(The Center Square) – A natural gas program designed to save taxpayers hundreds of thousands of dollars each year has yet to materialize in Connecticut, and is instead leaving homeowners and businesses who converted to it facing an expensive winter.
Former Gov. Daniel P. Malloy's Comprehensive Energy Strategy included a large-scale natural gas expansion, in part to bolster the economy and in part to reduce high energy prices. By 2020, 300,000 homes were to be connected to natural gas.
"At a high-level, the program assumed that the economics of converting from fuel oil to natural gas would drive a substantial number of conversions, with some additional assistance through this program," Taren O'Connor, director of Legislation, Regulations and Communications at Connecticut Public Utilities Regulatory Authority, told The Center Square. "However, the relative prices of fuel oil and natural gas through the life of this program have proven more price competitive, leading to fewer conversions than projected through the CES and at the outset of the program."
Chris Herb, president of the Connecticut Energy Marketers Association, told The Center Square the plan was built on a faulty premise that natural gas prices would remain low for decades.
"The plan was supposed to convert 300,000 customers and build 900 miles of new pipelines which is funded by a 30% surcharge on gas customers," Herb said. "When you calculate the cost to convert to natural gas (between $7,000 and $11,000), include the 30% conversion surcharge, and increasing cost of gas, this has been a complete fleecing of utility ratepayers. At the end of the day, DEEP was wrong when it came to the economics and on the environmental benefits of natural gas."
With natural gas prices currently soaring, those homes and businesses that have made the switch are looking at a costly winter season.
"Gas rates rose from September across the board for all three utilities, due to increased international commodity prices," Herb said. "PURA officials warn of more increases heading into the winter, so I think it is safe to say that natural gas customers can expect a much more expensive heating season than they have seen in years."
Herb said that conservation is the only proven way to cut costs and reduce emissions.
"DEEP and the legislature cannot control global commodity prices, and they made a bet with ratepayers' money that the low prices that were present in 2013 would remain like that for a very long time and they were dead wrong," Herb said. "Consumers trusted DEEP and they ended being misled into making a bad decision to switch to gas that ended up costing them more in the long run."
Even though the CT Public Utility Regulatory Authority (PURA) ultimately set the price of gas that homeowners pay, they are required to calculate the increase in the cost of the fuel. Herb said even though they set the price, they have no way to stop it from increasing.
"At DEEP insistence, an important discounting mechanism was taken away from PURA when they dedicated non-firm margin which was used to discount the cost of natural gas, was given to the utilities to build new pipelines," Herb said. "This was a fundamental flaw with the expansion plan that hurt consumers."