Roanoke Gas is one step closer to seeing state regulators approve the second increase to its base rates in two years.
But even if that increase is approved, customers still will pay less on their bills than they did two years ago thanks to lower natural gas prices, a Roanoke Gas executive said.
Base rates are separate from the cost of gas, which by law Roanoke Gas must pass on to its 64,000 Roanoke Valley customers without profit.
Base rates cover the utility’s operations, maintenance and capital costs, and the company says it needs to increase them because inflation is driving its expenses up.
“Inflationary pressures across the broader economy continue and we are sensitive to any customer pricing action,” Tommy Oliver, the utility’s vice president of regulatory affairs and strategy, said in an email. “Fortunately for customers, natural gas prices remain stable and affordable.”
The latest base rate hike would add $4.02 to the average residential customer’s monthly bill, according to a proposed compromise that Roanoke Gas and staff of the State Corporation Commission, which regulates utilities in Virginia, jointly filed last week with the SCC.
An average residential customer uses 5.6 dekatherms of gas monthly.
The combination of the new proposed increase, a separate increase approved last year and recently approved bill riders would add $9.72 total to the average customer’s bill compared to two years ago, Oliver said.
But because natural gas prices are relatively low, that average residential customer’s total monthly bill would actually be $15.70 less compared to two years ago, even if the latest base rate increase is approved, he said.
Cheap natural gas is not guaranteed. Its price can vary based on factors including production, weather and world events such as the war in Ukraine, and such factors contributed to a surge in prices two years ago that has since abated.
In asking for higher base rates, Roanoke Gas has said it needs more revenue to handle inflation, wage increases and higher interest rates on its short-term line of credit.
Oliver said that the base rate increase would ensure “that the Roanoke Gas system remains safe and reliable.”
“For example, in the recent Hurricane Helene event, Roanoke Gas did not experience a single customer outage or system issue,” he said.
In March, Roanoke Gas asked the SCC for permission to earn $4.33 million more in revenue each year. Last month, SCC staff recommended that the commissioners of the SCC allow the company $3.33 million, or $1 million less than Roanoke Gas requested.
The compromise proposed by the utility and SCC staff would allow an additional $4.08 million in revenue each year, or about a 5% increase.
Ultimately, the decision rests with the commissioners of the SCC. Roanoke Gas is asking them to approve the proposed compromise in time for it to take effect by Nov. 1 and before a public hearing scheduled for Nov. 7.