Relates to providing a program to extend natural gas delivery to unserved or underserved areas

1 Co-sponsor

• Thomas Croci

Title of bill

An act to amend the public service law, in relation to providing a program to extend natural gas delivery to unserved or underserved areas

Purpose

To establish a program in each natural gas service territory, including any necessary tariffs, to extend natural gas distribution service for end-users to un-served or underserved areas

Summary of provisions

This bill would add a new Section 65-c to the Public Service Law to direct each natural gas distribution company to file a petition with the Public Service Commission proposing a pilot or permanent program, including any necessary tariffs, to extend natural gas distribution to end-users in unserved or underserved areas within each certificated service territory. The PSC would review each petition and either approve, disapprove or modify the filings pursuant to its procedural rules.

Program requirements would include a process for managing and prioritizing customer requests from end-users for extensions of the natural gas distribution system; a cost-benefit analysis to determine if a customer contribution is required; a method for determining the amount of a required customer contribution in aid of construction and a program to enhance the affordability of required contributions in aid of construction to customers.

This affordability program would allow on-bill financing for a term of no less than five years and a customer shall be able to pay a required customer contribution in full at any time without incurring penalties or fees. In addition, the form of financing may include a surcharge, third-party financing or any other method of recovery approved by the PSC.

The bill would also authorize the PSC to establish periodic reporting requirements to review the performance and effectiveness of an end-user natural gas extension program. The PSC would not be able to require a natural gas distribution company to extend it distribution system to any area or customer that does not provide the opportunity to earn a reasonable rate of return.

Justification

There are 550,000 households in New York located within 100 feet of an existing gas distribution line that do not heat with natural gas. An additional 580,000 households exist beyond 100 feet from an existing gas distribution line but nonetheless within an existing natural gas utility franchise. In other words, 33% out of roughly 3 million New York households that currently heat with fuels other than natural gas live within an existing natural gas franchise area.

Under current price conditions, the typical homeowner who converts from No. 2 oil to natural gas could save about $1,3000 per year, although it could be more if they convert to a high efficiency furnace or boiler. Assuming approximate installation costs for such a system between $3,000 and $5,000, a homeowner's payback period could be less than four years.

Expanding the availability of natural gas has the potential to help low-income programs and customers and also is likely to have important implications for economic development and the job market within New York. According to the PSC, the ready availability of a lower cost energy source will substantially enhance the viability of existing businesses as well as enhance the State's ability to attract new businesses and industries. Moreover, expansion of the natural gas system itself will likely create and/or retain in-state construction jobs.

Legislative history

New Bill.

Fiscal implications

No cost to the State but significant economic benefits for natural gas residential customers and businesses.

Effective date

This act shall take effect on the sixtieth day after it shall have become a law.