A Grassroots Success at Utility Reform

David Grubb is one of those citizen advocates who does not give in easily. As executive director of the West Virginia-Citizen Action Group (1324 Virginia Street, East, Charleston, West Virginia 25301), this young lawyer has spearheaded a successful grass roots, legislative drive to contain the staggering increases in natural gas prices.

West Virginia has the nation’s highest unemployment rate. Its legislature has long been a subsidiary of coal and other energy interest. But riot this Spring. A ten-month organizing project with rallies and marches involving thousands of citizens was too much for these lawmakers. In the closing minutes of the 1983 session they passed a fifty page utility reform bill.

Given similar displays of outrage and shock by millions of natural gas consumers throughout the country, the provisions of the new West Virginia law may prove to be both model and motivation. Here are several of the key sections:

  1. All anti-competitive clauses in gas purchase contracts, such as “take-or-pay” provisions, are outlawed. This ban relates to pipeline companies, such as Columbia Gas, which signed long term high price natural gas contracts with producers. The company figured correctly that it could pass on these prices automatically to distributors and consumers. With cheaper natural gas available right in West Virginia, Columbia Gas said it could not buy this much less expensive energy because it was locked into these “take-or-pay” clauses. You can imagine how this self-serving stand was received by the mountaineers.
  2. All gas utilities must prove that they are purchasing the lowest priced gas supply readily available and must let out competitive, sealed-bids for a substantial quantity of their natural gas supply.
  3. All gas utility pipelines are required to serve as common carriers so that smaller gas producers with cheaper gas can find their way to market.
  4. The law sets a one-year moratorium on gas utility rate increases.
  5. A 20% rate reduction for 74,000 low-income and elderly households is mandated for both electricity and gas bills during the five winter months.
  6. Prohibits automatic cost pass-throughs to utilities and instead defines higher costs as applications for new rate increases subject to public hearings. Columbia Gas was receiving much gas from its own producer branches and passing them through automatically.

All this and more in the law prompted much jubiliation in the Mountain State and was long overdue. But it is really a very modest first step that reduced corporate super-greed to just great greed.

Ten years earlier, new natural gas at the wellhead was sold at a nice profit for about 29 cents per thousand cubic feet. Now the price is anywhere from ten to twenty times the level of a decade ago. The costs of production and inflation have not risen anywhere near as fast as this skyrocketing spiral. Tens of billions of dollars are being siphoned out of family and small business pocketbooks without Ronald Reagan wanting to do anything more than push a bill through Congress to lift all remaining federal price controls on the natural gas industry.

Fortunately, a broad-based Citizen/Labor Energy Coalition is canvassing homeowners in numerous states to impress on their Senators and Congresspeople to oppose this next natural gas price shock. Judging by the resistance to Reagan’s demand, the voice of a determined people is reaching Capitol Hill. It only needs to be continued at ever rising and informed decibels.

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