Some Virginia retail natural gas customers will not see gas production costs included in their rates, notwithstanding a recent state law allowing it. On November 6, 2015, the Virginia State Corporation Commission, in Case No. PUE-2015-00055, denied an application by Washington Gas Light Company (WGL) to include natural gas production costs in ratepayers’ bills through a natural gas supply investment plan. WGL had proposed to invest more than $120 million in natural gas production and wells located in Pennsylvania, asserting that the investment would secure lower-cost supplies of natural gas over a 20-year period. Although WGL submitted studies demonstrating the potential cost savings, the proposal was opposed by the state’s Division of Consumer Counsel, which argued that WGL’s proposal could increase ratepayer costs by about $51 million. Ultimately, the Commission denied the application, finding that it would transfer too much risk from WGL to its customers, and noting that some cost analyses had shown little or no benefits for ratepayers.
WGL’s application was the first by a utility under Virginia’s 2014 law that allows utilities to seek Commission approval to recover natural gas supply investment costs from ratepayers while providing reasonably anticipated benefits to customers. The investments, however, cannot exceed 25 percent of the utility’s annual firm sales demand by volume. WGL serves over one million customers in Virginia, Maryland and the District of Columbia.