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PSC orders lower prices and refunds for B&H gas customers

Natural gas costs to drop by two-thirds to correct substantial overcharges for customers of B & H in Floyd County, KY.
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Andrew Melnykovych
News from Commonwealth News Center

FRANKFORT, KY (4 May 2017) - The Kentucky Public Service Commission (PSC) has determined that B&H Gas Co. has been overcharging for natural gas and must both reduce the amount it charges and make refunds to customers.

As a result of the PSC action, B&H's customers will see the amount they pay for natural gas immediately reduced by more than two-thirds. B&H has about 260 customers in Floyd County.

In an order issued today, the PSC found that B&H could not justify the amount it was charging customers for natural gas. B&H has been charging much more than comparable utilities and has not reduced the amount at a time when natural gas prices have been falling.

By law, natural gas distribution utilities such as B&H may not charge customers more for natural gas than the amount paid by the company. The cost of distributing the gas is calculated separately and reflected in base rates, rather than the commodity cost.

B&H purchases most of the gas it provides to its customers from B&S Oil & Gas Co. The two companies are affiliates owned by the same individual. Because of the joint ownership, B&S is required to sell gas to B&H at cost and in no case for more than the market price.

The PSC in November 2015 opened an investigation to determine whether B&H was paying an appropriate amount to B&S. Much of the investigation centered on whether B&S could justify, on a basis of actual cost, the amount it was charging B&H.

In today's order, the PSC noted that "efforts to determine B&S's fully distributed cost, however, have been resisted by (B&H and B&S) during this proceeding." At various points, the companies said the costs were not relevant, that records had been destroyed in two fires in two separate offices, and gave inconsistent or incomplete answers to requests for information.

The two companies and their owner were each fined $500 for failing to comply with the PSC's orders to produce information requested by the PSC and by the Kentucky Office of Attorney General, which was a party to the case. The fines were levied through a separate PSC action in 2016.

In today's order, the PSC found that records ultimately produced by B&H and B&S did not provide sufficient evidence to justify the wholesale cost of gas charged by B&S to B&H.

This story was posted on 2017-05-07 16:04:49
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