DATE: Saturday, May 10, 1997                TAG: 9705100341

SECTION: BUSINESS                PAGE: D1   EDITION: FINAL 

SOURCE: STAFF REPORT 

                                            LENGTH:   49 lines

SOME CUSTOMERS COULD PICK GAS SUPPLIER UNDER NEW PLAN

Commonwealth Gas Services became the first utility in the state to file a customer choice proposal with the State Corporation Commission Friday.

The proposal, which calls for a two-year pilot program, would let about 26,000 of Commonwealth Gas' residential and small commercial customers in Northern Virginia choose among several gas suppliers.

Consumers would still pay Commonwealth for piping gas into their homes, but would pay one of perhaps several companies for the gas itself.

Those companies could sell customers gas in yearlong contracts, by the season or based on market rates at the time.

For customers enrolled in the pilot program, that could mean savings.

The utility said it would not penalize customers who switched suppliers with a so-called ``transition charge.''

Customers could enroll in the program as early as September.

Commonwealth also filed for a $12.9 million, performance-based rate increase over the next three years.

If the increase is approved by the SCC, a residential customer using 7,000 cubic feet of natural gas a month will see his or her bill increase from $61.78 to $66.07, or about 7 percent, during the first year.

The increase would take effect in October, and subsequent increases the next two years would be ``much smaller,'' said company spokesman Mike Anderson.

The increase would pay to upgrade the company's aging steel pipelines with modern plastic ones.

The caveat for Commonwealth is that it must decrease the number of leaks in its pipelines statewide by 10 percent and reduce operating and maintenance costs. If not, customers would be eligible for a partial rebate on the higher rates they paid.

The company is taking advantage of a law passed by the General Assembly last year that allows more flexibility in the way utilities are regulated.

``The traditional ratemaking process is expensive for the regulator, the regulated and the consumer,'' said Commonwealth Gas CEO Thomas E. Harris.

Nationwide, 17 local gas distribution companies in 10 states have opened their pipelines to competing gas marketers to solicit their residential customers, according to the American Gas Association.

Bigger, industrial gas customers have enjoyed such choice for years, including options for transportation, storage and other services, according to the AGA.

Commonwealth Gas is a local distribution subsidiary of Ohio-based Columbia Gas and serves about 160,000 Virginia customers, including 40,000 in Hampton Roads.

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