Bourbon County

Columbia Gas asks to increase rates

Columbia Gas of Kentucky has asked the state Public Service Commission to allow it to increase rates by 7 percent.

The proposal, if approved, would raise the average residential customer's monthly bill by $6.73.

Columbia Gas, which has 140,000 customers in 31 counties in Central and Eastern Kentucky, said the rate proposal would boost its revenues by about $11.6 million.

The company said it needs the increased revenue to continue a program to replace aging gas lines. The 30-year program expects to replace 525 miles of lines through Central and Eastern Kentucky. The proposal would let it recover almost $11 million spent in 2008.

Many of the lines "are bare steel or unprotected or uncoated pipe," said Columbia Gas spokeswoman Lisa Smith. "It was the preferred material when it was installed in the 1920s to 1940s.

"It has served a good useful life, but it's starting to experience leaks more frequently, and it's time to replace it with new material."

That program also includes moving meters outside at older homes where they had originally been installed indoors.

Columbia Gas is also asking the Public Service Commission to change its rate structure for delivery fees to include only a flat fee.

Delivery fees account for 30 percent of bills and are where natural gas companies make their profits. The remaining 70 percent is the cost of gas that is not able to be marked up under the law.

Under delivery fees, residential customers pay a monthly charge of $9.30 plus an additional charge that is tied to how much gas is used. If you use more, you pay more.

Because of that, "for years, natural gas companies encouraged customers to use more. Well, in today's energy environment, that's really not the most appropriate and responsible approach," Smith said.

Under the Columbia Gas proposal, the delivery fees would be phased gradually over two years to a flat fee.

The company's proposed higher rates would also be used to develop a residential energy efficiency program that would encourage home energy audits, create an incentive program for customers to install more efficient appliances and offer assistance to low-income customers who are weatherizing their homes.

If approved, the change in rates would be the first since 2007. In that case, bills rose $4.22 monthly for the average residential customer. The company had sought a total increase of $12.65 million in that case but was approved for $7.25 million.