Sandpiper Energy – a subsidiary of Chesapeake Utilities that distributes natural gas and propane to about 11,000 residential, commercial, and industrial customers in Worcester County, Maryland – announced on November 16 that the Public Service Commission of Maryland (PSC) had approved a settlement agreement (Case No. 9410) associated with its 2015 base rate case filing, which will result in a reduction in its delivery service rates over the next six years.
Sandpiper’s originally requested an increase in revenue of $1.3 million; the settlement however, actually results in a reduction in revenue over time. The declining revenues are related to the projected number of customers that Sandpiper converts from higher-cost propane service to lower-cost natural gas service each year.
The company’s fixed monthly residential service (RS) customer charge will initially increase from $4.50 per month for all residential customers to $6.50 for RS-1 customers, $8 for RS-2 customers, and $10 for RS-3 customers. The various new customer classes, both residential and commercial, are based on the amount of natural gas they use.
Under the terms of the agreement, Sandpiper is required to submit an annual compliance filing to the PSC starting one year after the approval of this order, and continuing for the next five years. The compliance filings will inform the commission of the actual number of customers converted from propane to natural gas during the prior year.
In addition, the settlement creates new non-recurring charges, including a connection charge of $35, a reconnection charge of $35, an after–hours service connection or reconnection charge of $60, a seasonal reconnection charge, a returned payment charge of $20, a change of account charge of $17, and a failed trip charge of $35.
The agreement also includes an introduction of several new service offerings, including a natural gas compression service for commercial customers and a program to support the use of propane or natural gas in multi-family housing.
“Sandpiper Energy began conversions to natural gas for the majority of its customers in mid-2013. Since that time we have converted more than 3,700 customers, bringing safe, clean and affordable natural gas to many families and businesses in Worcester County,” said Jim Moore, VP of Chesapeake Utilities and Sandpiper Energy. “I’m proud that we are able to provide this preferred energy source to the region while reducing rates and introducing new service offerings.”
The settlement maintains Sandpiper Energy’s use of a system improvement rate (SIR), which is adjusted annually to recover the cost of bare steel replacement and the cost of converting customers to natural gas service.