Washington Gas Light Co. and Baltimore Gas & Electric Co. yesterday said they will take on an additional gas supplier beginning in 1987 -- an agreement that the gas companies said could lower prices for consumers.
Both utilities have entered into a 20-year contract with Consolidated Gas Transmission Corp., a wholly owned subsidiary of Pittsburgh-based Consolidated Natural Gas Co., committing the gas companies to receive up to a combined 44 billion cubic feet of natural gas a year. The agreement, pending regulatory approval, could mean as much as 20 percent of natural gas in the Washington-Baltimore area will be supplied by Consolidated Gas after April 1, 1987.
"This new pipeline supplier will expand our ability to secure competitively priced gas," said WGL Chairman Donald D. Heim. "It's part of an ongoing strategy to buy gas for our customers at the lowest possible cost, while at the same time adding to the long-term security of supply."
Currently, Washington Gas Light, which serves 575,000 customers, buys gas from Columbia Gas Transmission Corp. and Transcontinental Gas Pipeline Corp. BG&E, serving 900,000 customers, purchases gas from the same two pipelines.
"Obviously, it creates a more competitive environment from which we can shop around, and it will save our customers money," said BG&E spokesman Glenn Heffner. Both utilities must first spend several million dollars to tie into an existing Consolidated pipeline that runs 110 miles from Central Pennsylvania to Northern Virginia. BG&E estimates it will cost about $15 million to tie into the pipeline near Dickerson, Md., while WGL has no estimate at this time. Washington Gas' tie-in is expected to run a shorter distance and therefore could cost less than BG&E's. Those costs would eventually be absorbed by the overall rate base.
The agreement between the two utilities and Consolidated also provides for short-term spot purchases from producers and other spot suppliers that could then be transported along the pipeline by Consolidated. Spot purchases have in the past made up 25 percent of Washington Gas Light's gas supply.
"What it means is flexibility in buying the fuel that makes up 60 percent of a customer's bill, the possibility of further rate stabilization and the lowering of prices for gas," said WGL spokesman Paul Young. A spokesman for Consolidated Natural Gas Co. said he could not speculate on how much customer rates at the two utilities might fall because his company has no knowledge of the prices the utilities are paying their other suppliers.
In 1983 and 1984, Washington Gas Light saved customers $31 million through fuel-cost adjustments. It also negotiated a settlement with Columbia Gas in which the supplier agreed to sharply reduce wholesale gas prices and freeze them at that level for two years.