Gas company asks rate hike

Gas company asks rate hike

November 18th, 2009 by Mike Pare in Business

A manufacturers group says it will evaluate a proposed $2.6 million rate hike by Chattanooga Gas Co. before officials decide whether to lobby against it.

"It appears like people are coming at us in all directions with increases in stormwater and sewer fees. Now here comes gas," said Ray Childers, Chattanooga Manufacturers Association president.

Chattanooga Gas, in its first rate hike petition in three years, is asking the Tennessee Regulatory Authority to approve an increase that would boost the typical residential customer's bill by an average of $2.84 a month, according to the company.

Steve Lindsey, Chattanooga Gas' general manager, said the rate hike would be about 4 percent.

The effect on manufacturing or commercial rates isn't immediately known. Mr. Childers said his trade group may intervene in the case, as could state government's consumer advocate.

"We'll be busy trying to understand the petition," Mr. Childers said.

The company said its rate hike is needed because of higher operating and financing costs and lower operating revenues and a drop in Chattanooga Gas' customer growth rate.

But the company said the hike could be more than offset by measures in a proposed energy efficiency effort.

The program would include free programmable thermostats, rebate programs to encourage customers to buy high-efficiency appliances and equipment, and weatherization assistance for poorer customers.

Chattanooga Gas said the average residential customer could save up to $280 annually by using programmable thermostats and installing high efficiency appliances.

In June, Gov. Phil Bredesen signed a bill requiring the TRA to develop energy conservation programs and set up a rate-making policy that seeks to align utility incentives with helping customers be more sparing with energy, the company said.

It said its energy-saving proposal is based on a rate model known as decoupling, which separates the company's ability to turn a profit from the amount of natural gas sold.

Mr. Lindsey said decoupling aligns everyone's interests around good stewardship of natural resources.

"We have proposed decoupled rates and new energy efficiency and conservation programs to provide customers an opportunity to reduce their total gas usage and monthly gas bills," he said.

Larry Buie, the company's regional manager, said talk about reducing consumption is a change in Chattanooga Gas' corporate culture.

"When you really look at the mechanics behind it, it really makes sense," he said. "We want to be the best stewards of the energy we provide."

Chattanooga Gas is proposing the rate hike go into effect May 17. Its last increase in rates, about $1.9 million, took effect January 2007, the company said.