Natural gas supplies have improved enough that Washington Gas Light Co. may take on new business customers, starting with a Johns Manville insulation plant in Woodstock, Va.
The result could be not only lower energy costs for Washington area business, but also some easing of the upward pressure on residential gas bills.
Washington Gas officials confirmed yesterday that they're talking with Johns Manville about supplying fuel for the Shenandoah Valley plant, which now burns oil.
Hooking up the plant would have been impossible under the federal and local regulations in effect for most of the past five years, but the move is encouraged under the latest flip-flop in energy policy and priorities.
The main reason is that gas supplies have improved dramatically. As a result of federal deregulation of some gas prices, supplies that previously stayed in the state where they were produced - and where they were no limits on price - now are flowing into interstate pipelines.
The pipelines will continue to stay full as more gas comes from wells in Alaska and the Gulf of Mexico and from tankers of Algerian liquified natural gas docking at Cove Point, Md.
"We're not able to sell all the gas we can get," said WGL Chairman Paul Reichardt.
"Our suppliers are forecasting a gradual increase in supply," added the company's president, Donald Heim. "There will be enough for existing customers and gradual increases" in the number of local gas users.
Right now, Washington Gas' storage facilities are full, and it is turning down gas offered by Columbia Gas Transmission Co., supplier of about 85 percent of the local gas.
Gas company officals are projecting about a 2 percent yearly increase in gas use, but getting that growth isn't easy.
In the District of Columbia, Washington Gas has been unable to use up the new customer hookups authorized last year by the Public Service Commission.
In the suburbs, home builders have snapped up all the new connections allowed by the Virginia and Maryland utility regulators and are clamoring for more. New connections were shut off in all three jurisdictions from the time of the 1973-74 Arab oil embargo until gas suppliers started to ease a year ago.
Initially, only new residential customers were allowed, but the gas company is pushing to expand that to some businesses.
That expansion has at least the theoretical backing of D.C. People's Counsel Brian Lederer, the official foe of the utility companies. Lederer believes new business gas users could absorb some of the gas companyhs rising costs.
When the number of customers is frozen, the inevitable inflationary increases in gas company costs have to be borne by existing customers. A little growth can take up some of the extra costs, and business customers generally are more profitable to the gas company than homeowners.
A plant burning gas the year round also could fill in some of the valleys in Washington Gas' year-round usage pattern. The local utility makes money only in the winter heating season and reports losses for most of the rest of the year.
No one is claiming that permitting more businesses to burn gas will bring down bills. The trend is inevitably upward, Reichard and Heim acknowledge, although they won't say how fast the rates will rise.
Washington Gas got a $7.2 million rate increase in February that raised the average bill for a D.C. customer who heats with gas by about $3 a month.
That was only 65 percent of what the gas company was asking. Washington Gas has gone back to the commission asking another $6.1 million interim raise and also has sued in court, contending it legally is entitled to higher rates than it was given.
Both those claims are based on Washington Gas' contention that local D.C. rates are not high enough to produce the 9.25 percent return on invested capital that is authorized by the D.C. PSC.
In addition, the company is preparing another "full-blown rate case" in which it will ask for an increase in that 9.25 percent profit margin. When and how much it will ask for, the company isn't saying.
The basic commodity, gas at the wellhead, is going up in price under a federal formula that moves it up faster than the overall inflation rate.