NASHVILLE — Tennessee’s largest seniors group, AARP, said Wednesday that a ruling in a Chattanooga Gas Co. rate case ultimately places a “burden” on consumers by requiring them to foot the bill for energy conservation programs.
AARP Tennessee Director Rebecca Kelly said that, while the group backs the Tennessee Regulatory Authority’s decision this week to slash Chattanooga Gas’ proposed rate hike, regulators’ decision to approve a “decoupling” provision for the company warrants close scrutiny.
Regulatory authority directors on Monday reduced Chattanooga Gas’ request for a $2.2 million rate increase for its estimated 61,000 customers to $60,068.
But the authority agreed to let Chattanooga Gas begin a three-year experiment that charges consumers a set fee to recover more of the company’s fixed service costs. The costs now are recovered through charges on the amount of gas a customer consumes. The new billing method is known as decoupling.
Chattanooga Gas, owned by AGL Resources, and other natural gas companies say that, under traditional rate-setting processes, they are discouraged from pushing energy conservation programs to customers because they will lose money.
Decoupling allows them to push conservation while maintaining their revenue stream, investments and profit, they say.
“In the short term, the TRA acted wisely to reduce this rate hike,” Ms. Kelly said in a news release. “But the decision to decouple rates from the amount of natural gas used will place a burden on consumers.”
She also urged the regulatory authority not to approve any requests by other natural gas companies to implement similar changes to utility rate structures until Chattanooga Gas’ decoupling experiment runs its course.
Tennessee Regulatory Authority Director Eddie Roberson said he believed the decoupling plan would “benefit both ratepayers and natural gas companies.”
At the end of the three-year period, Chattanooga Gas must provide a report “showing how the rate design has or has not worked,” he said.
“Specific attention will be paid by the TRA in reviewing the company’s rate of return over the period of the trial, and appropriate action can take place if warranted,” he said.
AARP’s Ms. Kelly said that “we believe the TRA should make sure this three-year trial results in real energy conservation from measures taken by the utility and not efforts by consumers or outside factors such as an economic downturn.”
Dr. Roberson noted that the TRA’s decision to reduced Chattanooga Gas’ rate request decreases the company’s rate of return to 10.05 percent. The effective impact of the decoupling ruling would increase the average monthly residential bill by five cents a month, he said.
The Tennessee Attorney General’s Consumer Advocate and Protection Division, which advocates on behalf of ratepayers before the TRA, opposed both the rate cut and decoupling.
In a statement this week, the attorney general’s office said it was “pleased” the TRA allowed only a $60,000 annual rate increase instead of the $2.2 million it sought.
But with regard to decoupling, the attorney general’s office said that “we plan to monitor it.”