Potomac Electric Power Co. is expected to intervene in regulatory agency hearings on a controversial proposal by Washington Gas Light Co., to impose a surcharge on customers who use electric heat pumps to cut down on natural gas consumption.
W. Reid Thompson, Pepco's chairman, confirmed that the electric utility's lawyers are drawing up petitions urging state regulators "to make certain that there are no anticompetitive elements" in the gas utility's rate plan.
Washington Gas Chairman Paul Reichardt, meanwhile, defended his company's proposed new charges, filed last month with regulatory commissions in Maryland, Virginia and the District.
In an interview, Reichardt said "a seed has been planted in the public mind that we are penalizing customers who conserve gas, and that's as far from the truth as you can get."
Use of electric heating pumps for all but the coldest days during winter, when the temperature drops below 30 degrees and the pumps are not effective, "is merely a replacement of energy in a different form and doesn't help anyone," he stated.
Reichardt also indicated that because of lagging sales due to warmer weather and declining sales of an insulation subsidiary, Washington Gas will be lucky to equal this year the profits of $3.04 a share earned in 1977.
Washington Gas, which provides natural gas service throughout the metropolitan Washington area, also expects adequate supplies to meet cold waves this winter and anticipates gradual increases in supplies and new customers over the next few years.
But the price of natural gas to consumers will be increasing continually in the near future under the energy law signed recently by President Carter. Starting Dec. 1 some interstate gas prices will be boosted up to 40 percent over current levels.
Reichardt said his company does not yet have information from its two interstate pipeline suppliers - Columbia Gas Transmission Co. and Transcontinental Gas Pipeline Co. - on which to base forecasts of prices this winter.
But gas company studies for the next four or five years indicated that consumer prices will increase about 3.6 percent a year just for natural gas, not counting inflation, as a result of gas production price increases included in the new energy act.
Reichardt cautioned that these figures are only for actual gas consumption and do not reflect other company costs. Natural gas price increases are passed on rapidly to consumers under regulatory agency rules but other costs must be included in general rate increase proposals.
Washington Gas Light's proposal for a surcharge involves new charges ranging from $7.80 to $14 a month for customers who reduce gas consumption by using another form of energy - with the exception of solar energy, which Reichardt said represents a true conservation effort and not just a substitution of electricity for natural gas. In addition, there would be no surcharge for customers who cut gas use by insulation, he emphasized.
The Department of Energy plans to oppose the gas utility's plan on the grounds that it could discourage conseparation and discriminate against customers who use alternative energy.
Pepco's Thompson also expressed concern about possible discrimination against use of electricity. "We understand the need for Washington Gas to recover costs." Thompson said, but the electricity utility wants regulatory agencies to "look at it very carefully" to make sure there won't be a source of revenue to the gas company "over and beyond legitimate costs."
According to Reichardt, the proposed higher cost for people who use natural gas only when the weather is coldest - a time that gas is most expensive, since manufactured gas must be drawn from storage tanks to meet peak demand - is necessary to continue recovering fixed company costs in supplying service to all.
Otherwise, he declared, all customers would be penalized by subsidizing the use of electric heat pumps by some neighbors. He estimated that customers with heat pumps would consume only about 20 percent of the gas normally used to heat a home. In an average monthly gas company bill, about 60 percent represents fixed costs of the business.
"We could sit here and do nothing, and continue to recover overall costs from all customers in general rate increases - but is it fair for us to wait three or four years after a number of people have installed heat pumps and have other people realized it's not fair?" he asked.
On the other side of the issue, General Electric Co. is pushing sales of energy-efficient heat pumps, stating that annual heating bills in a Maryland home that uses gas for heating could be sliced to $360 from $523.
Such an addition to winter electricity sales would be attractive for Pepco, a utility with peak demand during the air-conditioning season and under-utilized generating facilities during the winter months.
Washington Gas, meanwhile, is suffering from depressed profitability. Profits in the 12 months ended Sept. 30 declined to $15.5 million from $21.3 million a year earlier.
Unusually warm weather "is going to impact unfavorably . . . there is no question we're sensitive to weather . . . we hope to maintain last year's pace [of earnings]," Reichardt said, noting that the winter heating season here has yet to begin.
In addition, WGL's Davenport Insulation Inc., subsidiary, which manufactures cellulose insulation, is suffering from a reduced sales volume that Reichardt attributed to the absence of an energy law and insulation tax credit, until recently; and unfavorable publicity about Davenport's insulation product.
With the new energy law, including a tax credit of up to $300 for installing insulation, as well as new Consumer Product Safety Commission standards he said were met by Davenport, Reichardt forecast that an era of problems is over and the still-profitable subsidiary will begin to report growing sales and earnings.
On other matters, Reichardt said:
While he quarrels with the term "glut," there is a short-term surplus of natural gas in the U.S., reflecting conservation and switches by industry in other areas to other forms of energy. "But I expect it to be transitory," he added.
WGL is spending between $25 million and $30 million this year for improvements and replacements of facilities and plans a similar amount of outlays next year. No decisions have been made on whether stock or bond sales will be used to raise expansion funds.
To provide short-term cash over the winter months, WGL this month entered the commercial paper market. Proceeds will be used to buy gas for current use until WGL is paid by consumers.
The company has no indication when the D.C. Public Service Commission will rule on a request for an $11 million, or 12.56 percent, rate increase that was filed in July 1977. Virginia's State Corporation Commission recently approved an $8 million (8.2 percent) rate like and WGL has requested a $3.6 million boost in Maryland.
Depending on the D.C. decision, which has adversely affected projected profits by the delay involved in approval, WGL may have to seek another round of higher rates next year. Pepco, which also asked the D.C. agency for a rate increase 16 months ago, has sued the commission in an attempt to get an immediate decision.
WGL expects to propose continuation of a program under which it is adding a limited number of new customers.