Gas Co. Granted 1.2% Hike in Residential Users’ Rate

Southern California Gas Co. will raise its rates for residential customers by 1.2%, or about 60 cents a month, while rates for large industrial customers will fall 29.1% under rulings issued Tuesday by the state Public Utilities Commission.

The new rates, which take effect once the gas company files paper work in the next three to five days, will boost the average residential customer’s monthly gas bill to $24.80 from $24.20, the PUC said.

The new rates will add about $121 million in revenues to cover added operating costs and the rising price of gas, company officials said.

That revenue increase is less than the $135 million that the gas company sought, but is considerably more than the $47 million increase recommended by the Division of Ratepayer Advocates, a unit of the PUC staff that argues on behalf of consumers.

Consumer groups saw Tuesday’s PUC rulings as a continuation of recent decisions that seem to shift some of the utility’s operating costs from heavy industrial users to residential and small commercial customers. In the past, large industrial customers have subsidized the other users.

“It seems to be fairly indicative of PUC decisions lately, that the heavy weight seems to be falling on the small customers,” said Michel Florio, a lawyer with the private consumer advocacy group Toward Utility Rate Normalization.

In recommending the $121-million revenue increase, the PUC granted most of the company’s requests to improve aging equipment, as well as for $20.5 million for conservation and low-income programs, said PUC Administrative Law Judge Bertram Patrick. But the PUC agreed with the Division of Ratepayer Advocates that the gas company should cut administrative expenses.

The PUC also rejected a request by the company to raise its monthly service charge to $5 from $3.10.

“The single biggest reason for the increase in the core (residential and small commercial customer) rates is that the estimates of the costs of long-term gas supplies went up,” said Paul Clanon, a PUC staff member. “The reason non-core (large industrial customer) rates went down is that they did not include any estimate of future gas costs; they buy their own gas.”

Of Southern California Gas’ 4.5 million customers, 900 are large industrial users, who pay the company for use of its pipeline network. Roy Rawlings, a gas company vice president for regulatory affairs, added that the utility assumes the risk of doing business with large industrial customers. If revenues do not cover costs, then the utility must swallow the loss.

The new rates resulted from the PUC’s decision on Southern California Gas’ 1 1/2-year-long general rate case proceeding, its first in five years, under which the commission examined the utility’s overall cost of operation and estimated the revenue the utility will need to run in the next year.

Also on Tuesday, the PUC revised the so-called baseline allowance, or the amount of gas that can be purchased at low rates. In the summer, a customer who uses up to 19 therms of gas will pay 39.47 cents per therm, an increase from 36.68 cents. The same rate applies in the winter, but the baseline allowance was lowered to 55 therms from 62 therms.

Customers who use more than the baseline allowance will pay 75 cents per therm, which was reduced from 78.10 cents. A therm is equal to 100,000 BTUs.