Switch to gas tougher to do

BGE requires deposits from 40%-50% in area before it puts in main

A more profitable policy

July 18, 1999|By Robert Nusgart | Robert Nusgart,SUN REAL ESTATE EDITOR

For the better part of the decade, Baltimore Gas and Electric Co. has been trying to get homeowners to switch from oil, propane or electric heat to natural gas.

If a neighborhood met BGE's criteria and there was moderate interest from homeowners, gas mains would be extended and residents would have to pay a flat fee to bring a line to the home and purchase a gas appliance within a year of being connected. No deposit was required for the conversion.

Even though 11,400 homeowners converted to gas since 1994, many more, who once expressed interest, decided against gas conversion.

Now BGE has toughened its policy, requiring 40 percent to 50 percent of a neighborhood to put down deposits for conversions before the utility will install a gas main.

Doreen Hartley, BGE's director of residential gas business development, remembers that under the old policy the utility practically was asking, "If we build it, will they come?" Apparently they didn't. At least not as quickly as BGE had envisioned, based on the attractiveness of natural gas, which is generally a cheaper fuel. "We're still going to make gas available to customers; however, we are going to change things around from, `If we build it, will they come?' to `We can't build it unless they come,' Hartley said.

"We were suffering from two things: We had a profitability problem and a customer satisfaction problem," Hartley said, adding that the program had not lost money, it just wasn't as profitable as BGE had expected.

"We took a look at conversions and found that people were not hooking up at the rates in which we thought," Hartley said.

Hartley said the company had expected 22 percent of homeowners to convert to natural gas in the first year a main was run into their community. By the fifth year, the BGE hoped to have converted 70 percent of a neighborhood. However, the figures were 11 percent in the first year and 60 percent by year five.

"So what looked like very good investments at the time turned out not to be such great investments for us," she said. "In order for us to continue to offer gas conversions to customers, we knew that it had to be somewhat of a profitable investment for us as a company."

Gone are the days when -- if feasible -- BGE would show up in a neighborhood to install gas mains and charge a flat fee of $600 to run a line to the home.

But also gone is the "no-can-do" response to customers who wanted gas but were unable to convert because they didn't meet the utility's criteria for lot size, neighborhood density and distance to a gas main.

Now if a neighborhood wants to have BGE install gas lines, the company will ask residents to put up their share of the cost.

According to Hartley, BGE will not extend gas mains unless it gets a commitment from 40 percent to 50 percent of the people in a community who would be willing to put down a deposit.

But the company will give residents of communities that BGE previously rejected a price per home for a neighborhood gas main and for the household connection.

"Right now we are not saying no to customers who are living on acre lots or 2-acre lots," Hartley said. "We are saying, `Yes we can, however, your price may be higher than a customer living on a quarter-acre lot.'

"There is a big difference, though, in being interested in natural gas and physically connecting to that pipe. Now customers pay for that gas conversion in advance of construction."

She added that BGE will organize a community meeting once it has heard from 25 percent of the residents. If the residents choose to move forward, BGE will "make contracts available to customers and leave the offer open for about 60 to 90 days," Hartley said.

If participation doesn't hit the required 40 percent to 50 percent level within 90 days, the window closes.

Since the beginning of the year, the cost of a new gas main and connection fees per home have ranged from $600 to $1,500, Hartley said. But, with BGE scheduling communities that have fewer homes and longer distances to run lines, the conversion price can be as high as $4,100 per home.

"It really has aided in keeping BGE out of the business of speculating whether a community would be a good conversion prospect or not. Now the community demonstrates that to us," Hartley said, noting that Ashton Hills, an all-electric subdivision in Owings Mills, was the first to be affected by the new policy, which went into effect in January.

Harry Fox, a 10-year resident of Ashton Hills, recalled the conversion process.

"A couple of times during the years that [my family] had been there, I would call BGE and ask what were the chances of us converting [to gas]. The impression that I always got was, `Never in your lifetime.' "

But when an adjacent neighborhood with quarter-acre lots was approved for gas conversion two years ago for a $400 flat fee per house, he thought his neighborhood was next. He was wrong.

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