Published: October 14, 2008 09:32 pm         

PSC judge recommends natural gas rate increase

CHARLESTON — Amid an onslaught of public protest and falling market prices, the chief administrative law judge with the state Public Service Commission is recommending rate increases for natural gas companies doing business in West Virginia.

Chief Judge Melissa Marland issued the recommendations last Friday. Interim rate adjustments will go into effect Nov. 1, depending on what the full commission decides. Final rates will be approved in March.

Byron Harris, the state’s consumer advocate, said his office intends to ask the commission to reject Marland’s recommendations and bring the rate increases down even lower.

“We don’t think there’s any reason to hammer people this winter with high natural gas prices,” Harris said.

While Marland recommended rates that were less than what the gas companies had requested, she rejected the Consumer Advocate Division’s request that the increases be spread out over a couple of years to minimize the impact on residential customers.

In addition to staggering the increases, the division wanted the judge to limit any proposed rate adjustment to a maximum of 20 percent over what customers paid for natural gas last winter.

The average residential customer uses about 13,000 cubic feet units of natural gas a month, according to Harris.

With the recommended rates, customers of the seven largest gas suppliers in the state could see average monthly bills from $176 to $123 this winter, plus whatever fees and surcharges the companies add on.

Based on the rates the gas suppliers initially requested, customers could have seen monthly bills ranging from about $203 to $146.

Customers of the seven companies last winter saw bills ranging from about $176 to $101, according to current rates.

The seven largest suppliers are Mountaineer Gas, Hope Gas, Equitable Gas, Union Oil and Gas, Southern Public Service District, Consumers Gas Utility and Bluefield Gas.

According to documents filed with the PSC, Mountaineer Gas got the highest interim rate from Marland at $13.59 per thousand cubic feet for residential customers. The company had asked for a rate of $14.68 per thousand cubic feet. Its current rate is $12.55 per thousand cubic feet.

Hope Gas had requested the highest residential rate increase from $13.59 per thousand cubic feet to $15.68 per thousand cubic feet. Marland recommended a residential rate of $11.79 per thousand cubic feet, a decrease from the current rate, according to PSC documents.

Harris said the rates Marland recommended were based on natural gas prices from September, which were lower than over the summer.

“Prices have fallen quite a bit since then,” Harris said.

The gas companies had requested to charge higher rates primarily to recover costs as they bought and stored the commodity through the spring and summer when natural gas prices were on the rise.

Four of the state’s seven largest suppliers have the ability to stockpile.

Like with other fuels, natural gas prices have plummeted in the wake of the Wall Street turmoil and a declining demand for energy.

In July, natural gas was selling for $13.54 per million British thermal units. At the close of trading on Monday, natural gas was going for $6.68 per million Btu.

Harris said his division would try to sway the full PSC to further adjust the rates to better reflect the falling prices.

There also is the potential that natural gas prices will continue to fall or stay low during the time that the companies start stockpiling, Harris said.