Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, November 18, 1993 TAG: 9311200260
SECTION: BUSINESS PAGE: B-10 EDITION: METRO
SOURCE: By By GREG EDWARDS STAFF WRITER
DATELINE: LENGTH: Medium
A federal rule that took effect Nov. 1 could result in a 1 percent increase on the utility's monthly bills for both residential and commercial customers, Vice President Rob Glenn said.
Another aspect of deregulation, however, means Roanoke Gas is paying a lower wholesale price for gas, and that is partially offsetting what could be even larger bills.
An order by the Federal Energy Regulatory Commission ``unbundled'' the gas transportation function of big interstate natural-gas pipeline companies from their other role as wholesale suppliers of gas to local distributors such as Roanoke Gas.
Rather than turning to pipelines for their gas supplies, local gas utilities now have to go on the open market to find gas, then arrange for pipelines to deliver it.
Roanoke Gas is not having any trouble finding supplies as it moves into the winter heating season, and it's doing it at cheaper prices, Glenn said. The company is using a gas industry consultant to help line up supplies.
Roanoke Gas is not without experience in buying gas on the open market. In the past, it bought two-thirds of its gas from the pipelines and the remaining one-third on the open or ``spot'' market. Buying from the pipelines helped provide a guaranteed supply and buying on the spot market helped hold the company's costs down, Glenn said.
The federal rule change that may mean slightly higher residential and commercial bills is one that shifts more of the expense of reserving pipeline capacity from industrial users to residents and businesses.
Because gas companies are allowed to cut off gas to industrial customers - such as Roanoke Electric Steel Corp., in the case of Roanoke Gas - when supplies get tight, the government contends it's not appropriate to pass along the costs of guaranteeing pipeline access to those industrial customers, Glenn said.
Roanoke Gas has estimated that the further shifting of these costs will result in the 50-cent monthly increase in the average residential gas bill. The company said its average residential bill now is about $52 a month.
But Roanoke Gas' customers won't feel the impact of the rule change as much as in some other utilities where the percentage of industrial customers is higher, Glenn said.
Seventy-five percent of Roanoke Gas' customers are residential, and they've already been paying a large portion of the cost of guaranteed pipeline capacity, he said.
The fact that residential gas bills are 16 percent below what they were a decade ago seems to indicate deregulation is working, Glenn said.
The gas industry supports deregulation but is committed to stepping in and protecting customers' interests if deregulation poses a threat to gas supplies or competitive gas prices, he said.
by CNB