Washington Gas Light Co. wants to get into the business of providing compressed natural gas (CNG) fueling to the general public, a move that has private industry and consumer advocates crying foul.
The utility has asked Maryland’s Public Service Commission for permission to open two of its CNG fueling stations to the public and build custom compression facilities as part of a pending request to increase its rates and generate about $30 million more in revenue. Its case is still pending.
At issue is a regulated utility moving into a market where service is already provided by third-party businesses, and asking ratepayers potentially to subsidize the move, Maryland People’s Counsel Paula Carmody said. Maryland’s Office of People’s Counsel opposes Washington Gas Light’s request, she said.
“Why should a regulated gas distribution company with a monopoly go into a competitive business?” Carmody asked. “This is a competitive business. It is not part of providing gas service to customers and customers should not be paying for it.”
Competitors in the CNG market fear that allowing Washington Gas Light into the game will give the regulated utility unfair advantage in an already competitive market.
Brett Barry, policy and regulatory adviser from Clean Energy, said Washington Gas Light is asking to overstep its authority. Clean Energy is a natural gas fuel provider for transportation customers.
“They’re able to utilize their monopoly powers to undercut the free market,” Barry said. “The utility is granted its monopoly status to fulfill gas distribution duties and not to start competing in nonregulated activities. It’s just inappropriate for them to be involved like this. It’s beyond the scope of their responsibility.”
Those who favor allowing Washington Gas Light to provide public CNG fueling — including the staff of the PSC — say it will foster greater use of natural gas vehicles.
Washington Gas Light did not return multiple requests for comment.
Fueling station providers like Clean Energy receive the fuel they sell from utilities like Washington Gas Light, Barry said. Clean Energy has over 450 fueling stations in the nation.
“Every time we have to put in a natural gas fueling station, we have to go to the utility and ask what the pressure and line is,” Barry said. “So we’re tipping them off to our potential customers and they can poach them from us.”
Carmody said there is a national trend of regulated utilities seeking to penetrate the CNG market and the National Association of State Utility Consumer Advocates has taken a stand against it.
The National Association passed a resolution in June against allowing monopolies like Washington Gas Light to enter the market.
Traditional ratepayers could end up subsidizing the stations that perform poorly and the stations could cause an overlapping of monopoly and competitive utility roles, the resolution said.
“Natural gas refueling stations should be a competitive business. As such, retail ratepayers should not be required to subsidize, either directly or indirectly, any gas distribution utilities’ natural gas refueling stations,” the resolution stated.
In Utah and Pennsylvania, where utilities have been allowed to compete, private investment has decreased, Barry said.
“We really want to maintain a level playing field,” he said. “When you have a monopoly enter the market it discourages investment. It actually has a negative effect.”
When monopolies enter the CNG market it can deter future companies from building in this area, according to Bryn Marley, a regional operations manager at Blu. LNG, a natural gas fuel provider.
Many natural gas retailers have joined forces to combat these potential utility monopolies, Barry said.
Clean Energy and Blu. are fighting the case in Maryland. They remain in contact and coordinate efforts when a utility tries to get into the market.
Two public hearings in Washington Gas Light Co.’s case were held last week. Barry, who testified to the commission on Aug. 7, said he will inform Clean Energy headquarters about the Washington Gas Light plans and figure out a next step. Marley will be submitting written comments.