Washington Gas’s new five-year pipe replacement plan should be rejected, OPC tells Public Service Commission
BALTIMORE – Washington Gas’s proposed five-year plan for replacing gas infrastructure should be denied as unreasonable and imprudent, the Office of People’s Counsel said in a filing yesterday. The utility’s proposal does not account for changing technologies and climate policies, but rather presents the same approach the utility has used for more than ten years—all while continuing to operate over budget and underperforming, OPC said.
“Washington Gas’s proposed plan unfortunately follows the same old path the utility has been following for a decade,” People’s Counsel David S. Lapp said. “But times are changing, and Washington Gas’s strategies for addressing its legacy pipes should change too. The company’s proposal makes no attempt to address the evolution in State policy and the changing long-term economic prospects of the gas industry.”
OPC’s filing was made in response to Washington Gas’s third five-year plan to take advantage of the financial rewards the legislature has provided utilities for replacing gas infrastructure under the Strategic Infrastructure Development and Enhancement (STRIDE) law. To obtain those rewards, the STRIDE law allows utilities to file five-year plans for Commission approval based on whether the plans are “reasonable and prudent.” The utility’s second five-year plan ends this year.
In its filing, OPC documented Washington Gas’s poor performance implementing its first two STRIDE plans. The utility was overbudget, spending almost $600 million, but still managed to complete only about 80 percent of the work it proposed on those plans. The utility plans to complete the remaining work at an additional cost to customers.
Despite the utility’s poor performance in its first ten years of STRIDE, the utility is proposing a substantial increase in its budget for its third five-year plan, totaling $495 million—$144.5 million more than the Commission approved for Washington Gas’s second STRIDE plan. Further, reflecting its slow progress, the utility’s proposal says it now will not complete its overall STRIDE work until 2043, eight years longer than it had previously projected. The utility’s proposed budget for the five-year plan would cost customers more than $1.5 billion after accounting for its return for investors. The spending would be recovered in customer rates for multiple decades.
Washington Gas should be evaluating alternatives to its proposed infrastructure replacement work, OPC’s filing said, delaying the most expensive projects absent an urgent safety need while planning for the economic and policy changes that are sure to diminish the long-term role of gas in the State.
“The investors of Washington Gas’s owner—Canadian-based AltaGas—have been receiving the financial benefits of the STRIDE law, but customers have been shorted on their intended benefits,” Lapp said. “Any future STRIDE plan should focus on managing the highest system risks, and infrastructure replacement work should be conditioned on an evaluation of all options, including maintenance and retirement.”
The Maryland Office of People’s Counsel is an independent state agency that represents Maryland’s residential consumers of electric, natural gas, telecommunications, private water and certain transportation matters before the Public Service Commission, federal regulatory agencies and the courts.
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