Gas Bills have Arizonians Upset
Mar 09 - Arizona Daily Star
This discomfort is brought on by howling customers of the company's newly
acquired natural-gas business, and particularly customers in Prescott.
Members of the Arizona Corporation Commission - the all-powerful body in
regulated-utility matters - are indignant at the predictable results of rate
structures carefully deliberated and approved by the ACC.
An unusual confluence of factors have helped to spike gas bills for customers
of the new UniSource Energy Services subsidiary running former Citizens
Communications gas and electric properties around the state. Gas bills have
increased, in some cases, 60 percent or more from last winter.
The grumbling is understandable but predictable.
ACC regulators approved a 21 percent hike in basic gas rates at the time of
the UniSource takeover. Customers now get much higher bills from a company
unfamiliar to them, raising suspicions. The ACC also decided to let UniSource
collect $7 million in past-due fuel surcharges, piling on, in effect, two rate
increases at once.
Unseasonable cold added to the rate shock by adding usage increases to higher
commodity prices. = Rate shock!
Hundreds of Prescott-area customers have complained to the utility and/or the
commission. Things are a little quieter in the Tucson service area, where
Southwest Gas operates.
Tucson usage is also up due to colder weather, but complaints are nothing out
of the ordinary, according to Southwest Gas.
Tucson in January registered 366 heating degree days - which measure demand
for energy used for heating - compared with 204 heating degree days in the same
month last year and a 10-year average of 356 such days.
Nationally, utilities estimate that natural-gas users will see an overall
increase of 11 percent in costs this season compared with last winter.
Kris Mayes, the newest member of the corporation commission, has hinted
darkly of "profiteering at the expense of ratepayers" in this matter.
Which brings us to a little- known fact concerning commission- approved rates
governing gas utilities.
Guess what the rate of return, or profit margin, is for Southwest Gas or
UniSource Energy Services on the gas commodity portion of a monthly bill - 18
percent? 12 percent? 6 percent? 3 percent? It's zero.
Gas utilities earn a limited rate of return on getting the commodity to the
user. They only pass through the commodity price of gas.
Southwest Gas estimates that after the $8 monthly service charge, for the
first 40 therms of gas used, a residential customer pays just over half the
99-cents-per-therm rate for system service and half for the actual gas
commodity.
The current allowable rate of return for Southwest Gas is 9.19 percent - and
the company has never hit that rate since 1990.
Commissioner Mayes did not actually vote on the rate matters in question. She
was appointed to the post last fall. She is most vocal about alleged lack of
notice by UniSource Energy Services to its new customer base.
UniSource acknowledges it could have done a better job of warning customers
of coming rate hikes and how surcharges and rising gas prices would affect their
bills, although notice was sent to customers.
But there is nothing sneaky or illegal going on here. It's regulation at
work.
Gas customers would benefit in the long run by paying more in monthly service
charges to cover the utility's ongoing expenses and leveling out fuel commodity
charges over time through reasonable and predictable adjusters. Customers have
always had the option of "budget billing," which averages out monthly
bills year-round to a predetermined amount.
Regulators have a responsibility to be informed and fair not only to
consumers, but also to the big, nasty utilities they regulate.
But, of course, customers vote in larger numbers than utilities.
Commissioner Mayes, by the way, is from Prescott, where most of the noise is
coming from in the gas bill ruckus.
The terms of four of the five sitting commissioners are up this year.
Contact Richard Ducote at 573-4178 or ducote@azstarnet.com
.