaining a large-scale gathering system.
And while McKown proposes that Hope focus on leak repair and only replace lines where long stretches are leaking, Truman says McKown’s ideas are good in certain instances but different approaches are needed in other situations.
PREP program charges are authorized in state code for “cost recovery of projects to replace, upgrade, and expand natural gas utility infrastructure that are deemed to be just and reasonable and in the public interest.”
Hope’s proposed residential PREP rate increases are: existing Hope customers, $2.06 (2.4%); former Peoples Gas, $2.03 (2.58%); former Southern Public Service Company, $1.62 (2.92%); former Standard/Bazzle Gas, $1.80 ( 2.6%); former Consumers Gas, $1.70 (2.45%).
PSC staff has proposed smaller hikes: existing Hope customers, $1.46 (1.70%); former Peoples Gas, $1.44 (1.83%); former Southern Public Service Company, $1.15 (2.07%); former Standard/Bazzle Gas, $1.28 (1.85%); former Consumers Gas, $1.20 (1.74%).
Hope’s separate base rate case proposes various hikes aimed at achieving consistent rates for all existing customers and customers previously served by one of the six companies it acquired in 2023 and 2024. The proposed monthly rate increase would range from $21.10 to $33.74.
