July 30, 2007 at 12:00 AM EDT
Washington Gas Reaches Rate Settlement in Virginia
Washington Gas Reaches Rate Settlement in Virginia
New Rate Design to Benefit Customers, Company
WASHINGTON, July 30 /PRNewswire-FirstCall/ -- Washington Gas Light Co., a wholly-owned subsidiary of WGL Holdings, Inc., (NYSE: WGL) announced today that it has reached a settlement agreement in its pending Virginia rate increase proceeding. The agreement, which must be approved by the State Corporation Commission of Virginia, reflects a modest increase in billing rates for its delivery service and two innovations in rate design that will encourage continued operational efficiency and help customers manage their monthly natural gas bills more effectively.
The settlement will increase customer rates by $3.9 million annually and will allow the company to continue investing in vital system maintenance and improvement projects to support regional growth. Washington Gas implemented an interim rate increase on Feb. 13, 2007. The company will refund amounts collected from customers that exceed the final, approved rate increase.
As part of the settlement agreement, Washington Gas will freeze its billed delivery service rates in the Commonwealth for the next four years. It also will implement a Weather Normalization Adjustment mechanism and a Performance Based Rate plan that results in sharing cost savings with customers.
"We applaud all of the parties for working cooperatively to reach an agreement that will avoid the costs of an extensive regulatory proceeding and produce sound results for all involved," said Adrian P. Chapman, Washington Gas's Vice President of Operations, Regulatory Affairs and Energy Acquisition. "Under this plan, we will introduce a Weather Normalization Adjustment mechanism, which will benefit Virginia customers by minimizing monthly bill volatility caused by weather fluctuations and associated demand for natural gas. Washington Gas, in turn, has greater leverage to stabilize revenues and support ongoing expenditures necessary for daily operations, maintenance and improvements that support system integrity and reliability. It's a win-win for everyone."
The Weather Normalization Adjustment, or WNA, allows Washington Gas to credit customer bills when the weather is colder than normal and gas usage increases. Conversely, Washington Gas will attach a surcharge to customer bills when temperatures are warmer than normal and gas usage decreases. Credits and surcharges would apply to natural gas used between October and May and would be reflected on bills mailed each August.
In October 2005, Washington Gas implemented a revenue normalization mechanism in Maryland that addresses the effect of variances in normal customer usage that can be caused by weather and other factors. According to the American Gas Association, similar rate design proposals have been approved or are under consideration in 21 states and in the District of Columbia as of June 1, 2007.
In addition to the WNA, Washington Gas will implement a Performance Based Rate plan, which will allow Virginia customers and Washington Gas investors to benefit from earnings that exceed an established target. The measure supports Washington Gas's ongoing operational efficiency initiatives as well as its efforts to manage pipeline and storage assets more efficiently. As operational efficiency goals are achieved, the expected savings, less the cost to implement a major outsourcing initiative, could produce earnings above the established target, which, along with additional net revenues from asset management transactions, will be incorporated into an earnings sharing mechanism. The company automatically will share 75 percent with customers, and 25 percent with investors.
Other components of the settlement include provisions for the recovery of hexane costs incurred in the company's gas conditioning facilities and recovery of the gas cost portion of uncollectible expense. These items are addressed separately through Washington Gas's purchase gas adjustment clause.
Headquartered in Washington, D.C., Washington Gas is a wholly-owned subsidiary of WGL Holdings, Inc. The parent company holds a group of energy- related retail businesses that focus primarily on retail energy-marketing and commercial heating, ventilating and air conditioning services.
Additional information about WGL Holdings is available on its Web site, http://www.wglholdings.com.
Forward-Looking Statements: Note: This news release and other statements by Washington Gas include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the outlook for earnings, revenues and other future financial business performance or strategies and expectations. Forward- looking statements are typically identified by words such as, but not limited to, "estimates," "expects," "anticipates," "intends," "believes," "plans," and similar expressions, or future or conditional verbs such as "will," "should," "would," and "could." Although the company believes such forward-looking statements are based on reasonable assumptions, it cannot give assurance that every objective will be achieved. Forward-looking statements speak only as of today, and we assume no duty to update them.
As previously disclosed in filings with the Securities and Exchange Commission (SEC), the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: the level and rate at which costs and expenses are incurred and the extent to which they are allowed to be recovered from customers through the regulatory process in connection with constructing, operating and maintaining Washington Gas's natural gas distribution system; the ability to implement successful approaches to modify the current or future composition of gas delivered to customers or to remediate the effects of the current or future composition of gas delivered to customers, as a result of the introduction of gas from the Dominion Cove Point facility to Washington Gas's natural gas distribution system; the ability to recover the costs of implementing steps to accommodate delivery of natural gas to customers as a result of the receipt of gas from the Cove Point facility; variations in weather conditions from normal levels; the availability of natural gas supply and interstate pipeline transportation and storage capacity; the ability of natural gas producers, pipeline gatherers, and natural gas processors to deliver natural gas into interstate pipelines for delivery by those interstate pipelines to the entrance points of Washington Gas's natural gas distribution system as a result of factors beyond the company's control; changes in economic, competitive, political and regulatory conditions and developments; changes in capital and energy commodity market conditions; changes in credit ratings of debt securities of WGL Holdings, Inc. or Washington Gas Light Company that may affect access to capital or the cost of debt; changes in credit market conditions and creditworthiness of customers and suppliers; changes in relevant laws and regulations, including tax, environmental and employment laws and regulations; legislative, regulatory and judicial mandates or decisions affecting business operations or the timing of recovery of costs and expenses; the timing and success of business and product development efforts and technological improvements; the pace of deregulation efforts and the availability of other competitive alternatives to our products and services; changes in accounting principles; acts of God and terrorist activities and other uncertainties. The outcome of negotiations and discussions with other parties from time to time regarding utility and energy- related investments and strategic transactions that are both recurring and non-recurring may also affect future performance. For a further discussion of
the risks and uncertainties, see the company's most recent annual report on Form 10-K, and other reports filed with the SEC.
SOURCE WGL Holdings, Inc.