|
Enstar applies to RCA for rate increase
Utility tells regulator current rates do not allow it to earn authorized rate of return; increase would average 5.28% for customer
Kristen Nelson Petroleum News
Enstar Natural Gas Co. has filed with the Regulatory Commission of Alaska for a rate increase.
In prefiled testimony, Enstar President John Sims said RCA ordered Enstar to file a rate case in 2025 or 2026 based on a 2024 or 2025 test year. He said the company is requesting an overall increase of 5.28%. That increase, Sims said, includes the cost of natural gas and 24.52% on non-gas revenue requirements, allowing Enstar "an opportunity to recover its just and reasonable costs and earn a fair return of and on prudent capital investments" in the company's Southcentral Alaska transmission and distribution system.
In its filing with RCA, Enstar said its current rates do not provide a reasonable return. Both the Alaska Supreme Court and the U.S. Supreme Court have ruled that rates which do not provide a reasonable return on property used in the public service are confiscatory. While a permanent increase of 5.28% in total revenue is requested, an interim and refundable increase of 4.52% is requested effective June 1.
Sims said the increase in rates is based on $127 million in capital investments and increases in annual operating expenses totaling some $8.8 million since the 2021 test year on which the company's current rates are based.
Increased costs Sims said that in 2021, the last test year, normalized operations and maintenance expenses were some $38.3 million. Those costs have increased and in 2024 were some $47 million, with the increase due to inflation, cost of labor, safety related costs with Pipeline and Hazardous Materials Safety Administration regulations for pipeline integrity, insurance, cybersecurity and additional regulatory changes and compliance efforts.
Sims said Enstar's cost to deliver natural gas is one of the lowest in the country, and assuming the company's application is approved, cost of natural gas delivery service, not including the cost of the gas, would be $3.67 per thousand cubic feet, well below the national average as reported by the Energy Information Administration of $13.14 per thousand cubic feet.
He said Enstar has not earned its authorized returns since the 2021 rate case was filed, "significantly" underearning compared to the authorized rate or return in the last three years, with the 2022 return somewhat below that authorized and decreasing to a return in 2024 less than half of that authorized. Sims said Enstar plans to file a ratemaking mechanism allowing it to adjust its base rates annually, similar to the rate mechanism used by Cook Inlet Natural Gas Storage Alaska.
| 