Cascade Natural Gas Rate Hike Cut By 63%
Posted on October 28, 2016 by Bob Jenks
Tags, Energy
Last April, Cascade Natural Gas filed a rate case requesting a $1.9 million increase in rates charged to Oregon customers. Cascade is a small natural gas company that serves parts of central and eastern Oregon. CUB, the PUC Staff and the NW Industrial Gas Users have spent the last few months investing the company’s request.
Recently, CUB and other parties filed a settlement agreement which reduced Cascade’s proposed rate hike by 63%. CUB, working with the other parties, was able to eliminate $1.2 million of that increase, leaving the Company with an increase of just $700,000.
For residential customers, this agreement will increase rates by 3.12%. However, that increase will be more than offset by Cascade’s natural gas costs, which will decline by about 14% on November 1.
One important element for CUB in agreeing to this increase was an agreement by Cascade to use more debt and less equity to finance their capital investments. Debt is money borrowed from financial institutions while equity is money that comes from shareholders. With interest rates low, Cascade can borrow money for about half of the cost of equity.
In Cascade’s request to raise rates, they proposed that approximately 80% of the rate hike be recovered from residential customers, and that commercial customers be exempt from the rate increase. CUB argued that the company analysis that supported this was flawed and pressed the Company to more equitably spread the rate increase. The stipulation reflects an agreement that includes an increase to commercial customers and a lower increase to residential customers.
This rate case concerned the costs associated with the company’s distribution system – its network of pipes that supply gas to homes and businesses. The cost of the natural gas that flows through the pipes was not an element of the rate case. However, natural gas costs are reset each fall and this year Cascade’s cost of natural gas is declining significantly, which means that overall rates will go down by a little more than 10% for most residential customers when the two rate adjustments are combined.
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03/15/17 | 0 Comments | Cascade Natural Gas Rate Hike Cut By 63%