Vermont Gas seeks rate increases totaling 28 percent by fall

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Tuesday, March 13, 2001

Vermont Gas seeks rate increases totaling 28 percent by fall

By Sue Robinson Free Press Staff Writer

Vermont Gas has asked state regulators permission to raise its natural gas rates by 28 percent by this fall in anticipation of rising wholesale gas prices. The latest rate request follows a 24.4 percent increase granted in November.

If granted, the new request would add about $273 a year, or $23 a month, to the average customer's gas bill.

Vermont Gas spokesman Scott Scholten said the company hopes it will not have to exercise the full 28 percent increase, but gas prices have become increasingly unpredictable.

"We are seeing wholesale prices moving 10 percent in a day," Scholten said. "There is no telling what that number will be in October."

National gas companies buy their gas on the wholesale market, where supply and demand drive prices. Prices in that market have risen this year, in part because higher oil costs have increased reliance on natural gas, in part because of the strong economy, and in part because of low gas inventories. The cold winter also contributed.

Customers began paying a 24.4 percent increase -- of which 7.6 percent is permanent and 15.6 percent is temporary -- in November. Vermont Gas' request to make the 15.6 percent increase permanent is pending before the board.

"We need to get out of this mode of filing increases and confusing customers, and try to install some stability to our customers," Scholten said.

To protect consumers, Vermont Gas proposes: buying price insurance to hedge against volatile prices in wholesale markets; creating an account that would spread the cost of short-term spikes to customers over the year; and submitting quarterly reports to the Public Service Board to keep them abreast of changing market conditions.

Scholten noted that buying price insurance this winter saved the company $5.6 million between November and March.

"It is interesting that the gas company is thinking about creative ways to make their purchases so we are very interested in taking a look at their ideas," said Christine Salembier, commissioner of the Vermont Public Service Department. The department advocates for consumers in rate requests.

News of the third rate increase filing dismayed Vermont Public Interest Research Group. Paul Burns, the director of advocacy for the consumer group, said he's skeptical whenever large increases are requested.

"This size increase can cause real hardship for consumers," Burns said. "With all the burdens that this winter has brought in terms of high fuel costs, it is one more headache that consumers don't need."

The 28 percent increase includes an 11.2 percent rate increase request filed in September, but postponed until this spring, and a new 14.8 percent increase request filed last week.

"Gas prices for years were very stable, and now we are seeing these spikes and we need to deal with those spikes," Salembier said. "I don't think it will stay this way forever."

Vermont Gas is Vermont's only natural gas company and employs 100 employees, serving Franklin and Chittenden counties.

http://www.burlingtonfreepress.com/bfpnews/local/1000h.htm

-- Martin Thompson (mthom1927@aol.com), March 13, 2001


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