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Roanoke Gas Files With SCC for 3 Percent Price Reduction

Posted on: Wednesday, 28 December 2005, 21:00 CST

By The Roanoke Times, Va.

Dec. 24--Roanoke Gas customers will be getting a small break starting in January -- the company filed for a 3 percent price reduction with the State Corporation Commission.

That translates to about $6.00 to $8.00 per month for the company's 57,000 area customers, according to Roanoke Gas president John Williamson.

"I was hoping maybe we'd see a 7 or 8 percent reduction," he lamented.

The company will begin charging $1.48 per therm, down from $1.52. Customers who get their bill on or after Jan. 2 will pay the new rate; it's effectively retroactive to December, Williamson said.

A therm of natural gas produces 100,000 British thermal units of energy -- about the same as three-quarters of a gallon of heating oil. That means Roanoke Gas' new price of $1.48 per therm is equivalent to about $2.05 per gallon of oil, although factors such as furnace efficiency and system design play a role.

The average Roanoke household uses about 900 therms of natural gas annually, Williamson said.

Unlike other utilities, retail gas companies are prohibited from making a profit on the gas they deliver to users' homes. Instead, the price of the gas is passed through directly to customers based on what Roanoke Gas pays Houston-based Sequent Energy, its broker. (Sequent purchases the gas from the producers -- companies such as ExxonMobil that do make a profit -- and pipes it to regional suppliers.)

Sequent's pricing is based on the economics 101 factors of supply and demand. Cold weather means greater demand, and the price goes up. And "it's been cold, and gas prices didn't come down as much as I would have liked," Williamson said.

Roanoke Gas must file for rate changes every three months to adjust the "pass-through" price of gas. But, Williamson explained, "if gas costs are changing dramatically we can speed that up and file monthly." That's what happened this month.

The company next has to file in March, but Williamson said that "if the weather warms up and prices drop we will file sooner."

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To see more of The Roanoke Times, or to subscribe to the newspaper, go to http://www.roanoke.com.

Copyright (c) 2005, The Roanoke Times, Va.

Distributed by Knight Ridder/Tribune Business News.

For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.

RGCO, XOM,

Source: The Roanoke Times

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