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This story was updated Monday, Sept. 14, 2020, at 8:45 p.m. with more information.

Chattanooga Gas Co. rates will rise 7% next month to help pay for the continued upgrade and expansion of the natural gas utility in Chattanooga.

The Tennessee Public Utility Commission Monday authorized Chattanooga Gas to boost its rates $4.8 million in the next year, starting Oct. 1, for the 68,000 homes and businesses served by the private gas utility in Southeast Tennessee. The rate hike approved by state regulators was slightly below what the utility asked for this spring, but the gas utility will still boost the typical residential natural gas bill by $2.98 a month in October as the winter heating season begins.

Chattanooga Gas officials noted that with cheaper commodity prices of the fuel itself, the average gas bill will still be about 4.1% lower than a decade ago.

"Today's ruling acknowledges we have made prudent investments to ensure the safety and reliability of our infrastructure, meet our customers' demands and support growth in the Chattanooga region," said Pedro Cherry, president and CEO of Chattanooga Gas. "These rate adjustments allow us to better serve the community. "

Last year, Chattanooga Gas Co., spent a record $38 million upgrading the piping and infrastructure for natural gas delivery and the utility expects to spend up to $30 million a year for the next several years making sure that Hamilton and Bradley counties have adequate gas to accommodate the economic growth in the region.

"We are mindful of the impact any increase can have on customers during this unprecedented time, and we appreciate the Consumer Advocate's collaboration to ensure this rate adjustment truly benefits all of the Chattanooga region," Cherry said in a statement after the state commission approved the rate increase. "As the region works to recover from the economic impacts of the coronavirus, investments like these will enable us to serve as a key ally in efforts to rebound."

A report by the Consumer Energy Alliance recently estimated that the availability of natural gas infrastructure critical to major industries generated investment to support 18,475 jobs in the Chattanooga region.

The rate increase was delayed this year, at the request of Chattanooga Gas, to help struggling consumers and companies when many businesses were shut down this spring due to the coronavirus.

The impact of the rate adjustment was minimized from an even higher rate hike that would otherwise be needed by the acceleration of the return of $3.4 million in credits stemming from the 2017 Tax Cuts and Jobs Act to customers.

Chattanooga Gas is one of four natural gas distribution companies of Southern Company Gas, a subsidiary of Southern Co., and provides retail natural gas sales and transportation services to approximately 68,000 customers in Hamilton and Bradley counties.

While natural gas rates are going up this fall, electricity rates are stable and could even decline as the Tennessee Valley Authority keeps its base rates constant for a second consecutive year while providing rebates to the local power companies that distribute its power. Lower fuel cost adjustments by TVA also have kept the delivered price of electricity below the price consumers paid five years earlier.

But other utilities also are raising their rates this fall. The Hamilton County Water and Wastewater Treatment Authority is raising sewer rates for its roughly 30,000 customers by 12% next month for ongoing sewer upgrades needed to meet federal water pollution standards.

While the city of Chattanooga opted to take a break from its usual yearly increase in its sewer rates this fall due to the coronavirus, the city is still continuing to raise its stormwater runoff fees, which will rise another 9.8 % in October, according to Chattanooga city spokeswoman Richel Albright.

Contact Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340.

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