The U.S. Department of Energy is studying Washington Gas Light Co.'s proposed surcharges on customers who significantly cut home gas consumption, and the agency may send representatives to testify in local hearings on the proposals.
"It's a major national question because other gas companies around the country are thinking of doing the same thing," a DOE source said.
Energy Secretary James R. Schlesinger said in a press conference Friday that WGL proposal may "cut against the grain of federal (energy conservation) policy."
"A penalty designed to induce greater gas consumption . . . has severe limitations from the standpoint of public policy," Schlesinger said. He said that although there may be cost justifications for the proposals, they should be looked at "rather critically" by local authorities.
The proposals were submitted earlier this month to regulatory authorities in the District of Columbia, Maryland and Virginia. Public hearings are expected in all three jurisdictions.
If DOE enters the local cases, its lawyers will testify in the regulatory hearings on what impact WGL's proposals may have in the context of national energy policies and what DOE's view of this impact is. This testimony would be taken into consideration by the local regulators along with testimony by other interested parties, such as consumer groups.
The proposed charges, ranging from $7.80 to $14 a month or more, would affect customers who cut their gas consumption significantly by substituting electric heat pumps, propane or other energy sources for most of their heating needs while still using gas for the rest.
The company's rationale is that these customers continues to cost the company the same amount in fixed capital expenses while company revenues are cut because less gas is used.
The proposals met with a barrage of criticism charging WGL with discouraging conservation and trying to corner the home heating market.
"Of course we're not penalizing anybody for energy saving," said WGL spokesman Paul Young. "We're trying to recover costs. It's not directed against the heat pump or against conservation."
Young said that by combining a gas heater and an electric heat pump a customer was not saving any energy but merely changing his "energy mix" - a contention that the electricity industry, for one, disagrees with.
"The heat pump, we think, is the most energy-efficient way to heat and air-condition a house," said William W. Berry, executive vice president of Virginia Electric and Power Co. "We'd hate to see anything that would discourage that."
Paul Dragoumis, senior vice president of Potomac Electric Power Co., said Pepco wants "to make sure if the gas company or any competitor of ours had a charge for backup service that it was related to the cost of providing the backup because we're really hot in the competition with gas and oil for the home heating market!"
"It's like giants fighting over who's going to plunder the village," said Diane Worthington of Virginia Consumer Congress, one of several consumer groups with plans to fight the proposals. "We have two utilities who want to have control . . . It's mostly a slap at conversation."
Dragoumis noted that Pepco already has a rate structure somewhat similar to what is being proposed by WGL: that is, in the District of Columbia at least, Pepco customers with electric water heaters and electric space heating pay less per kilowatt hour than the bulk of customers.
The rationale is the same as WGL's: customers who use less electricity must pay more per kilowatt hour to pay their share of the company's fixed costs. When Pepco computers discover a significant change in a customer's electricity use, the case is studied to see if the customer should be shifted from one rate to another, a spokesman said.
Pepco has not had the public relations problems that WGL encountered after its announcement WGL's Young said the issues are so complex that he sometimes despairs of the public ever understanding them.
Maryland people's Counsel John Keane, who represents the public in utility cases, said that a key questions that must be examined in the Maryland hearing on the proposals is "whether in fact there is an energy saving by combing an electric host pump and gas." If so, he said, "then it seems to me that's a combination we'd want to encourage."
Keane said he questions WGL's "logic" in proposing surcharges on some customers rather than spreading the charges among all customers - since, he said, all customers are equally responsible for the high incremental capital costs of providing gas during the cold peak demand periods, costs that the surcharges are proposed to cover.