Chattanooga Gas Co. will raise its natural gas rates by an average of 6.3% next month under an annual cost recovery adjustment approved by state regulators Monday.
The higher rates to cover the utility's capital investments will be more than offset in December and January, the utility predicts, because of lower commodity prices for natural gas, cutting most residential gas bills in those winter months by more than 15%.
Homeowners in Hamilton and Bradley counties who heat their homes with natural gas will pay an average of $4.19 more a month for their gas service, effective Sept. 1. The average small commercial and industrial service customer will pay about $8.87 more per month, starting in September, under the new rates approved Monday by the Tennessee Public Utility Commission.
State regulators Monday accepted the utility's annual capital investments eligible for cost recovery of nearly $12 million, but only $6.8 million of that will be recovered in the next year as part of a voluntary rate cap adopted in 2021, similar to what the company did a year ago when rates were raised by a similar amount.
Photo by Dave Flessner / Pedro Cherry, president and CEO of Chattanooga Gas, talks during a news conference Aug. 3 at the company's headquarters in Chattanooga.
"This ruling will ensure natural gas's significant role in expanding our region's ever-growing economy while enhancing the customer experience," Pedro Cherry, president and CEO of Chattanooga Gas, said in a statement after the rate increase was adopted Monday.
Cherry said the filing and the utility's agreement to limit its recovery of investments made in the past year "demonstrates our commitment in working with TPUC to bring safe, reliable and affordable natural gas service that our customers expect and deserve."
Chattanooga Gas, a subsidiary of Southern Company Gas, serves more than 70,000 homes and businesses in Hamilton and Bradley counties. The rate increase will be applied equally across all customers with the exception of two of its major contract customers that have a separate service agreement with the gas utility. The rate increase will be capped at 5% for Kordsa and gas rates will remain unchanged at Volkswagen, according to filings with state regulators.
The rate increase will soon be counteracted by the lower prices for natural gas. The fuel price of natural gas spiked a year ago after the Ukraine war disrupted the global market for natural gas, and commodity prices for the fuel have since returned to their pre-war levels, according to TradingEconomics.
Chattanooga Gas projects that the average residential customers will pay $99.90 for natural gas in December if the weather is normal, compared to the $115.46 paid last December for the same amount of natural gas.
In January, which is typically the coldest month of the year, residential customers of Chattanooga Gas can expect to pay $126.43 for natural gas if the weather is normal. That's down from $155.46 charged for that same amount of gas in January of this year.
Jeff Wilson, communications manager for Southern Company Gas, said Chattanooga Gas does not profit from the cost fluctuations of gas and instead passes on the market cost directly to customers.
The current price customers pay for natural gas delivered by Chattanooga Gas comprises approximately 48% of a typical residential customer's bill.
Earlier this month, Chattanooga Gas announced that it is one of the first gas utilities in the nation to shift entirely to certified low-emission natural gas as part of the commitment by its parent company to become carbon neutral by 2050. Utility officials said its next-generation natural gas is cutting an estimated 646 tons of methane or 16,152 tons of carbon dioxide per year.Brian Hlavinka, vice president of new energy ventures for Williams, which is supplying Chattanooga Gas with the next generation fuel, said the methane and greenhouse gas reductions come primarily from extra monitoring and sensing equipment to detect methane gas leaks or emissions, which help gas producers and distributors cut average emissions by 10 times more than the industry as a whole.
Chattanooga Gas estimates the extra expense of the cleaner natural gas and fewer methane leaks cost the typical customer about 30 cents more a month.
Some environmental groups eager to replace fossil fuels with renewable energy sources said any burning of natural gas continues to emit greenhouse gases linked with global warming and other air pollutants that can contribute to respiratory problems.
Cherry said the cost recovery plan adopted Monday reflects investments made by the utility to broaden its service and upgrade the safety and reliability of its infrastructure, even on the coldest days of the year. On a frigid day on Dec. 23, 2022, Chattanooga Gas customers used 6% more natural gas than the previous winter's peak, marking one of the highest natural gas usage days in company history.
Additional investments in 2022 supported more than 1,200 new residential and commercial customers and their demand, as well as provided greater capacity to high-growth residential, commercial and industrial areas, Cherry said.
Chattanooga Gas is one of four natural gas distribution companies of Southern Company Gas, a wholly-owned subsidiary of Southern Company.
Contact Dave Flessner at dflessner@timesfreepress.com or 423-757-6340.
Staff file photo / Markers denoting underground Chattanooga Gas Co. lines are seen along the Wauhatchie Trail on the foot of Lookout Mountain.