Bay State Gas Rate Hike OK’D; Firm Had Sought 4.2% Boost, but Settles for 2.3%

By Andrew LaVallee; ANDREW LaVALLEE

The Patriot Ledger

State regulators approved a 2.3 percent rate increase for Bay State Gas Co. yesterday, giving the natural gas company only about half of the rate increase it had sought.

The Westboro-based company said the rate hike, which takes effect today, will add only about $2.25 to the average monthly bill for homes that rely on natural gas for heat.

But the rate decision follows a much larger price increase – known as a “cost of gas adjustment” – last month that reflected the rising costs of natural gas on the wholesale market. The average monthly gas bill this winter for Bay State Gas heating customers will be nearly $300, up from an average of $226 a year ago.

Bay State Gas had requested a 4.2 percent rate increase in its efforts to boost revenues by about $22 million, said Paul Afonso, chairman of the state Department of Telecommunications and Energy.

“What they ask for is not necessarily what they need,” Afonso said.

He said the department reduced the amount of money that Bay State could return as profits to its parent company; that change accounted for a large part of the reduction. The company also requested an increase to cover the costs of a computer system, which the state agency denied.

“There wasn’t due diligence in the quality of the computer system,” Afonso said. “Let shareholders pick that up.”

Bay State Gas, in a statement released last night, said its typical residential heating customer’s monthly bill will increase by about 1.5 percent, or about $2.25. Commercial and industrial customers, however, will see monthly increases that range between 2 and 3.5 percent.

Natural gas companies usually adjust the portions of their bills that reflect the wholesale cost of gas every six months, and the major ones that serve Massachusetts all sought significant increases from the state to cover their wholesale costs this fall. But Bay State Gas said this marks the first time since 1992 that it has received what’s known as a “base rate” increase to cover its costs of running and maintaining its distribution system and providing income for its parent company, Indiana-based NiSource.

Attorney General Tom Reilly was opposed to the latest rate increase, and had argued instead for a $20 million rollback. “Once again, the DTE has sided with the utility industry over ratepayers who are being absolutely squeezed by the high cost of energy,” Reilly said in a prepared statement. “Now is not the time to hit ratepayers with yet another multi-million dollar increase.”

Afonso also said that his agency would investigate staffing levels at Bay State to ensure the company’s operations are appropriately staffed. The Brockton-based Utility Workers Union of America Local 273 has accused the company of presiding over a drop in safety and customer service standards since its 1998 acquisition by NiSource.

Local 273 President Kevin Friary said he was disappointed that the department did not ensure Bay State would not make further job cuts, but he was encouraged by the proposed staffing investigation. The union represents about 200 Bay State workers.

Bay State Gas provides natural gas service for about 285,000 customers, including people in Brockton, Canton, Duxbury, Hanover, Hanson, Holbrook, Marshfield, Norwell, Pembroke, Randolph, Scituate, Sharon and Stoughton.

Andrew LaVallee may be reached at alavallee@ledger.com.