Natural gas provider seeks rate increase

The natural gas provider for most Lawrence residents announced Monday it is seeking a 5.5 percent rate increase just as its customers are bracing for what are likely to be their highest gas bills ever.

Officials with Aquila Inc. filed a request with the Kansas Corporation Commission to increase rates by $6.2 million in the state. The new rates, which if approved wouldn’t begin until the fall of 2005, would be in addition to any increase in the price of natural gas between now and next fall.

The company estimated the new rates would add $51 per year — or $4.25 per month — to the price an average residential customer pays for gas service. The bill for an average business would jump $108 per year.

The new rates are designed to help the Kansas City, Mo.-based company recoup costs related to delivering gas to customers.

“Although we would rather not request an increase in our customers’ rates, it’s important to recover system investment costs that were incurred in providing safe and reliable service,” said Chuck Loomis, the operating vice president of the company’s Kansas gas assets.

An official with the state’s utility watchdog group, the Citizens’ Utility Ratepayers Board, said his organization would examine the rate request carefully.

“Given how much consumer bills already are, we will take a very close look at this request,” said David Springe, consumer counsel for the organization.

Springe said Aquila customers were fortunate the rate increase wasn’t proposed to take effect for this upcoming heating season. He expects this winter’s heating bills to be up to 40 percent higher than a year ago.

“We’re extremely concerned about the upcoming season,” Springe said. “We’re afraid consumers are going to see some of the highest natural gas prices they’ve ever experienced. My advice, frankly, is to turn the thermostat down to 66 and put on a sweater.”

Aquila last was allowed to increase its rates in 1999, when the KCC approved an increase of 7.5 percent. That generated a $4.8 million increase in annual revenues.

Loomis said the company needed the newly requested rate increase to cover the toll inflation has taken on the business, pay for new maintenance projects and provide adequate return to shareholders.

He said the rate increase was not related to other financial problems the company was experiencing. Aquila is in the process of exiting the energy trading industry, which suffered after scandals at Enron Corp.

Springe said his group would have independent auditors look through the company’s books to ensure Aquila isn’t asking ratepayers to cover the costs of that failed venture.

Aquila serves 30,000 natural gas customers in Lawrence, 30,000 in Wichita and 45,000 in the areas surrounding Dodge City, Garden City and Liberal.