For the second time in as many years, the price of natural gas is going up in Chattanooga to help pay for investments in expanding gas distribution across the region.
Chattanooga Gas Co., which boosted base rates 7% last September, will raise its base rates again next month by 8.1% to help pay for system expansions as well as to help make up for a revenue shortfall during the pandemic last year. The Tennessee Public Utility Commission approved the latest gas rate hike this week to help pay for some, but not all, of the company's requested funding to pay for gas system maintenance and upgrades. Under an agreement with the Tennessee Consumer Advocate approved after a review of the gas company's spending plans, Chattanooga Gas Co. will be allowed to recover an extra $11.5 million over the next four years to pay for system expansions and upgrades.
"Demand for service from Chattanooga Gas increased in 2020, with more than 1,000 new residential and commercial customers connecting to our system," said Pedro Cherry, president and CEO of Chattanooga Gas. "This settlement agreement acknowledges the prudent investments we have made to ensure we can continue to meet the region's growing demand while maintaining the safety and reliability of our infrastructure and enhancing customer experience."
Chattanooga Gas Co. requested an even bigger rate hike earlier this year. The agreement provides that Chattanooga Gas will recapture no more than $6.8 million per year, which will boost rates by 8.15% or $4.17 per month for a typical residential customer.
"This will create rate stability and minimize the impact on monthly bills," Chattanooga Gas Co. spokeswoman Mekka Sherre Parish said. "Even with this rate adjustment, the average monthly bill will still be more than $60 below what it was two decades ago, after accounting for inflation."
Chattanooga Gas, which distributes natural gas to nearly 70,000 customers in Hamilton and Bradley counties, The rate increase for Chat is only the second time Chattanooga Gas has proposed a rate increase under the Public Utility Commission's annual review mechanism.
Last September, state regulators approved $4.8 million in rate adjustments that boosted the typical residential gas bill by 7%, or $2.98 a month.
In the years leading up to the coronavirus pandemic and throughout the last year and a half, Chattanooga Gas provided the infrastructure needed to attract new business to the area, especially for companies like McKee Foods and automotive suppliers to the Volkswagen assembly plant in Chattanooga. In the past decade, the Consumer Energy Alliance estimates that access to natural gas has helped to create or support more than 18,000 jobs and over $3.6 billion in investment in Hamilton and Bradley counties.
The Tennessee Public Utility Commission approved the rate increases last year and this year to help the gas utility recover costs incurred to add more gas lines and expand the capacity of the utility's liquefied natural gas facility that helps store natural gas for use when it is needed most.
"By doing this, Chattanooga Gas anticipates saving customers an estimated $40 million over the next 10 years by reducing the need to employ more expensive gas supply alternatives," Parish said.
Contact Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340.