Chattanooga Gas Co. is proposing to raise its rates by 8.6% this fall to help pay for planned expansions and upgrades of the natural gas network in Hamilton and Bradley counties and to recover costs incurred by the utility during the pandemic.
The utility is seeking permission from state regulators to raise gas rates enough to generate up to $6.8 million more each year over the next four years to help recover what it spent last year and to fund $150 million of planned capital improvements that the gas utility is planning to make over the next four years to extend its gas connections and better utilize its liquefied natural gas (LNG) plant in Chattanooga.
In its annual filing for the rate review mechanism used by the Tennessee Public Utility Commission, Chattanooga Gas estimates its costs rose in 2020 by $11.8 million due to higher expenses and writeoffs during the pandemic and continued expansion of its gas lines to serve new customers. To limit the rate impact from such expenses, the gas utility is proposing to cap its annual rate increase to $6.8 million and stretch out its cost recovery through 2025.
“Despite the economic uncertainty induced by the pandemic, demand for service from Chattanooga Gas increased in 2020, with more than 1,000 new residential and commercial customers connecting to the system,” said Pedro Cherry, president and CEO of Chattanooga Gas. “In order to continue to safely and reliably meet the region’s present and future needs, Chattanooga Gas made prudent, necessary enhancements to its infrastructure.”
The rate filing 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.