Gas Transportation Rates

The Maryland Public Service Commission (PSC) announced that it is challenging the rate schedules that Eastern Shore Natural Gas Company (ESNG) filed earlier this year with the Federal Energy Regulatory Commission (FERC).

The state commission reported that, along with the Maryland Office of People's Counsel, it has formally intervened as a party to oppose ESNG's rate proposal. It added that it is participating in settlement hearings before FERC to advocate for lower rates that are allocated more uniformly among all of ESNG's customers.

According to the PSC, the new rates proposed by ESNG are unjust and unreasonable. The state commission expressed particular concern about the company's rate design, which the PSC said would unfairly burden gas transportation customers at the southern end of the company's gas transmission pipeline system.

In explaining its position, the state commission said that ESNG had put forth a zoned rate structure that imposes "drastically different amounts of the proposed rate increase" on different gas transportation customers, depending on which of the five zones a customer is assigned to. Besides questioning the extent of the increase requested and the zone-based rate design, the PSC also protested the 13.75% rate of return on equity (ROE) that ESNG has asked FERC to approve. The state commission characterized that ROE as "far exceeding" the equity returns that have been authorized in recent state utility rate case orders.

Pursuant to FERC rules, the PSC acknowledged that ESNG's proposed rates have already gone into effect. However, it said, the rates are subject to refund if the settlement participants reach consensus on lower rates or FERC overturns the rate design.