Laclede Gas Co. wants the Missouri Public Service Commission to let it include as extraordinary expenses more than $10 million to help make up for money the utility failed to earn this past winter, one of the warmest on record.

The amount would be figured into future rate cases as part of the utility's expenses, so customers wouldn't see the increase immediately.

Laclede proposes to classify a warm winter as an extraordinary event, such as an ice storm or computer preparations for the year 2000. Ice storms and Y2K led Laclede to incur unusual expenses, which then could be figured into future rate requests to the commission.

Adding warm winter weather to that category, under present procedures, would be unprecedented. Warren Wood, energy chief at the commission, said including warm weather would be "a jump over into a new category."

Wood said the commission staff will file its recommendation this week. Then the five-member commission will decide whether to permit classifying a warm winter as an extraordinary event.

Jane Dotson, a spokeswoman for Laclede, said that if the natural-gas utility had a different rate plan, called a weather-mitigation clause, it could overcharge customers during warm months and undercharge in cold months, and its cash flow would smooth out.

Cash flow during warm winter months is a built-in hazard for a gas utility. Laclede Group, which owns Laclede Gas, doesn't have a company that specifically generates cash during warm winter months.

But Laclede Group recently bought a company that finds and marks utility lines throughout the Midwest as a way to bring in cash during the summer, when earnings typically are low because customers use less natural gas.

The exact amount of Laclede's request is confidential, said Doug Micheel, a lawyer with state Office of Public Counsel.

The utility, which serves 630,000 customers in eastern Missouri, still has fixed administrative and overhead costs, Dotson said.

Micheel said the utility's weather-related shortfall is not a cost. "It means they didn't get as much revenue as they wanted," he said.

John Coffman, acting director of the Office of Public Counsel, said in a statement: "If the weather is severe and cold, Laclede gets the break and recovers more revenue from customers. If the weather is mild, the customers get the break on their other bills. . . .

"When opportunity knocks, the door should open both ways. Laclede did not give back any extra income it had last year with the cold weather; it should work the same way for the consumer."

Laclede has said it will pay a dividend of 33.5 cents on April 1 for the first quarter, and it is projecting total dividends for this year of $1.25 a share.

In January, it asked the commission for an administrative rate increase of $36.1 million to cover its operating costs. The commission will decide that case year's end. That is separate from the more than $10 million request.

Last year, Laclede asked for a $39.8 million rate increase to cover costs related to paying employees and running its distribution system. The commission knocked that down to $15 million.

St. Louis Today

-- Anonymous, March 26, 2002