The former deputy for longtime Democratic State Treasurer Harlan Boyles says the N.C. Utilities Commission should deny plans for Piedmont Natural Gas Co. to merge into its overall rate base a money-losing gas pipeline venture in the northeastern part of the state.

Charles Heatherly, in a letter to the commissioners, called the pipeline project a “dubious scheme,” and said that if allowed to further burden Piedmont ratepayers and overall taxpayers with a merger, it “would betray the confidence that has been placed in you by the people of North Carolina.”

Piedmont is proposing an overall merger of North Carolina Natural Gas and Eastern North Carolina Natural Gas, the latter of which it co-owns with a nonprofit economic development organization, into its rate system. The Charlotte-based company is also seeking permission for a $36.7 million rate increase on all of its customers, $8.3 million of which would cover annual revenue losses associated with ENCNG’s Northeastern project.

The project was built with $188 million of $200 million total in taxpayer-funded bond funds, which voters narrowly approved in a referendum in 1998. ENCNG has about 1,000 customers, mostly residential.

In earlier testimony for the commission, Dr. Mitch Renkow, a professor of resource economics at N.C. State University, said, “There is a substantial probability that (ENCNG) will never become economically viable.

“Given that the customer base is smaller than had been anticipated, the only way for (ENCNG) to recoup the high capital cost associated with construction would be to charge very high rates.”

Heatherly said that when the bonds were proposed in 1998, Boyles called it “a bad deal” for North Carolina.

“He noted that the state’s prosperous energy providers already had evaluated this region and concluded it was ‘not economically feasible’ to install underground gas lines over such a remote and sparsely settled region,” Heatherly wrote to the commissioners. “Now comes Piedmont Natural Gas Company saying that with such a low customer base it is not economically feasible to operate this system, even after North Carolina taxpayers have built the infrastructure.

“That’s exactly what Treasurer Boyles said seven years ago.”

Heatherly pleaded with commissioners to forbid any more public money, or additional Piedmont ratepayer money, to be given to “this bad investment.”

“It merely spreads the seed of discontent for government boondoggles that have become altogether too frequent,” he wrote.

Heatherly suggested that the commission could halt the long-term subsidization of the pipeline by Piedmont’s ratepayers.

“You can send a positive message to those who would concoct such a fraud upon taxpayers in the future by denying Piedmont the authority to penalize its entire customer base for the benefit of so few,” Heatherly wrote. “To do otherwise would betray the confidence that has been placed in you by the people of North Carolina.

“Just because others have failed to exercise prudent judgment does not mean that you should compound their error.”

The policy of the commission is to defer comment on cases that they have not yet decided.

David Trusty, a spokesman for Piedmont, had no comment on Heatherly’s assertions.

“Our position on this issue has been expressed in detail through testimony before the commission,” he said.

Paul Chesser is associate editor of Carolina Journal. Contact him at [email protected].