ERIE — National Fuel wants to cut rates for all its natural gas customers in Pennsylvania through a one-time bill credit plus a rate reduction for the next five years.
A total of $50 million would be returned to active residential, commercial and industrial customers during the next five years, according to Brian Welsch, National Fuel Gas Distribution Corp.'s general manager for rates and regulatory affairs.
National Fuel has filed a request for the reductions with the Pennsylvania Public Utility Commission, which if approved by the PUC, it would give a one-time bill credit to current active customers plus a reduction in base delivery rates for five years. It all would be effective starting Oct. 1.
Residential customers would get a one-time bill credit of $100 and a reduction in base delivery rates saving $53 a year, or about $4.42 a month for the average residential customer. The reduction would be in effect for five years
Commercial customers would get a one-time bill credit of $250 and a reduction in base delivery rates of $106 a year, or about $8.84 a month for the average commercial customer.
Industrial customers also would be eligible for a one-time bill credit and base delivery rate reduction, Welsch said.
The base delivery rate is the cost of delivering natural gas to a customer. It's a separate charge from the purchased gas cost rate, which is the rate National Fuel pays for natural gas from its suppliers.
Under PUC regulations, natural gas utilities can’t make a profit on the cost of gas they buy from suppliers. The gas costs must be passed on to consumers on a dollar-for-dollar basis and it's adjusted up or down quarterly.
The delivery rate and the gas cost rate make up the bulk of a customer's bill.
National Fuel has filed for the massive reduction because it no longer needs to collect amounts from customers previously authorized by the PUC to cover future healthcare benefits for union and supervisory employees upon their retirement.
"In 2006, the last time we sought a delivery rate increase in Pennsylvania, we projected we needed to collect $7.7 million a year to cover those future health care costs for those future retirees," Welsch said.
The demographics of the pool of retirees and current workers has changed since 2006 as National Fuel had closed that post-employment health care benefits program to then-current and any future retirees after 2002, Welsch said.
"Why were in a position to give the money back to customers is we invested the $7.7 million needed each year to cover the retiree health care costs. Those investments have done very well since 2006," he said. "We've also been able to manager our health care costs and our costs are lower than the 2006 projection."
While the savings would be part of a future rate proceeding, National Fuel is seeking approval from the PUC to do so now to deliver savings for all customers in advance of the coming winter heating season, Welsch said.
"The reason we filed is a lot of people still are struggling with the impact financially of the pandemic," Welsch said.
Since the time of National Fuel's last base rate proceeding in 2006, the average residential customer bill has decreased by approximately 50 percent as a result of cost control by the company and access to affordable natural gas supplies, Welsch said.
Residential customer bills have declined from an all-time high during 2008-2009, when annual bills averaged $1,618, to an average annual residential bill of $859 during 2020-2021.
According to National Fuel, an analysis of data recently published by the U.S. Energy Information Administration found National Fuel had the lowest residential gas rates among gas utilities in Pennsylvania and ranked second lowest in the northeastern U.S.
Keith Gushard can be reached at (814) 724-6370 or by email at firstname.lastname@example.org.