Columbia Gas battles ’misinformation,’ ‘emotional’ issuesWritten by Elizabeth Hazel | | email@example.com
When it comes to natural gas, Jack Partridge is on the budget plan.
The president of Columbia Gas of Ohio said it is his way of dealing with high gas prices.
”It helps me to spread things out,” he said. ”I live with four women and we bought an older home and renovated it. I do more than my share of contributing to paying gas bills.”
He said he shares consumers’ feelings on the gas bill, because he has one, too.
”Customers have been receiving bills reflecting December weather and they go ‘Ouch,’” he said. ”And I did, too.”
In Toledo, it sounded more like a scream.
”I think in some ways [natural gas companies] are easy targets,” Partridge said.
Consumers held up gas bills for media cameras and news radio WSPD called for a Jan. 27 town hall meeting called ”Heat or Eat.”
”Sad to say but … a lot of Toledoans are making that choice,” WSPD’s Bob Frantz said in an interview with Bob Reinbolt, Mayor Finkbeiner’s chief of staff, prior to the Mayor’s State of the City Address Monday.
WSPD invited Columbia Gas, a NiSource Company, to join in the town hall meeting, but Partridge said the meeting will not be a place where Columbia Gas can address the concerns or work on the confusion.
”We are frankly refusing to go,” Partridge said. ”It’s not a healthy place to go.”
In the State of the City address, Finkbeiner called gas rates in Toledo the highest of any region in Ohio and Michigan.
”This is a major obstacle to growth of industry in our region,” he said.
Reinbolt echoed the Mayor’s feelings shortly before the speech.
”We wind up losing residents just over the line because of lower rates up there,” he said in WSPD interview. ”Just across the border is a strong incentive for people and business to go up there.”
Finkbeiner described the formation of a ”tough-minded” six-person Utility Rate Committee to examine the reason for the gas prices.
Natural gas history
The reasons gas prices are high aren’t tough for Partridge to find, but does involve a history lesson.
”Until the recent past, natural gas has been one-choice, one-option [for provider],” he said, adding Toledo was a major player in changing that.
Prior to the 1970s, the natural gas business was fairly simple since prices were held artificially low by the federal government, he said. At the time, natural gas prices were regulated at the source.
”That finally caught up with everybody,” Partridge said.
Incentives for new exploration and well-drilling dropped, and when the winter of 1977-78 hit, a shortage occurred.
”What that meant for us at the retail end was we had to curtail our commercial customers,” he said, adding that Columbia Gas pushed all of its supplies to the ”human need,” meaning homes and hospitals. ”There naturally was a reaction from the government. They were in the right church, but the wrong pew.”
The government deregulated the price of gas, but kept other regulations, which resulted in a disproportionate share of expensive gas in the pipelines. It resulted in spikes of up to 20 percent a year, he said.
Because Columbia Gas is regulated not to profit on the sale of gas, but instead on the delivery charges, the company spent much of the 1980s filing nearly annual to increase rates — a months-long process including hearings and public comment.
”That didn’t help on any fronts with our customers,” Partridge said. ”Nobody wins in a rate case.”
The company chose a different approach in the early 1990s. Columbia Gas opened its doors to a management audit, with no major findings. He said the process removed the stigma of malice surrounding the company.
The company also invited the parties opposed to the rate increases to form a collaborative group to reach an agreement.
”Everyone around the table would use, as their judgment, the premise, ‘Would I do better in a rate case?’” he said.
Among those working to reach an agreement on rate increases were concerned Toledoans, including Kerry Bruce, Toledo’s public utilities commissioner.
In 1994, with the urging of Toledo, Columbia Gas froze its rates on delivery charges and agreed to maintain the freeze until Oct. 2008.
The company took a step further in 1997 with a voluntary program allowing marketers to sell gas to consumers. Partridge said it was designed for the best results for customers. Unlike Columbia Gas, the marketers can sell the gas to consumers for a profit, but can also keep rates lower by directing gas to the market that most needs it at a given time and limiting the gas directed to less-needed areas.
The first phase of Choice began in Toledo in 1999.
”We decided we need to do this in a discreet area first, then roll it out statewide,” Partridge said. ”It exceeded even our wildest dreams.”
The marketers offered a variety of programs beyond the basic budget plan offered by Columbia Gas. The gas retailers offered fixed rates and discount offers. Toledo responded, and currently 59 percent of Toledoans purchase their natural gas through a third-party marketer.
”The Choice program really gets into that final frontier of the market, which is residential,” said Suzanne K. Surface, director of regulatory policy at Columbia Gas. ”We help them sort through their choices and help them understand [the Choice program].”
Even Choice couldn’t compete with the ”double whammy” that hit the natural gas industry in 2005.
Partridge said the natural gas industry is constrained in the U.S. by lower-producing wells and an inability to drill or explore 85 percent of the U.S. coastline. That was the first hit.
The second was weather. A particularly hot summer placed extra demand on natural gas, which is used in part to generate electricity. Then, Hurricanes Katrina and Rita shut down natural gas drilling in the Gulf of Mexico. A warm November offered a quick dip in prices, but December 2005 was cold and demand was high.
When the situation resulted in higher gas bills in Toledo, residents pointed their fingers at Columbia Gas.
Natural gas mythology
”There is misinformation out there,” Partridge said. ”And it’s become an emotional issue now that we’re in a high-cost environment.”
The result is myths the company is trying to combat. Probably the most frequently repeated myth, according to Partridge, is that when the price of natural gas rises, so do Columbia Gas’ profits.
”People lump us in with the big oil companies, not realizing we don’t profit on the commodity,” he said.
The money Columbia Gas makes is based on delivery charges, which is based on how much gas a person uses. When customers conserve energy, Columbia Gas actually loses money, according to Partridge.
He said the company also combats the false ideas Columbia Gas manipulates or controls the price of natural gas.
The gas price on the bill? That’s what Columbia Gas paid on the open market, Partridge said, dollar-for-dollar. He said most industrial and commercial natural gas customers purchase their natural gas from alternative suppliers that buy on the national market, meaning the oft-repeated saying that natural gas prices drive businesses away from Toledo isn’t necessarily true.
Similarly, Toledoans are often told they have the highest rates in Ohio. But, by law, Columbia Gas has one statewide rate.
”By no means are we the highest gas in the state,” Partridge said. ”It’s just difficult to counter those statements.”
Getting information to people is a problem.
”That’s why we’re seeking a dialogue,” Partridge said.
He said he’s weary of the impact paid ads with such information would make and said he prefers to keep Columbia Gas’ paid ads focused on environmental messages.
Columbia Gas plans to continue sending information on winterizing and minimizing gas costs along with bills.
He said he’s not sure just how to get the message out, but he knows he needs to be more visible in Toledo.
”I want to be more active in Toledo,” he said. ”I’ve got to get up there and we’ve got to do more to educate.”
He said he also wants to increase awareness of the Columbia Gas staff that is already involved in the community.
”I just want to survive this winter, and I just want our customers to survive this winter,” Mr. Partridge said. ”The days are gone when we’d all be smiling at each other when it’s a cold winter.”