Delmarva Power wants to raise rates on its natural gas customers in Delaware to recover costs from a series of infrastructure improvements made in the past two years.
Delmarva Power’s proposed increase would raise the monthly bill of the average residential heating customer in winter months by about $11. The sought increase would raise Delmarva Power’s total natural gas distribution by about $19.5 million, or 20%.
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Delmarva Power last filed a distribution rate increase request for natural gas in February 2020. At that time, Delmarva Power wanted a $14.6 million increase. In January 2021, the Public Service Commission approved a $6.7 million increase.
The cost increases proposed earlier this year will go into effect on Aug. 14 but are subject to a refund based on the Public Service Commission’s later decision. With the increase, Delmarva Power projects the average customer will pay around $103 per month in the winter.
To raise distribution rates utilities must go through the Public Service Commission, a regulatory body for public utilities. Over several months, the utility’s request is scrutinized by Delaware’s Public Advocate division before a series of settlement conferences. The sides often work toward a compromise between the utility’s and public advocate’s positions decided by the commission.
Delmarva Power could also institute another increase on Nov. 1 by filing a change to its natural gas supply rates. The average customer began paying an additional $3 per month on April 1 due to the previous supply cost adjustment.
Delaware Public Advocate Drew Slater said there could be a decision on Delmarva Power’s distribution rate request in the fourth quarter of this year, but it’s dependent on scheduling.
Slater expects Delmarva Power to make a similar request for electric customers. The utility is required to issue a 60-day notice before filing a request, which it has not yet done. In previous rounds, Delmarva Power has filed the rate increase requests together.
In its application, Delmarva Power says the natural gas rate increase is necessary to recoup costs to continue to “provide safe and reliable service.” They say they’ve made investments since filing the previous rate increase request to “maintain system reliability,” “enhance safety,” and comply with state and federal policies.
Most of those improvements have come in the form of pipe replacements. In 2020 and 2021, the company retired nearly 23 miles of plastic, steel and cast and ductile iron mains (it has about 2,100 gas main miles in northern Delaware). Delmarva Power says it spent almost $110 million on its “customer safety and reliability” improvements in 2020 and 2021.
The company projects that all of their cast iron mains will need to be rehabilitated or replaced in the next six years. It has budgeted almost $365 million for improvements from 2022 to 2026.
On the electric side, Delmarva Power has budgeted $430 million for improvements over the same five-year period.
“The rate of the capital spend is going to continue to lead to rate increases,” Slater said. “Unless we get their spending under control.”
Delmarva Power has about 140,000 natural gas customers in northern Delaware.
Contact Brandon Holveck at bholveck@delawareonline.com. Follow him on Twitter @holveck_brandon.
