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MINNEGASCO REQUESTS FIRST RATE INCREASE IN 10 YEARS

 MINNEGASCO REQUESTS FIRST RATE INCREASE IN 10 YEARS
 MINNEAPOLIS, July 2 /PRNewswire/ -- Minnegasco today filed a rate


increase request with the Minnesota Public Utilities Commission (MPUC) that would raise a typical residential heating customer's bill by about $3.50 per month.
 This is Minnegasco's first general rate increase in Minnesota since 1982. The filing with the MPUC requests a revenue increase of $24.8 million, 5.5 percent.
 "This rate increase will help us meet the significant increases in our costs of doing business, and enable us to continue providing a safe, reliable supply of natural gas," said Phillip Hammond, vice president of gas supply and regulatory administration. "Although we have been able to improve productivity and manage expenses effectively over the past several years, we're at a point where those efforts are no longer enough to offset rising costs," he said.
 Hammond explained that major factors affecting Minnegasco's need for a rate increase are the need to invest continually in the gas distribution system, costs associated with old manufactured gas plants, the effects of inflation over several years, and growth of conservation programs designed to help customers save energy and money.
 Inflation has affected the costs of the human resources, equipment and supplies Minnegasco needs to run the business, Hammond said. He pointed out that in 10 years since Minnegasco's last rate increase, the Consumer Price Index (CPI) has grown 45 percent.
 Hammond said that during the last 10 years Minnegasco spent over $80 million on the distribution system to serve an additional 80,000 customers. However, he said, total gas sales volumes increased only by six percent during that time span, due to continuing conservation efforts by customers and increased competition for energy services.
 "To continue providing safe, reliable, economical natural gas service, and to meet the growing needs of our customers, we have to make a substantial investment in our gas distribution system every year," he said.
 In 1992, Hammond said, Minnegasco will invest more than $21 million in improvements to its gas distribution system in Minnesota. These improvements include increasing the capacity of the system to meet a growing demand for natural gas, meeting the needs of new customers, and replacing older gas mains and service lines with new, more durable materials to maintain the strong record of safety and reliability, he explained.
 In 1992, for example, Minnegasco will replace more than 4,800 customer service lines in Minnesota, Hammond said. He said that over the next five years, Minnegasco expects to replace more than 20,000 service lines in Minnesota.
 Minnegasco also operates a comprehensive leak detection program, enabling the company to locate problems early, assuring safety and minimizing disruption of service, he said. Every year, Minnegasco conducts leak detection surveys on more than 13,000 miles of gas mains and 110,000 services lines, and typically completes about 30,000 checks around customer homes and in public buildings, Hammond said. He said that Minnegasco will be increasing its leak detection work by 35 percent in the coming years to comply with new federal mandates.
 Hammond also explained that costs associated with the clean-up at the old manufactured gas plant site in Minneapolis, in compliance with federal and state laws enacted in the 1980s, have become a significant area of attention and expense. He said Minnegasco is working cooperatively with the Minnesota Pollution Control Agency to clean up the site of the plant which operated from 1870 until about 1960.
 In addition, Minnegasco proposes to increase by about $2 million its annual investment in conservation programs designed to help its customers save energy and money. Hammond explained the increase will fund a wider array of services for all customer classes, including: a new high efficiency heating rebate project; expansion of a major weatherization project for low income residential heating customers; and development of a comprehensive demand-side management plan.
 Hammond said that even with proposed increase in rates, Minnegasco's residential natural gas rates will be the lowest offered by the five largest natural gas utilities in Minnesota.
 Minnegasco asked the MPUC to permit it to place new rates into effect on Sept. 1, on an interim basis, that would provide an overall revenue increase of 4.1 percent. The interim rates, which will raise a typical residential heating customer's bill by about $2, will be collected, subject to refund with interest, until the MPUC's final ruling on Minnegasco's rate increase request. That ruling is expected by May 1, 1993.
 For more than 120 years, Minnegasco has provided reliable, affordable gas services to families, businesses and industry. Minnegasco, a division of Arkla, Inc., is Minnesota's largest natural gas utility, serving approximately 500,000 residential, commercial and industrial customers in 158 Minnesota communities.
 -0- 7/2/92
 /CONTACT: David Kostik of Minnegasco, 612-342-4914 or (pager) 612-538-1234/ CO: Minnegasco; Arkla, Inc. ST: Minnesota IN: UTL SU:


AL -- MN005 -- 6307 07/02/92 16:14 EDT
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Date:Jul 2, 1992
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