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Enstar files gas delivery rate increase Request to RCA to approve new fees for shipping gas through utility’s pipelines raises concerns by power companies, others Alan Bailey Petroleum News
Enstar Natural Gas Co., the main Southcentral Alaska gas utility, has filed a tariff advice with the Regulatory Commission of Alaska, asking the commission to approve increases in the rates that Enstar charges its customers for delivering gas through its pipeline network. The utility says that this will be the first increase in its rates since 2010 and that the rate increase is needed to restore the company’s return on its equity to the level approved in its last rate increase.
Power companies that use copious quantities of gas for power generation, along with a number of other gas users, have filed comments with the commission, expressing concern about the proposed increases.
Reasonable return As a regulated utility, Enstar is allowed to make what is referred to as “a reasonable return” on its cost of doing business: The utility has to submit an analysis of its costs to the commission, to allow the commission to assess whether a requested rate charged to customers fits that reasonable return criterion.
The two major components in the fees that Enstar charges its customers for their gas consist of the cost of the gas that the utility buys from gas producers and the price that Enstar charges for shipping that gas through its pipeline network to the customers’ gas meters. This new tariff filing applies to the second of those charges.
Two-stage increase Enstar proposes increasing the fees in two stages: an initial increase amounting to 1 percent of the utility’s revenues, starting on Nov. 1, and an additional increase, bringing the revenue increase to 5.06 percent, after commission approval. For general gas consumers the initial rate rise would bring rates from a current range of 10.87 to 11.26 cents per 100 cubic feet of gas, to a range of 11.28 to 11.42 cents. The final rise would bring the rates to a range of 11.45 to 13.37 cents for users of modest amounts of gas, and to 88.55 cents for general consumers with meters rated for consumption of more than 3,000 cubic feet per hour.
Enstar says that a typical residential monthly bill will increase by $5.64 as a result of the rate increases. Power station impacts Apparently the operators of gas-fired power stations would see sharp increases in the rates for the delivery of gas through Enstar’s pipeline system. In a filing with the commission, Bradley Evans, CEO of Chugach Electric Association, said that the Southcentral Power Project, the new power plant operated in south Anchorage by Chugach Electric and Municipal Light & Power, would see a gas delivery price increase of 101.7 percent as a result of the proposed rate changes. While accepting that much has changed since Enstar’s last rate increase, Evans requested the commission to conduct a formal hearing, to ensure that the rates are just, reasonable and in the public interest. Joe Griffith, general manager of Matanuska Electric Association, has told the commission that his utility strongly opposes the proposed rate increases. The rates for gas that his utility will need next year for its Eklutna power station will increase by 100 percent, Griffith said.
The Anchorage Home Builders Association has questioned the validity of some of Enstar’s cost parameters. And the United Association of Plumbers and Steamfitters has filed a formal complaint, citing a list of what it claims are deficiencies in Enstar’s rationale behind its rate-increase proposal. Cost additions Enstar, in its filing with the commission, says that there have been a number of additions to its “rate base,” the costs used to justify rate levels. These additions include improvements to the utility’s pipeline infrastructure; some upcoming upgrade projects; the cost of gas stored in the Cook Inlet Natural Gas Storage Alaska facility on the Kenai Peninsula; and the required replacement of a portion of a pipeline between Kenai and Anchorage.
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