Hartford Business Journal

www.CTGreenGuide.com SprinG 2014 • Connecticut Green Guide 25 The utilities' ability to convince customers of the cost advantage is the crux of Gov. Dannel P. Malloy's plan to replace heating oil with natural gas as the home heating fuel of choice in Connecticut. Malloy likes the energy and environmental advantages of natural gas, but by not committing public funds to the conversion, the success of the strategy lies in the hands of custom- ers, particularly those who have yet to switch. In December, the Public Utilities Regulatory Authority ruled the $2-$3 billion cost of building new mains and hooking up homes and businesses will be borne solely by new customers, on top of the $3-$4 billion they will spend on new heating equipment. No taxpayer dollars. No state bonding. No burden shifted to customers who converted last year or who have used natural gas for decades. Specifically, new customers who are on existing mains and only need a hookup will pay a 10 percent premium on the distribution portion of their bills. For new customers not near existing mains, the premium will be 30 percent. Those premiums will last 10 years. Because distribution is only one charge among others like supply and conservation, Yankee estimates new off- main customers will pay 7 percent more than existing cus- tomers. For new on-main customers, that falls to 3 percent. New customers also must absorb the cost of switch- ing out their heating equipment. Residential furnaces run anywhere from $7,000 to $12,000, depending on effi- ciency. Commercial and industrial equipment will run significantly more, depending largely on size. To pay for new equipment, Connecticut arranged for business customers to make incremental payments on property tax bills while residential customers can make payments on utility bills. Yankee has deals with lenders for loans ranging from $1,000 to $25,000, with interest rates up to 7.99 percent. "We have 10 ways to finance your heating equip- ment," Collins said. To convince customers to incur these expenses, the selling point for Yankee and the other two utilities — Con- necticut Natural Gas and Southern Connecticut Gas — is the cost advantage of natural gas over other heating fuels. Based on pricing in early February, natural gas had a 47 percent cost advantage over heating oil, Collins said. The cost savings rise for propane, even though it might be cheaper per gallon, because a gallon of propane doesn't produce the same amount of energy. Even after buying new equipment and paying a premium on bills for 10 years, customers still will save money by switching to natural gas. Customers will ei- ther start saving immediately or break even until their equipment is paid off, Collins said. The more natural gas a customer uses, the greater Natural Gas Usage Here's how Connecticut currently uses its natural gas: Electricity Generation ....................50% Commercial heating ......................18% Residential heating ........................18% industrial heating ..........................12% Pipeline Use ......................................2% Natural Gas Vehicles ...................0.01% SouRCe: u.S. eneRGy inFoRMATion adminiSTraTion Green fact: of the natural gas used in the united States, 97 percent comes from north America, including 84 percent from the u.S. SourCe: Florida publiC uTiliTieS The expansion of the three pipelines that feed natural gas into Connecticut will help loosen constraints on the system, but the earliest completion date is 2017. PhoTo | hBJ FiLE

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