FLAGSTAFF, Ariz., Nov 07, 2008 (BUSINESS WIRE) -- UniSource Energy Services (UES) filed a request today for new natural gas service rates that would increase average residential bills by an estimated 6 percent beginning in late 2009 or early 2010.
UES' current rates are based on costs the company incurred during 2005, and expenses have increased steadily since then. The company has spent more than $54 million since 2005 to strengthen and expand its distribution system while adding more than 5,000 new customers.
"We've invested heavily in maintaining reliable service for our current customers, while extending service to new residents and businesses," said David G. Hutchens, Vice President of UNS Gas for UniSource Energy Corporation (NYSE: UNS), UES' parent company. "Our rates must allow us to recover our costs, which have increased significantly over the past three years."
In a request filed with the Arizona Corporation Commission (ACC), UES has proposed phasing in an increase to its monthly customer charge while eventually reducing its usage-based rates. This change will align the company's rates more closely with the costs of serving individual customers, which do not vary significantly with consumption.
At first, the residential customer charge would increase from $8.50 to $10, while the distribution rate for residential usage would climb from 32.7 cents to 39.2 cents per therm. That rate does not include the cost of natural gas, which accounts for the majority of customers' bills.
A year after the new rates take effect, the customer charge would rise to $12, but the per-therm distribution rate would fall to 34.8 cents. The following year, the customer charge would increase again to $14, while the distribution rate for usage would be reduced to 30.4 cents per therm -- more than two cents lower than it is today.
The proposed increase would not affect low-income customers participating in the CARES program, who would continue to pay a discounted $7 monthly customer charge and current usage rates. Program participants also would continue to enjoy additional discounts of up to $15 per month from November through April, when gas bills typically reach their peak.
"We'd also like to work with public assistance agencies, advocates for the low-income community and others to offer additional assistance for customers who may be struggling to pay their gas bills," Hutchens said.
New discounts could be offered to customers whose income exceeds the limit for the CARES program, which is available only to those whose gross household income does not exceed 150 percent of the federal poverty level. That eligibility limit is currently $2,651 per month for a family of four. Like the current CARES discounts, any new programs would be subsidized through rates paid by other customers.
Finally, UES has proposed increasing the cost of new gas line extensions by up to $6.50 per foot. That change, along with the elimination of a previous free footage allowance for new connections, is intended to ensure that developers and buyers of new homes and businesses pay a fair share of growth-related costs.
UES' request for higher rates will not affect bills this winter, which are expected to be about 8 percent higher than they were last winter, due to higher natural gas costs. The request also will not affect the cost of gas itself, which UES purchases at market prices and provides to customers without any markup or profit.
UniSource Energy Services provides natural gas service to nearly 146,000 customers in Mohave, Yavapai, Coconino, Navajo and Santa Cruz Counties. The company also provides electric service to more than 90,000 customers in Santa Cruz and Mohave Counties. For more information about UES, visit uesaz.com. For more information about its parent company, UniSource Energy, visit uns.com.
SOURCE: UniSource Energy Services
UniSource Energy Services News Media: Joe Salkowski, 520-884-3625 Investor: Jo Smith, 520-884-3650
Copyright Business Wire 2008
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