BG&E fights plan to pass along pipeline costs

February 23, 1993|By Ross Hetrick | Ross Hetrick,Staff Writer

The Baltimore Gas and Electric Co. and about nine other utilities have mounted a concerted effort to persuade federal regulators to prevent Columbia Gas Transmission Corp. from passing along costs that could add $9.42 to monthly gas bills in Maryland, according to BG&E.

The campaign so far has consisted of urging congressmen and senators from Maryland and East Coast states to write letters to the Federal Energy Regulatory Commission (FERC). And as an outgrowth, they are also suggesting that more consumer-oriented appointments be made to the five-person FERC board, which now has four open seats.

"If we have commissioners who have more consumer focus they might be more inclined to rule that the deferment makes sense," said Robert S. Fleishman, BG&E's associate general counsel.

The issue revolves around an order issued by the FERC last April and involves Columbia Gas Transmission of Wilmington, Del., a large gas pipeline company that has been operating under Chapter 11 bankruptcy protection since July 31, 1991.

The FERC order comes as part of a mandate requiring pipeline companies to change from wholesalers to transporters of gas. Order 636 required that process to be complete by the end of 1993. To complete that change, the order also allowed the pipeline companies to pass along the cost to its customers -- the utility companies -- of terminating long-term gas contracts they agreed to in the late 1970s and early 1980s.

Passing along terminating costs has presented a special problem for Columbia, according to Mr. Fleishman. Because it is in Chapter 11, more costs than necessary might be passed along to the utilities, and ultimately to consumers in 13 East FTC Coast states. About 20 percent of the cost would be paid by customers in Maryland, Virginia and Washington.

To avoid possible overcharges, BG&E and other utilities have asked the FERC to defer applying Order 636 until after Columbia emerges from bankruptcy protection. But in December, and again on Feb. 10, FERC turned down the request.

Columbia is opposed to the deferment, saying it would put them at a competitive disadvantage with other gas companies.

The company also says consumers would be protected by the FERC, which would determine the charges.

The precise amount consumers would pay is unknown, but Mr. Fleishman pointed to a $1 billion liability that Columbia told the Securities and Exchange Commission it has for past gas contracts.

If the entire $1 billion was passed on to utilities, BG&E would be responsible for $70 million because it buys about 7 percent of the gas carried on Columbia's pipeline. This would translate into an extra $113 for the average natural gas customer, or $9.42 a month, if it was spread over an entire year.

The charge might be higher if the liability is found to be higher, Mr. Fleishman said.

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