Kentucky: Here we go again... Gas prices going up

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Tuesday, January 30, 2001 Hopkinsville, Kentucky

News Article Here we go again... Gas prices going up

By E.L. GOLD elgold@kentuckynewera.com

Western Kentucky Gas customers, already facing their highest gas bills ever this winter, will see another 21–percent increase in heating bills beginning Thursday, according to an order issued Monday by the Public Service Commission. The PSC called the rate adjustment "fair, just, reasonable and in the public interest" in the order.

The increase raises residential customers' cost of natural gas to $9.37 per thousand cubic feet, up $1.63 from the previous rate set in September.

With the hike, the cost of natural gas has more than tripled since this time last year, according to numbers from the Owensboro regional office of the gas utility. Residential customers who paid $49 per month in 1999 will pay approximately $157 per month after the increase.

Mayor Rich Liebe said early today he planned to call officials at the utility to voice his concerns about the continued price hikes.

"We get bombarded with calls from people who can't pay their bills," Liebe said. "They (Western Kentucky Gas) have a 20–year franchise with the city that doesn't leave any loopholes."

The increase approved Monday covers all of WKG's service area, including Hopkinsville and Christian, Todd, Trigg and Caldwell counties.

The rate hike was less than WKG asked for in its original request. Papers filed Dec. 28 asked for $10.65 per thousand cubic feet. However, PSC officials suspended that filing on Jan. 16 and asked for revisions. Gas company officials reduced the requested hike on Jan. 24.

"We were very pleased to do that," said Bill Senter, WKG vice president for rates and regulatory affairs. "The market had declined somewhat, and we could adjust our request downward."

In fact, gas prices have dropped sharply in the past three weeks. Analysts note warmer weather in January following the coldest December on record has reduced demand for gas and prices followed. However, the rate–setting formula includes provisions for recouping unexpected losses in previous rates.

Senter said the utility had been paying more for gas than the approved rate at which the utility was authorized to resell the fuel to customers. WKG makes no profit on the gas it sells. Company earnings come from the service network and delivery charges. Neither of those costs will rise under the new rate structure.

"We found ourselves getting behind in our gas cost recovery," Senter said. "We are constantly in a lag mode."

Part of that unrecovered cost was factored into the rate hike, according to the PSC order. It includes a "correction factor" of $1.13 per thousand cubic feet to recoup losses from the first seven months of 2000, before natural gas prices began to skyrocket last summer. Presumably, that charge will increase in future filings.

http://www.kentuckynewera.com/cgi-bin/view.cgi?/200101/30+Here-we-go-again----Gas-prices-going-up_news.html+20010130+news

-- Martin Thompson (mthom1927@aol.com), January 31, 2001


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