SW Gas rate hike approved
Truckee’s natural gas users will be giving more this holiday season rather than receiving.
With last week’s California Public Utilities Commission approval, the average residential gas consumer will pay out on average, an additional $14.94 per month, reflecting a nearly 21 percent rate increase, effective Jan. 1.
Southwest Gas petitioned the additional rate increase with the CPUC as a result of an increase in gas prices, gas transportation and storage and safety improvements in the northern California area, said Dante Pistone, Southwest’s spokesperson.
He explained that last winter’s definitive increase in the demands for natural gas drove market prices up. The increase is an attempt to recoup lost funds.
“This is standard practice,” said Mannis Galliston, of the CPUC’s Energy Division. “The CPUC forecasts future use and rates, but it is the yearly rate case that is presented by the gas companies that allows the CPUC to make decisions about the gas to be bought and sold.”
Southwest Gas filed a request with the CPUC Nov. 19, asking for the rate change for three reasons, Pistone said. They are:
— To update the surcharge for gas costs that Southwest Gas pays to purchase gas at the beginning of the year. This is a non-profit, dollar-per-dollar exchange, Pistone said.
— To reflect the increases in the costs for transporting and storing gas. This is also an anticipation of costs for the upcoming year.
— To offset the costs of safety-related improvements, which Pistone said are the installations of emergency valves along the gas pipeline in the Tahoe-Truckee area.
He added that although the increase seems dramatic, Southwest Gas has kept the annual rate increases below
the normal inflation rate over the past 10 years.
“This rate increase may seem dramatic, but (the Truckee) area is not alone,” he said. “The increases have hit consumers nationally.”
Michael McNamara, program manager for the Office of Ratepayer Advocates, supported the increase conditionally in a Dec. 9 letter to the CPUC. He wrote that the increase was reasonable in light of the expenses incurred by Southwest, but the rates were to be audited in 1998 for their accuracy.
Sandra Fukutome, of the ORA, said the increases needed to be monitored and options possibly sought by Southwest to prevent large increases like this in the future.
“This is a large increase,” she said. “It isn’t trivial.
“Our office never supports rate increases. What we are saying to Southwest is that for the time being the rates can go up to offset their losses from last year, but we are going to audit their rates to make sure they are legitimate.”
Fukutome said Southwest’s rates are based on forecasts for the yearly demands and there may be other ways for Southwest to handle their billing, such as “core monthly pricing,” where consumers pay monthly rates directly related to what the company is paying for gas.
“This way there isn’t such a long-term projection,” she said. “Other utilities are using this method. It is better than maintaining over- and under-collected balancing accounts (where companies have to adjust annually to cover losses or profits.)”
She added that these options haven’t yet been discussed with Southwest and that with the audit, options will be made clear.
Steve Wright, Truckee’s town manager, said the town has no control over rates with the franchise agreement between the town and the gas company. There is only control over rights-of-way for pipe locations.
“They can do whatever they want or need to do with their rates,” Wright said.
The rate increase for an average household will increase from $74.74 to $89.68 during the winter, not including the $4.25 service charge.
“This is not a profit driven increase,” Pistone said. “The increases are dollar-to-dollar. Southwest won’t see any marginal profit increase.”
Southwest Gas has programs in place to assist consumers who may have difficulty staying current with their bills. There are two programs: the California Alternate Rates for Energy Program or CARE that can assist low-income families finance their bills, and the Energy Share Program which assists families experiencing financial hardships. For information, call 582-7200.
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