The Baltimore Gas & Electric Co. today asked the Public Service Commission to allow it to increase natural gas rates by 5.5 percent to residential customers.
The company said that while the price of natural gas has declined, the costs of delivering the gas and expanding the pipeline system have increased.
The proposed increase, which must be approved by the state Public Service Commission, would increase the monthly gas bill for a household using 90 therms from $51.83 to $54.71, or $2.88.
The rate for commercial users would increase by 0.7 percent, boosting a monthly bill for 500 therms of gas from $261.14 to $263.08. Therms are used to measure quantities of natural gas.
The increase for both commercial and residential customers averages out to 3 percent and will add $12.7 million to BG&E's revenues, according to a BG&E press release.
BG&E, which filed the request with the PSC today, is proposing that the rate increase becomes effective at the beginning of November.
If approved, the increase would be the first increase in natural gas rates since 1984. In fact, for the last seven years gas prices have been dropping and BG&E has lowered gas rates by $2 million in 1987 and $3.5 million in 1989.
Overall, the price of natural gas dropped by 17 percent in the last seven years. When that decrease is adjusted for inflation, which increased 26 percent during that period, the decrease was 34 percent, according to BG&E.
While gas prices are continuing to decrease, the cost of delivering it has moved up, according to BG&E spokesman Arthur J. Slusark.
Part of the increase stems from the renewed popularity of natural gas and BG&E's selective efforts to expand its gas system to serve the new customers. There are also higher costs in maintaining and improving the system, according to the press release.
While there have been no gas rate increases in recent years, there have been numerous electric rate increases.
F: The most recent electric rate increase was in February
when the fuel adjustment rate was boosted by $48 million, adding $1.69 a month to the bill of a household using 900 kilowatts of electricity.
The fuel adjustment rate, which makes up about 25 percent of a utility bill, allows the utility company to pass on the cost of higher fuel costs.
That was the seventh fuel adjustment increase that BG&E has requested since mid-1989. The increases primarily stemmed from the cost of buying power from other utilities to replace power that would have come from the BG&E's Calvert Cliffs nuclear power plant, which has been out of operation because of mechanical and regulatory problems. The cost of replacement power for both reactors at the plant averages $600,000 a day.
While one of the two reactors has been returned to service, unit two remains shutdown. Unit two has begun the "heat up" process, but the company must still get permission to produce power from that unit from the Nuclear Regulatory Commission, according to Slusark.
On Dec. 17, the commission granted a $77 million base rate increase to BG&E. The commission also approved another $72 million increase effective in June.