Roanoke Gas is asking state regulators to approve its second rate increase in less than two years as inflation continues to weigh on the company’s operations.
The natural gas utility’s latest proposal would increase the monthly bill of an average customer using 5.6 dekatherms of gas by $4.03.
The increase would take effect on an interim basis on July 1 and would be subject to refunds if regulators ultimately approve a lower amount or deny the request.
“While the Company continues to make significant investments in its natural gas system to improve safety, reliability and to reduce emissions or the potential for emissions, the current case is driven primarily by continued inflationary pressure on our cost of service,” Paul Nester, president and CEO of RGC Resources, Inc., which owns Roanoke Gas, said in testimony filed with the State Corporation Commission as part of the utility’s rate increase application.
The company previously filed a rate increase request in late 2022, and the SCC approved it in late 2023. That increase helped some, Nester said, but Roanoke Gas “has continued to experience upward pressure on its costs.”
When the two increases are combined, an average residential customer’s base rate, net of bill riders, would be $7.95 per month higher this July than in October 2022, according to figures provided by Roanoke Gas.
Nonetheless, the average customer’s overall monthly bill, excluding local utility taxes, could end up being about $18 lower this July than in October 2022, largely because natural gas has become cheaper since then, which could offset the increase in the base rate.
Base rates cover operations, maintenance and capital costs and are separate from the cost of gas. Roanoke Gas is required by law to pass the cost of gas on to its approximately 64,000 Roanoke Valley customers without markup.
The price of natural gas can go up or down based on factors including how much is produced, how the weather affects consumers’ usage and world events such as the war in Ukraine.
“The cost of gas today is actually very cheap,” Nester said in an interview.
In its filing with the SCC, Roanoke Gas said the latest base rate increase request would enable it to earn an additional $4.33 million in annual revenue, for an overall increase of 5.1%.
The company has raised wages to help attract and retain more workers. Insurance is more expensive, as are information technology services. And the interest rate on the company’s short-term line of credit has tripled in the past two years as the Federal Reserve has raised its benchmark rate to fight inflation.
“I don’t know that one [factor] stands out any more than the others,” Nester said of the different reasons behind the company’s higher costs.
RGC Resources, Inc., is one of five investors in the Mountain Valley Pipeline, a controversial 303-mile natural gas pipeline planned to transport up to 2 billion cubic feet of gas per day from West Virginia into Virginia.
The lead developer of the pipeline, Equitrans Midstream, has said it expects to complete the project by the end of next quarter.
Mountain Valley was first announced in 2014 and was expected to be complete in 2018, but years of legal and permitting challenges have delayed the project and more than doubled the final price tag to upwards of $7.63 billion.
Nester said the request for a higher base rate is not connected to the company’s investment in Mountain Valley. But he noted the utility hopes to expand its natural gas service into Franklin County, which he said would only be possible because of Mountain Valley.
For Roanoke Gas customers who are also Appalachian Power customers, the gas company’s latest base rate increase proposal comes as the electric utility this year raised an average residential customer’s bill by about $16.
The State Corporation Commission has scheduled a telephone public hearing on Roanoke Gas’ latest rate increase proposal for 10 a.m. Nov. 7.
Anyone who wants to comment during the hearing should, by Oct. 31, fill out a form on the SCC website, email a PDF version of the completed form to SCCInfo@scc.virginia.gov, or call 804-371-9141.
Comments can also be submitted via the SCC’s website, or by mail to the Clerk of the State Corporation Commission, c/o Document Control Center, P.O. Box 2118, Richmond, VA 23218-2118. All comments should reference case No. PUR-2024-00006.