Kansas Public Service, the local natural gas utility, instituted a rate increase today, which will boost the amount of the average residential gas bill by an estimated $1.93 per month, or $23.16 per year.
Bill Salome, president of KPS, said the increase estimate is based on average household gas usage, which is 10,000 cubic feet per month.
The Kansas Corporation Commission, the state's utility regulator, on Friday signed an order authorizing the rate increase, a KCC spokesman said.
The rate increase, which will allow KPS to recover $625,000 of the costs it is incurring for an 11-year pipeline replacement program, grew out of a settlement that the utility and the KCC reached last week.
In December, KPS applied for a $1.284 million increase, which would have increased the average monthly residential bill by $4.61. However, the KCC staff opposed that request, recommending instead that the utility receive an increase of about $431,000.
KCC staff had taken issued with several provisions of the utility's request, including KPS' intention to charge a higher rate to residential and small commercial customers but not to large industrial consumers.
Last Tuesday, when the KCC was scheduled to hold a technical hearing on the increase, the KCC staff and KPS officials instead presented the commission a settlement agreement. The agreement outlined the $625,000 rate increase and included provisions for KPS to charge a higher rate to all customers on the system.
However, the utility will be allowed to "flex down" rates for large industrial customers if those parties threaten to leave the KPS system to buy gas at a better price from an independent broker.
The KCC staff and KPS officials agree that if large customers leave the KPS system, the reduced volume of gas puchased by KPS will drive up the price for all KPS customers.
The settlement also bars KPS from receiving another increase before Dec. 31, 1994. KPS officials have said they hope to recover much of pipeline replacement project's $12 million in costs through higher rates and that they will seek further increases after that date.