Aug. 9—The typical residential customer of Chattanooga Gas Co. will pay about 25% more in their monthly heating bills this winter compared to last year, reflecting higher natural gas prices and the cost of investments the utility has made to maintain and upgrade its natural gas service in Chattanooga and Cleveland, Tennessee.
The Tennessee Public Utility Commission voted Monday to approve the company's request for a 5.66% increase in its Annual Review Mechanism that allows utilities to recover capital investments needed to maintain gas delivery service to its customers. The rate increase adopted by state regulators will add $4.20 to the average residential gas bill and be effective Sept. 1.
Additionally, natural gas prices, which are reflected in the company's purchased gas adjustment rates, will be $13.05 a month higher than they were a year ago for the typical customer in September. Combined, the rate changes will boost gas bills for the typical customer by $17.25 next month compared with a year ago.
Rate increases are projected to be even higher in the winter months, when gas consumption jumps for residential users. Subject to varying weather and usage, the average Chattanooga Gas customer is projected to be billed by Chattanooga Gas for $125.56 in December (up from $10.75 a year ago) $167.05 next January (up from $133.47 a year earlier) and $158.54 in February (up from $121.54 a year earlier).
"Current natural gas costs reflect the impact of supply constraints and higher demand this winter heating season," Chattanooga Gas Co. said in a notice of its plans to raise rates effective Sept. 1. "Chattanooga Gas does not profit from these increased costs and instead passes on the market cost directly to customers."
The commodity price increase for natural gas comprises about 70% of ratepayer bills. The gas utility, which is a subsidiary of the Southern Natural Gas Co., also is able to pass along approved capital investments the utility makes each year to serve its 68,000 customers in Hamilton and Bradley counties. Chattanooga Gas gained approval for more than $6.8 million in rate adjustments for work completed in 2021.
The Public Utility Commission ruling, which aligns with agreements made between Chattanooga Gas, the Tennessee Consumer Advocate and the Chattanooga Regional Manufacturers Association, allows the company to recover costs incurred in the past year to improve the capacity and reliability of the gas service in the region.
In a similar Annual Review Mechanism rate adjustment a year ago, Chattanooga Gas raised its rates 8.1% to help pay for investments in expanding gas distribution across the region.
To minimize the effect on customers' bills, Chattanooga Gas is limiting the rate request based on the voluntary rate cap proposed by the company and approved by regulators in 2021 for rate filings made through 2024.
"As the Chattanooga area continues to grow, it's incredibly important we continue to make smart investments needed for our customers to have clean, safe, reliable and affordable natural gas," said Pedro Cherry, president and CEO of Chattanooga Gas, in a statement Monday. "This agreement ensures we can continue to meet the region's growing demand while maintaining safety, reliability and enhancing the customer experience."
Utilities are raising rates this summer after fuel and equipment prices have jumped due to higher inflation, interest rates and supply chain problems exacerbated by the ongoing war in Ukraine.
EPB electricity rates are up by more than 27% in August compared with a year ago. Local water utilities also have raised their rates this summer, although far less than most power utilities. The Tennessee Public Utility Commission agreed Monday to allow Tennessee American Water to boost its residential water rates by an average of $1.30 a month in September to recover the $20.4 million the water utility spent on capital projects last year in the Chattanooga area.
To help consumers with the higher costs of natural gas, Chattanooga Gas said customers can find energy efficiency tips and programs at bit.ly/engtips22. In addition, the company offers energy assistance resources for customers to help offset their natural gas bill at bit.ly/engres22.
Contact Dave Flessner at firstname.lastname@example.org or at 423-757-340. Follow him on Twitter at @dflessner1.
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