ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Tuesday, March 4, 1997 TAG: 9703040103
SECTION: VIRGINIA PAGE: A-1 EDITION: METRO
SOURCE: GREG EDWARDS STAFF WRITER
Roanoke Gas Co. said Monday that it is cutting its residential rates by 11 percent effective March1, saving the average homeowner more than $10 this month.
This is the company's second rate cut in as many months. Roanoke Gas, which serves roughly 47,000 customers in the Roanoke Valley, had lowered its rates 6 percent on Feb.1.
The price cut should be well received by customers who saw gas rates increase earlier this winter by more than 25 percent.
The 13,000 Roanoke Gas customers who pay on a budget plan, which offers the same flat rate each month, will see their bills drop by 11 percent in April, the company said.
Rates are coming down for the same reason they went up - a change in the wholesale price that Roanoke Gas pays to its suppliers. The State Corporation Commission allows gas distributors to fully recover any increase in fuel costs but also requires them to cut their rates when gas costs drop.
"The market price of natural gas has declined significantly from the increases that occurred during the unusually cold months of November, December and January," John Williamson III, the company's vice president for rates and finance, said.
Williamson attributed the price declines to significantly warmer weather and an increased supply of gas on the market. "The impact has been to reduce demand and lower prices," he said.
The rate cut will mean a savings of $10.08 for an average customer in March. Average budget customers should see their bills drop by $7.60 next month, Williamson said.
Williamson said the company had received many calls from customers who were upset about the price increases earlier in the winter but said he wasn't aware of Roanoke Gas losing any customers because of the increases.
A study conducted a couple of years ago showed that there was no gas utility in Virginia buying gas more cheaply than Roanoke Gas, Williamson said.
By drawing on gas in storage at the company's liquefied natural gas plant in Botetourt County, the company is able to keep rates down at times when market prices peak, he said. On a typical winter's day, the company will move 55 trillion cubic feet of gas through its system with a little more than a third of that coming from storage, he said.
Williamson said the company has been studying ways to avoid the unexpected price increases it experienced earlier this winter. Some of the things being looked at include buying more gas at summer prices and storing it or buying gas at fixed prices or "hedging" the price in other ways.
In the past, the SCC has not endorsed the use of hedging, which involves buying gas on the futures market for delivery at a set price at a future date. The company, however, has encouraged the commission to take another look at the practice, Williamson said.
LENGTH: Medium: 58 linesby CNB