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Chattanooga Gas Co., will increase its rates next month by nearly 4.4 percent, adding about $1 a month to the typical residential natural gas bill in Chattanooga.

The rate increase, the first in eight years for the Chattanooga utility, was approved Monday by the Tennessee Public Utility Commission after eight months of review and hearings on the company's request. The increase will provide another $1.4 million for Chattanooga Gas, a subsidiary of Southern Co. But it is only 23 percent of the $6.1 million increase originally sought by the company.

Chattanooga Gas said in its original filing in February it needed extra revenues to pay for ongoing capital improvements, including a $20 million pipeline from an existing liquefied natural gas (LNG) plant into the Red Bank and Signal Mountain areas to make pressure improvements to better serve Lookout Mountain. The company also sought to improve its rate of return on its investment.

But Greg Mitchell, a spokesman for the state agency, said PUC directors determined that a $1.4 million increase "is sufficient for Chattanooga Gas Company to continue provisioning safe and reliable service while also providing the Company's shareholders with a fair return on their investment."

Mitchell said the increase will boost rates by 4.36 percent compared with the initial request that would have boosted rates by 27.75 percent. But the company claimed in a statement the increase is only 2.25 percent of what was originally an 11 percent rate increase.

Even with the increase in base, regulated rates, effective on Nov. 1, the delivered price of natural gas to consumers will still be about 20 percent below a year ago due to the drop in the commodity price of the fuel.

"Natural gas prices remain at historically low levels," said Mekka Sherre Parish, a spokeswoman for Chattanooga Gas. "Customers will pay 20 percent less in November for natural gas priced at 46 cents per therm as compared to 58 cents per therm in 2017."

Natural gas prices rose a decade ago to as high as $1.20 per therm in Chattanooga, or triple the current inflation-rate for the fuel.

"Natural gas remains a good value for customers," Parish said.

David Klinger, purchasing manager at McKee Foods in Collegedale and one of the biggest customers of Chattanooga Gas, said Wednesday he thinks the approved rate increase "is fair to customers and to the gas company."

Because Monday's rate decision by state regulators in Tennessee has not yet been published, "other than implementing the authorized changes, the company will continue its review of the decision" to decide whether to appeal or file for other rate increases in the future, Parish said.

The last rate increase granted to Chattanooga Gas Co. by the state Public Utilities Commission was in 2010.

Contact Dave Flessner at dflessner@timesfreepress.com or at 757-6340.

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