RCA orders hearing over Enstar rate rise

Perhaps predictably, the Regulatory Commission of Alaska has suspended a rate increase recently proposed by Enstar Natural Gas Co., the main Southcentral gas utility, and has ordered a hearing into the rate change. The state Department of Law, the Southcentral Alaska electric utilities and some other entities have requested participation in the hearing.

Enstar applied to the commission in June for approval of an increase in the fees that the utility charges for the shipment of gas through its gas transmission and distribution pipelines, and for the inclusion of some gas storage fees in its gas cost adjustment. The rate increase, which would be applied in two stages, would result in a total increase to 3.9 percent of revenues. Enstar said that the impact to a typical residential gas bill would be an increase of 4.6 percent per year or $5.47 per month. The increased rate would also impact the cost of fuel gas for electric utilities, all of which use some portion of Enstar’s pipeline network for gas transportation.

Enstar has said that it needs to raise its rates to elevate its return on equity to an acceptable level.

The commission, in a July 18 order mandating the hearing into the rate change, said that Enstar’s rate filings “raise a number of issues that require investigation.” The agency has initially suspended the tariff until Jan. 18, 2017, although under state statutes the commissioners do not have to issue a decision in the case until Aug. 25, 2017. Meanwhile the new rate can be applied on an interim basis, but with a requirement for refunds if eventually found to be too high.

- ALAN BAILEY