Trusted local news leader for Kingman, Arizona & Mohave County
Tue, July 23

Citizens Gas files for $21 million rate increase

Citizens Arizona Gas filed a request for an annual $21 million rate increase with the Arizona Corporation Commission on Tuesday.

The increased revenue to Citizens would pay for $166 million in additional investment to serve customer growth of 45 percent since 1991, according to Tom Broderick, director of communications and business development for Citizens.

He said the larger customer base did not pay for the growth, some of which was mandated by the ACC in areas where Citizens' costs were increased beyond profitability.

Under ACC regulations, gas companies in Arizona split bills between a base rate that covers the company cost of operations, and a rate of return to stockholders.

The remainder of the bill is a pass-through of the wholesale cost of natural gas.

Broderick said Citizens makes no money on natural gas, only on the service provided in delivery.

The rate increase filing is for Citizens operations in Northern Arizona and Santa Cruz County, including Nogales.

Meanwhile, if wholesale natural gas prices increase sharply again, customers will see still higher bills as Citizens passes through its increased wholesale costs to customers.

In 2000, the ACC granted a pass-through retail rate increase of nearly $40 million so Citizens could recover the increased wholesale cost of gas delivered in the winter of 2000, when prices hit historical highs.

That rate hike amounted to $20 million per year or until Citizens recovered the $40 million.

Consumers have paid that higher gas-cost adjustment rate since last October.

Broderick said $28 million has been recovered.

When the remaining $12 million is collected from gas customers, the gas price adjustment will no longer be charged.

Depending on when the ACC rules on the latest rate filing, the higher rate would kick in just as the current gas price adjustment increase ends.

Consumers would see bills just a little less than they had paid the previous 24 months, unless wholesale gas costs increase yet again.

If the $21 million rate increase filed Tuesday is granted, it would raise the base rate from the current 19 cents per therm (a measure of the volume of gas delivered) to 33 cents.

The entire 14-cent increase goes to Citizens for cost of operations and profits.

Broderick said that the more than 70 percent increase in revenue to Citizens would pay for growth, additional programs for low-income customers and additional safety measures.

Citizens Communications, the parent company, has been selling off all its natural gas and electric utilities.

Both the gas and electric companies have filed for rate increases to recover high cost of energy and increase the rate of return.

A sale of Citizens Arizona Electric fell through after the electric costs spiked in 2000.

During a January ACC rate hearing in Kingman, an overflow crowd complained of the hardships caused by increased gas and electric bills.

Most of the complaints were about the large increase in the gas bills.

The ACC has not yet heard arguments in the Citizens Arizona Electric case, an increase estimated at 30 percent.

Several business owners testified at the hearing about high costs of electricity and gas that have increased costs of operations.

North Star Steel shut down 70 percent of its steel mill because electric costs had gone so high.


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