Gas customers face big rate increase
Tuesday, Jun 24, 2008 - 10:38 AM
Customers of Virginia Natural Gas would face a 35 percent increase in their annual fuel costs under a rate increase announced today.
The Norfolk-based distributor asked state regulators last week for an adjustment in its purchased gas costs for the next three months because of soaring commodity prices that threaten customers with high heating costs next winter.
Virginia Natural Gas serves about 272,000 homes and businesses in the state, including customers in Hanover, New Kent, Charles City, King William, and King and Queen counties.
Company officials estimated today that a customer using 100,000 cubic feet of natural gas would pay an additional $556 a year, an increase of 35 percent from March to July 1, when the rate will take effect.
The adjustment already has been accepted by the State Corporation Commission under a quarterly tariff that allows gas distributors to pass through their fuel costs to consumers. The increase adjustment applies only to the company's costs of purchasing gas, not its rates for distribution or its profit margin.
The increase is driven by high wholesale prices in the country's commodities market. The wholesale price has increased by more than 50 percent since the beginning of the year. As a result, Virginia Natural Gas and other distributors are paying more for gas to put in storage this summer, which will mean higher prices for consumer next winter.
"We are really being hit hard by the commodity price of gas," said Ann Chamberlain, manager of gas supply for Virginia Natural Gas.
The causes of the high prices are a mystery to gas suppliers, who say they haven't seen anything like it since Hurricanes Katrina and Rita disrupted production in the Gulf of Mexico in 2005. This time, however, they don't see any reason for the rise in prices.
"For the first time in my [30-year] career, I just don't know," Chamberlain said.
-- Michael Martz
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