AOG seeks to lower monthly rates
by March 27, 2009 3:02 pm 114 views
An action sought by Fort Smith-based Arkansas-Oklahoma Gas Corp. would lower the average residential summer natural gas bill by $1.74, and the average small commercial summer gas bill by $11.93.
AOG has asked approval from the Arkansas Public Service Commission to lower its commodity charge to reflect the significant decline in natural gas prices. By law, AOG is not allowed to make money on natural gas as a commodity; rather, the utility makes money on the transportation and ancillary services related to providing natural gas.
Within the past year, the price of natural gas has fallen from above $10 per mmBtu to at or below $4. According to the American Gas Association, natural gas prices have not been this low since November 2002.
The prices were high in the summer and low in the winter, completely opposite of normal price patterns.
“It’s just the strangest thing,” said AOG President Mike Callan.
In testimony filed Thursday (Mar. 26) with the Public Service Commission, AOG predicted its cost-of-gas collection in excess of the company’s actual gas costs at the end of March would be about $6 million. AOG wants to adjust the rate downward beginning April 1.
However, existing PSC regulations restrict how often AOG can adjust its cost-of-gas charge. If following regulations, an adjustment would not be allowed until Nov. 1.
“We just want to change what we charge the customer more quickly,” Callan said Friday.
According to the AOG filing, the lowered rates would apply to 41,089 residential customers, 5,357 commercial customers and six industrial users.
On Friday, Robert Booth, PSC manager of the gas and water utility section, submitted testimony urging the commission to approve AOG’s request for a rate adjustment beginning April 1.
“In this market area, the wholesale price of natural gas has decreased approximately 53% when comparing the first three months of 2009 to the first three months of 2008,” Booth noted. “It is reasonable for AOG to recognize the decline in natural prices and return that over collection to its customers sooner rather than later. In addition, AOG’s proposal to modify its COG (cost-of-gas) Tariff is a reasonable solution to avoid similar situations in the future.”