“A focused and prioritized replacement of approximately 4,100 miles of Dominion’s system is needed to ensure continued safe and reliable natural gas service to customers in the future,” said Bruce Klink, president of Dominion East Ohio. “The pipelines recommended for replacement are older pipelines that are either cast- or wrought-iron or bare steel pipelines that do not have the coating or corrosion protection used today.”
The total cost of the programme is expected to exceed $2.6 billion at 2007 rates. If approved, Dominion estimates that the additional cost to residential customers will be $1.12 per month beginning in November. Thereafter, there would be annual adjustments of no more than $0.90 per month, resulting in approximately a 1% increase in annual bills. The cost to customers would be spread out over many decades because of the 25-year time frame of the replacement programme and accounting that spreads those costs over an expected service life that lasts many decades.
Under its proposal, Dominion would become responsible for installing new service lines and for repairing or replacing existing service lines if they are found to be leaking. Those costs would be accumulated with the other costs of the pipeline-replacement programme and included in a monthly charge spread among all customers beginning later this year.
Many natural gas utilities throughout the US are understood to be implementing similar programmes. PUCO has already approved an accelerated mainline replacement programme by Duke Energy Ohio in Cincinnati that shares many of the same features that are proposed by Dominion. Among the benefits cited by PUCO in a recent review of Duke Energy’s proposals are the improvement in pipeline safety and a reduction in the cost of repairing leaks on the system. Like the Duke Energy Ohio programme, Dominion will reduce the replacement-programme costs to be recovered by any savings from fewer leak repairs.