Chesapeake explains natural gas delays

Getting natural gas service isn’t as straightforward as some Lewes homeowners thought it would be. Even though Chesapeake Utilities Corp. has connected two commercial customers to its underground gas service, fewer than 50 homes in the City of Lewes have been connected.

Jeffrey Tietbohl, vice president of Chesapeake Utility’s Delaware Division, said until the Delaware Public Service Commission has ruled on the company’s rate request, it could not begin providing gas to most city residential customers.

Tietbohl, at a Sept. 12 Public Service Commission public hearing at Cape Henlopen High School, explained the company filed its rate request in June 2012, and still cannot begin providing residential service until the commission has ruled. The company’s rates are subject to the PSC and any other state or federal authorities with jurisdiction over natural gas service.

SPI Pharma was Chesapeake Utility’s first Lewes area commercial customer and Beebe Medical Center its second.

He said it took time for Chesapeake to develop the best approach to make service affordable to the maximum number of people in the company’s eastern expansion area.

Tietbohl said the company estimates there are about 2,500 residences currently in the City of Lewes.

He said the number of homeowners who say they want natural gas service is critical.

“The more customer interest there is the better we’ll know how many people are likely to take service,” Tietbohl said.

In a July 24 affidavit for the PSC, Tietbohl said the company’s pipeline distribution extension policy is tied to economical feasibility.

When Chesapeake offers to provide service, its estimated investment in main line extension and service line installation must be equal to or less than, six times the related estimated annual net revenue from customers to be served.

To cover system expansion costs, the company is requesting a monthly customer service charge based on the quantity of gas used.

Residential customers in the least amount of gas schedule would pay a fee of $16.50 per month while those who use more than 50 cubic feet would pay $31.75 per month.

Charges for gas also depend on quantity used. Those using up to 20 cubic feet monthly would pay .607 cents per cubic foot while those using up to 50 cubic feet per month would pay .170 cents per cubic foot.

Commercial and industrial customers would pay higher monthly customer service and gas volume used rates.

If a majority of homeowners in a subdivision now serviced via an on-site propane tank farm wants natural gas, those who do not want service must decide whether to install their own propane tank, Tietbohl said.

In its franchise agreement with the city, 25 percent of residential properties must be offered service by Sept. 12, 2016; 60 percent by 2021; and 100 percent by 2026.

Lewes Mayor Jim Ford said he understands service installation takes time, and he asked Tietbohl not to forget those with homes and businesses downtown that won’t be easy to connect.

“Most of downtown is a retrofit; that doesn’t mean those go to the bottom of list,” Ford said.

Lewes homeowners are frustrated about time they’ve spent waiting.

Ron Barlow, a Bay Breeze homeowner, said two years ago, nearly everyone in the community said they were interested in service, and since then, some no longer are.

“We’ve got a beehive of very angry people who want to know when they’ll get gas,” Bay Breeze homeowner Jeff Broderick said.

Tietbohl said it could take a couple months for the PSC to rule.

PSC hearing examiner Mark Lawrence will review the case and write a recommendation for the commission.

To see Chesapeake Utilities’ complete Public Service Commission docket, go to www.depsc.delaware.gov, and look for docket number 12-292.