NASHVILLE - In a landmark step, the Tennessee Regulatory Authority on Monday approved an experimental rate design that lets Chattanooga Gas Co. push energy conservation while also maintaining its revenues.
The net effect is expected to increase the average residential user's natural gas bill by 5 cents a month, according to TRA Director Eddie Roberson and Chattanooga gas officials.
"In a time when our nation has been awakened by the need to be more energy independent, all agree that energy conservation is the low-hanging fruit on the path to energy independence," Dr. Roberson said.
The plan "more properly aligns the interest of ratepayers and utilities in better promoting energy efficiency," Dr. Roberson said.
It will be implemented June 1 on a three-year trial basis, he said, and the plan includes a 2 percent cap on on future increases on the alignment and usage adjustment. Chattanooga Gas, owned by AGL Resources, must report on how the program fared with "specific attention" on the company's profits so that "appropriate action can be taken if warranted," Dr. Roberson said.
TRA Chairwoman Sara Kyle and Director Mary Freeman joined Dr. Roberson in voting for the changes, which the company sought as part of a general rate case.
Chattanooga Gas' regional manager, Larry Buie, said TRA's decision "is a historic point for not just the gas company but the state of Tennessee."
"This gives the opportunity to share with our ratepayers a new process or rate design. ... We think there's a lot of positives and the upside is the conservation of natural gas in Tennessee," Mr. Buie said.
The change allows Chattanooga Gas to charge a set fee to recover more of its fixed service costs, which currently are recovered through charges on the volume of gas a customer consumes. The industry refers to it as decoupling.
While proponents say decoupling allows utilities to promote conservation, legislative critics last year said it also lets the company maintain its fixed costs even while consumption goes down with ratepayers in effect paying more for less. Efforts last year by the natural gas companies to push decoupling through the legislature failed.
The set fee charge to residential users will increase from $10 a month in the summer and $12 in the winter to $13 and $16, respectively. But at the same time, charges on volumetric use will fall, resulting in a 5-cent increase for the average residential user, Mr. Buie said.
In its amended request before the TRA, Chattanooga Gas had sought a $2.2 million increase in rates. That was lowered to $60,068 by the TRA.
The TRA, however, also allowed the company to recover from ratepayers $744,744 in legal expenses from a matter that grew out of a 2007 rate case.
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