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Ouch! Price of Natural Gas Jumps 27 Percent Today

Posted on: Monday, 3 October 2005, 18:00 CDT

By Melissa McGrath, The Idaho Statesman, Boise

Oct. 1--Some 260,000 Intermountain Natural Gas Co. customers in southern Idaho will see their monthly gas bills go up more than 27 percent starting today.

State regulators approved Intermountain Gas Co.'s request for an average 27.6 percent rate increase to help the utility recover the cost of buying natural gas.

The average resident who uses natural gas for space and water heating will pay about $17 more a month -- from about $63 a month to about $80.

The rate hike likely will impact local retail stores and restaurants as natural gas customers tighten their budgets to accommodate the rate increase, said Don Reading, a Boise economist with Ben Johnson Associates.

"For those customers who rely on gas for heat, it's going to mean another hit on the budget just like the higher gasoline prices mean a hit," Reading said. "That means less spending for the local economy."

Intermountain Gas filed for the rate increase on Aug. 7, and the Idaho Public Utilities Commission, the state agency that regulates public utilities, approved the utility's full request Friday:

--27.4 percent increase, or about $17.26 more a month, for residents who use natural gas for space and water heating.

--25.5 percent increase, or about $12.17 more a month, for residents using only space heating.

--28.4 percent rate increase, or about $77.76 more a month, for commercial customers.

The estimated rate increases are based on average monthly bills and will differ for each customer, said Mike Huntington, a spokesman for Intermountain Gas.

Kelli Fairless, Valley Regional Transit executive director, said the regional public transportation agency operates about 40 buses that run on compressed natural gas and will feel the increases.

"We do have a large user contract because of the volume we buy, so our rates tend to be lower overall than the average user," she said.

Intermountain Gas adjusts its rates every year about this time so Valley Regional Transit makes the adjustment part of its annual budgeting process, Fairless said.

Huntington said Intermountain Gas is sorry to have to raise rates, but pleased "that the current price we're having to pay to the producers to get the gas is now reflected in our customers prices."

Natural gas prices are up about 32 percent since the utility's last rate hike of nearly 10 percent in 2004.

The company has been able to lower the cost of buying gas to about 27 percent for its customers through various credits, surcharges and deals on storage contracts, the commission said.

The increase will generate $67.6 million in revenue, but none of that money will go to the utility company's earnings. All the money will be used to pay natural gas suppliers for the cost of gas.

The utility has not raised its base rate, which can go to the company's earnings, since 1985.

If the price of natural gas drops by at least 5 percent, Intermountain Gas must file for a rate decrease, the commission said. The commission, which must approve any rate changes, told natural gas customers Friday that the commission's staff made sure Intermountain Gas is not charging customers too much.

"Staff looks closely at all of the company's records and assures that the company is making efforts to keep costs down and making prudent decisions," the commission said.

Customers can ask the commission to reconsider the rate increase, but all petitions must be received before Oct. 21.

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Copyright (c) 2005, The Idaho Statesman, Boise

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Source: The Idaho Statesman, Boise

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