Arkansas Western Gas seeks surcharge

JOEL KIRKLAND ARKANSAS DEMOCRAT-GAZETTE

FAYETTEVILLE -- About 133,000 Arkansas Western Gas Co. customers could see their gas bills increase as much as $27 a month if state regulators allow the company to impose a temporary surcharge.

The Fayetteville-based company, which serves most of Northwest Arkansas, asked the Arkansas Public Service Commission this week for permission to charge an extra 30 cents per hundred cubic feet for three months. The company based its $27 monthly average increase on normal usage rates.

The utility is not allowed to charge a base rate that's more than the prices set by its group of suppliers. The company must get permission from the Public Service Commission to charge anything beyond that base rate. The state has 30 days to respond to the gas company's request. Robert Booth, who manages the commission's gas and water cases, said he believes the agency's staff will have a recommendation by Friday. The temporary surcharge would be for February, March and April.

Utility rates nationwide have steadily increased since October. Natural gas rates have risen by as much as 50 percent over much of the United States, and customers have watched utility bills rise from $60 to nearly $300 in some regions. Northwest Arkansans, too, have seen their utility costs rise with the cost of delivering natural gas. A surge in energy consumption, the nation's record-long economic expansion and unusually cold winter have contributed to higher costs. Natural gas companies are charged a certain price per thousand cubic feet at the well head. The price charged by oil suppliers has more than tripled since January 2000. It grew from $2.27 to $9.83 this January. The price was as low as $1.76 in January 1999. "Supplies were just tight," said Charles Stevens, senior vice president of Arkansas Western Gas. "Because we're in the commodity market, when supplies are tight, costs are going up." Usage has been anything but normal in recent months, and unusually cold winter months in Arkansas and nationally have contributed to a supply crisis. Arkansas Western Gas said January and February were about 40 percent colder than usual, which translated into about 15 percent more gas usage. The local gas company had a $10 million deficit in December and a $12 million deficit in January. Arkansas Western Gas projects its total 12-month deficit at $35.9 million by the end of February. That figure represents the money the company has spent to obtain gas but has yet to recover from customers. Utilities generally build seasonal deficits that occur throughout the year into their annual budgets. The companies must operate in the red during those times to ease the burden on customers. Arkansas Western operates on a 12-month-billing system that essentially bills customers about one-twelfth of the costs for supplying their gas over the past 12 months. That's a system that was developed during a period when natural gas costs were relatively stable. When deficits start building up into the $30 million to $35 million range, Stevens said, that system becomes difficult to cope with.

About 40 percent of Arkansas Western Gas's supply comes through parent company Southwestern Energy Co.

Southwestern has picked up the pace and scope of its drilling in Arkansas, Oklahoma, Louisiana, Texas and New Mexico. But that extra supply won't be prepared for distribution by Arkansas Western for several years.

This article was published on Thursday, February 1, 2001

http://www.ardemgaz.com/today/biz/D1bnwwestga1.html

-- Martin Thompson (mthom1927@aol.com), February 01, 2001