The state Public Utilities Regulatory Authority on Friday announced a decision enabling expansion of natural gas service to residents and businesses.

The state's three gas companies applied for approval to convert 280,000 customers to natural gas over the next 10 years. The plans target customers within 150 feet of an existing main but not yet connected, as well as potential customers who are off-main but can cost-effectively convert, PURA said in a news release.

PURA said its ruling eases the viability criteria gas companies use to evaluate projects and lengthens payback periods to reduce upfront costs required from new customers connecting to the gas distribution system. It also introduces a "portfolio" approach to gas extensions in which 60 percent of the customers needed to make a project viable must commit to gas service before construction starts. This change will allow more customers to cost-effectively connect, PURA said.

The decision also establishes new rate and cost recovery mechanisms. Customers added after Jan. 1 will be charged a monthly premium over current rates to offset incremental costs of expansion, in lieu of making a one-time upfront payment to cover connection costs. On-main customers added after Jan. 1 will pay a 10-year, 10 percent premium on the distribution component of standard rates, while off-main customers added after that day will pay a 10-year, 30 percent premium on the distribution component of standard rates. The distribution component of rates averages between 40 percent and 60 percent of the overall monthly bill. After the initial 10 years of service, new customers return to standard rates. Some customers, such as those far from the main or with complex construction requirements, may still incur upfront costs.

A new law passed in the most recent legislative session directed Connecticut Natural Gas, the Southern Connecticut Gas Co. and Yankee Gas Services Co. to file the infrastructure expansion plans consistent with goals of the Department of Energy and Environmental Protection's Comprehensive Energy Strategy released in February. The gas companies finalized and submitted modified proposals with PURA on July 26.

CNG and Southern plan to convert 29,500 customers to gas heat, add 113,700 new on-main customers and 54,000 new off-main customers by 2023. Yankee proposes to convert 10,000 customers to gas heat, add 41,296 new on-main customers and 31,125 off-main customers by 2023.