PSC grants BGE higher gas rates Residential bills will go up 5.4%

October 04, 1995|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

The Baltimore Gas and Electric Co. yesterday was granted an increase that will raise the cost of natural gas to residential customers by 5.4 percent, or $19.45 million annually.

In addition, a hearing examiner for the Public Service Commission allowed the utility to raise a mandatory charge to those customers to $10 per month. That will generate $13 million in additional revenue for BGE.

The rate increase, while less than the amount BGE had requested, exceeded that recommended by the PSC staff. The increase will raise the average residential gas customer's bill by $2.74 per month.

"I'm disappointed in the revenue figure they determined, and I don't think it was justified," said Theresa V. Czarski, an assistant people's counsel in the Maryland Office of the People's Counsel, a citizens advocate group. "We made the argument that BGE's request was the result of the mild winter we experienced last year."

In the quarter ended March 31, the company's gas revenues dipped by 14 percent as a result of the mild winter.

Ms. Czarski said the People's Counsel intends to review the ruling before deciding whether to appeal. If an appeal is not filed, the ruling becomes effective early next month.

BGE sought the overall $30 million, or 7.6 percent, gas rate increase in April, in an attempt to offset $116 million in capital expenditures to its 617-square-mile natural gas system since 1992.

BGE, which declined to comment on the decision, maintains that gas costs to residential customers have declined by 14 percent in the past decade. BGE's last gas revenue increase occurred in 1993.

In making the ruling yesterday, Hearing Examiner Teresa M. Bay rejected a PSC staff recommendation that BGE be allowed a $14 million revenue increase. Originally, the PSC staff calculated in July that BGE should receive only a 1 percent increase, amounting to $352,000 annually. The $14 million figure was derived through a series of mathematical formulas and adjustments to the initial calculation.

The People's Counsel has asked for a $3 million annual decrease.

Ms. Bay's 103-page order said the company's rate of return on its gas system be reduced to 8.86 percent, from 9.4 percent.

BGE asked for a 9.54 percent yield.

Additionally, BGE's request to boost its return on equity from a current 10.86 percent to 12.5 percent was dismissed. The percentage was raised slightly, to 11 percent, said Frank B. Fulton Jr., a PSC spokesman.

A surcharge for new residential customers -- above the regular monthly charge -- was rejected by Ms. Bay. BGE intends to add 16,000 gas customers this year.

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