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W.Va. Senate president to probe gas utility hikes

CHARLESTON, W.Va. — With several utilities announcing increases in natural gas prices this fall, West Virginia Senate President Jeff Kessler says officials need to make sure residents are being fairly treated.

Kessler said Monday he is instructing his staff to begin gathering information on rate increases approved by the Public Service Commission of West Virginia.

“How are rates, in a state that is sitting on a motherload of natural gas, going up for residents?” Kessler said. “Based on the law of supply and demand, certainly we’ve got significant supply.”

Kessler pointed to Senate Bill 465 which gave “significant tax breaks to foster development of the gas industry.”

The commission announced the rate changes last week in a press release. Purchase rates are based on the price per Mcf, which equals 1,000 cubic feet of gas. Monthly rate changes are based on an average customer using 7 Mcf.

According to the release, residential customers of Mountaineer Gas and Peoples Gas will see their monthly rates increase by $6.97 and $4.06, respectively. The purchased gas rate for Mountaineer Gas is going from $5.30 to $6.29 per Mcf. The purchased gas rate for Peoples Gas is going from $5.09 to $5.67 per Mcf.

However, residential customers of Hope Gas should see their rates decrease by about $3.40 a month, according to the commission. The purchase price for Hope Gas is going from $5.15 to $4.66 per Mcf.

Officials said the increases follow eight consecutive years of decreasing gas rates.

The new rates go into effect Nov. 1.

Susan Small, spokesperson for the commission, said such adjustments are made on an annual basis and the commission reviews those changes before they are approved.

Larry Meador, manager of communications and business development for Mountaineer Gas, said the company will make no profit off of the increased purchase price.

“The adjustment is based off of the year before, did you estimate your costs correctly? What are you expecting the cost of gas will be in the year to come?” he said. “The year we are in right now, we estimated low. The companies are allowed to recover that difference. We’ve got that plus the small expected increase in natural gas prices.”

Small said a company’s base rate, which includes all of the costs necessary to provide gas service, is where the utilities make a profit. Any increase in base rate, which makes up about one-third of a customer’s bill, must also come before the commission for approval.

Small said while the commission has several base rate increase requests pending from power companies, she was not aware of any requests from natural gas utilities currently before the commission.

Small said historically the purchase price for West Virginia residents has steadily decreased during the past eight years. Meador said the price of gas had dropped starting in 2008, but then slightly increased beginning in 2012.

Kessler said he finds it hard to believe any resident’s gas bill actually decreased in recent years.

“I would like to see how many folks can point to their bills over the past few years and show it has gone down,” he said. “I know my bill has just continued to increase.”

Kessler said while lawmakers options are limited in dealing with the gas rate increases, legislators could appeal to the commission.

“The PSC is charged with looking into the rates. We could always ask for a reconsideration,” he said. “I just want to make sure any increases are justified.”

Small said the commission acts more like a court, and all rate requests are fully vetted by the commission. Small said while the commission does not have any control over the price of natural gas, it does review the purchasing practices of gas utilities to ensure prices are reasonable and in line with the current market.

For a full listing of rate changes, visit www.psc.state.wv.us.

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