ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Thursday, January 9, 1997 TAG: 9701100021
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
SOURCE: GREG EDWARDS STAFF WRITER
American Electric Power Co.'s rates may be going up, but Roanoke Gas Co.'s rates, which recently jumped dramatically, may be coming down.
The Virginia State Corporation Commission said Wednesday it has set a Jan. 30 hearing on AEP's request to raise the fuel-cost portion of its monthly rates - an increase that, if approved, would add $1.18 or about 2percent to its average residential power bill for a customer using 1,000 kilowatt hours.
AEP has asked that the rate increase take effect Feb . 1. The increase would generate an additional $17million in annual income for the company, spokesman Tom Ayers said.
Meanwhile, a recent drop in the wholesale price of natural gas may mean some good news for Roanoke Gas customers.
The company recently raised its rates by 27percent because of a dramatic increase in the wholesale price of natural gas, but if recent declines in the wholesale price hold, then Roanoke Gas intends to ask the SCC for permission to cut its consumer rates, said company Vice President John Williamson III.
The open-market or spot price of natural gas, which rose to roughly $4.75 per 1,000 cubic feet in mid-December, fell to a little over $2.50 per 1,000 cubic feet by Jan. 1 as the East Coast enjoyed an extended warm spell. News that cold weather was coming, however, sent the wholesale price back up to $3.50 per 1,000 cubic feet by Tuesday.
If temperatures moderate after this week and gas prices come down and stay down, Williamson said Roanoke Gas intends to ask for a downward adjustment in its rates. If rates are adjusted downward, the 25percent of the company's 47,000 customers in the Roanoke Valley who pay on a budget plan would see their bills lowered from April through June or the last three months of the company's fiscal year, he said.
Another rate increase that Roanoke Gas has requested from the SCC will not be affected by changes in gas prices or the weather. On Dec. 2 the company asked the commission for permission to raise its base rates by 1.99percent, which would increase its annual collections from customers by $959,277 per year.
The company needs the additional money primarily to cover the cost of improvements it is making to its transmission system and depreciation, Williamson said.
The commission issued an order Dec. 20 permitting that rate increase to take effect on an interim basis, subject to refund, on Jan. 1. The increase is reflected as part of the 27percent increase on January bills.
The SCC last granted Roanoke Gas an increase in its base rates in September 1995 in reaction to a request the company made about a year earlier. The company had then wanted to raise its yearly revenue by $1.28million, but the commission allowed only a $655,347 increase.
In its current rate request, Roanoke Gas is asking to be allowed to increase its return on equity to the same 11.7percent that the commission granted previously. If the SCC does not grant all of Roanoke Gas' requests, the company will have to refund the amount it has over-collected using the interim rate that took effect Jan.1.
The commission has not set a hearing date on Roanoke Gas' latest request.
The hearing on AEP's rate request will be Jan. 30 at 10 a.m. at the commission's headquarters in downtown Richmond in the Tyler Building, 1300 E. Main St.
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