Questions and Answers about Columbia Gas of Ohio Base Rate Case

Filing March 3, 2008

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Q: How big of a rate increase is Columbia Gas of Ohio seeking?

A: If the case is approved as filed, it would increase Columbia Gas of Ohio's revenues by $79.3 million, which is a 6 percent increase.

Q: What would this mean for an average residential customer's bill?

A: The average residential customer's bill would increase by $5.59 per month.

Q: When will the new rates take effect? Is my bill going up this winter?

A: The new rates would not take effect until late 2008, so bills would not be affected during this winter's heating season.

Q: Would this rate increase impact all customers, even those enrolled in CHOICE or a municipal aggregation program?

A: It would affect all customers. CHOICE customers purchase the natural gas commodity through a marketer, but that gas is still delivered to their home or business through the Columbia Gas of Ohio distribution system.

Q: What are base rates?

A: Base rates generate the revenue needed to build, maintain and operate Columbia Gas of Ohio's natural gas delivery system. This system includes 19,000 miles of pipelines, regulator stations, meters and other facilities. This charge is separate from gas costs, which make up more than three quarters of the bill.

Q: Why does Columbia Gas of Ohio need higher base rates?

A: Columbia Gas of Ohio has made millions of dollars in investments since its last base rate case which haven't been fully recovered. And it will need to make significant investment in repairing and upgrading its gas delivery system in the coming years. At the same time, high commodity costs have caused our customers to cut their gas usage, which has lowered our gas delivery revenues.

Q: When was the last time Columbia Gas of Ohio asked for higher base rates?

A: 1994.

Q: Is this rate hike fair to Columbia Gas of Ohio customers?

A: We believe it is. The average residential customer would see an increase of only $5.59 per month. In return, they'll benefit from a safer, more-reliable delivery system, less volatility in their bills and a new program which could help them cut their gas usage.

Q: Aren't bills a lot higher today than they were in 1994?

A: Bills have increased, but that is almost entirely due to increased natural gas commodity costs. Columbia Gas of Ohio isn't a natural gas producer and doesn't control natural gas prices. Natural gas prices have increased sharply in recent years, and those prices are passed along dollar-for-dollar to our customers through our Gas Cost Recovery (GCR) adjustment. Under Ohio law, gas utilities may not profit on gas commodity sales. Columbia has no incentive to raise its GCR and, in fact, higher gas costs have hurt us because our customers have responded by reducing their usage. When we deliver less gas, it hurts our profits.

Q: What's in this proposal for customers besides higher base rates?

A: Several things. The base rate case proposal includes funding for an infrastructure replacement program that will result in a safer, more reliable delivery system with fewer leaks and fewer outages. It also includes rate changes that would stabilize the delivery portion of the customer's bill and allow the company to promote conservation.

Q: Will this rate case result in any changes to the CHOICE program?

A: No. Thanks to a separate agreement that COH reached with several stakeholders late last year, the CHOICE program will continue.

Q: Will Columbia Gas of Ohio do anything to help low income customers cope with higher base rates?

A: The company will continue funding of its nationally recognized WarmChoice home weatherization program.

Q: I believe energy conservation is very important. Does the Columbia Gas of Ohio rate case proposal do anything to promote conservation?

A: Yes. The company would create a comprehensive energy efficiency program aimed at helping customers reduce their gas consumption. It would also continue funding of its nationally recognized WarmChoice home weatherization program over three years. WarmChoice typically reduces a home's gas consumption by more than 25 percent.

Q: Is there anything in Columbia Gas of Ohio's rate case that will promote economic development in Ohio?

A: Yes. The infrastructure replacement program will create jobs both for Columbia Gas of Ohio employees and construction contractors and create demand for materials and construction equipment. It will also increase pipeline capacity in some areas, which could support business development.