Columbia Gas OKs a $1-Billion Refund

One of the nation’s largest natural gas pipelines--after being found to have “recklessly disregarded” its legal obligations--agreed Thursday to effectively refund up to $1 billion to 4.2 million customers in eight Eastern states.

Columbia Gas Transmission, Charleston, W.Va., said it will cut its wholesale gas rates by 11.5% retroactive to April 1 and forgo any rate increase for the next two years as part of a settlement to several challenges before the Federal Energy Regulatory Commission.

The settlement provides that Columbia, a unit of Columbia Gas Systems of Wilmington, Del., will reduce the wholesale price it now charges for gas from the current $4.07 per 1,000 cubic feet to $3.60 and keep it at that level until March 31, 1987.

The rate cut will effectively reduce the annual home-heating costs of consumers in parts of New York, Pennsylvania, Ohio, West Virginia, Virginia, New Jersey, Maryland, Kentucky and the District of Columbia an average of $25 to $75 per year.

The agreement ends four years of challenges before the agency and in federal court over Columbia’s practice in the early 1980s of buying high-priced supplies--in some instances from its own affiliated companies--while cutting back purchases from producers charging less. The five-member FERC last year concluded that “Columbia’s gas-acquisition policies and practices evidence a reckless disregard of its duty to provide service at the lowest reasonable cost.”

But the commission stopped short of ordering a refund, saying it could find no evidence that the pipeline company’s continued purchases of expensive gas while avoiding cheaper supplies had an “adverse impact” on consumers.

While the settlement does not preclude further court action, it would limit Columbia’s liability for additional refunds to $1 million.