BGE asks to raise gas rate

$36.3 million increase would add about $4 to residential bills

November 18, 1999|By Shanon D. Murray | Shanon D. Murray,SUN STAFF

Baltimore Gas and Electric Co. asked the Maryland Public Service Commission yesterday to approve a $36.3 million natural gas distribution rate increase.

The utility said the increase is needed to maintain its system and expand service.

The rate boost would raise natural gas distribution prices by 6.9 percent, and increase the average residential consumer's bill by $4 per month, to about $64, the utility said yesterday.

This is BGE's third request for a rate increase in four years.

If granted by the commission, the rate increase will go into effect in June and apply to all of the utility's 580,000 customers in Central Maryland -- even those who buy gas from other suppliers.

The primary reason for the increase request is "so we have the opportunity to continue to maintain the distribution system in a safe and reliable manner," said D. Douglas Dewitt, BGE director of gas regulatory planning.

"As in any rate case, we're seeking to recover costs that have already been spent," he said. "We're hopeful we will receive an award in this case sufficient enough to not seek a gas rate case for some time."

The proposed increase would raise BGE's rate of return for natural gas from a projected 6.81 percent for the year ending Dec. 31 to an overall rate of return of 9.7 percent, Dewitt said.

Natural gas sales in Maryland were fully deregulated Nov. 1, but BGE's system of nearly 6,000 miles of pipe remains regulated by the commission.

Almost 90,000 Baltimore-area residents have enrolled with one of the nearly dozen natural gas suppliers operating in the terri- tory of BGE, which continues to distribute the gas through its pipelines, regardless of the supplier.

About 40 gas suppliers are active in Maryland, and about a dozen serve the residential market.

A hearing and review process by the commission could take seven months, said Sandra Guthorn, the deputy people's counsel.

"We're going to read the request, and actively participate in the process," she said.

There is also a chance the rate case could be settled, Dewitt said.

BGE's last natural gas rate increase took place in March 1998, when the commission granted the utility permission to raise natural gas rates by 2.8 percent, which BGE said it needed to fund capital improvements and expand its system.

The action raised typical gas rates on energy bills by $2.03 a month, allowing BGE to collect $16 million more annually.

BGE also received a rate increase in November 1995, when the PSC granted the utility a $17 million increase that raised residential bills an average $3.38 per month. BGE had sought a $30 million increase.

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