AG office cool to $9M utility rate rise

SourceGas Inc., a natural gas utility in Northwest Arkansas and the northern third of the state, shouldn't be allowed a $9 million rate increase because it's not in the public interest, a representative of the Arkansas attorney general's office told the state Public Service Commission on Tuesday.

Earlier this year, SourceGas, which has about 160,000 customers, sought a $12.6 million annual increase in its rates but reached a settlement with five of the six intervenors in the case last month to reduce the requested increase to about $9 million.

The only party to reject the settlement was the attorney general's office.

Under the settlement agreement, a SourceGas residential customer would see a 7.44 percent increase in a monthly bill. A customer who currently has a $100 natural-gas bill would have a $107.44 bill if the settlement is approved by the commission.

A SourceGas executive said the average bill for a SourceGas residential customer is closer to $50 a month.

SourceGas, formerly known as Arkansas Western Gas, last sought a rate increase in 2013.

It is the first time since 2003 that a settlement has been reached in any rate case in the state in which the deal wasn't unanimous, Shawn McMurray, senior assistant attorney general, told the commission.

"[The settlement] should not receive elevated credibility due to the fact that a number of parties agreed to its terms," McMurray said.

The attorney general's office believes SourceGas' settlement violates a settlement approved in 2007 by the commission, fails to properly apply legislative directives and allows SourceGas too great a rate increase.

The attorney general's office also recommended that the commission not allow SourceGas to recover about $1.2 million in incentive plan compensation for its employees.

"It is the utility's burden to prove that it is entitled to a general rate increase," McMurray said.

And the fact that SourceGas first filed for a $12.6 million rate increase doesn't mean it should automatically receive the $9 million increase, McMurray said.

The settlement was approved by SourceGas, Continuum Retail Energy Services LLC, several SourceGas customers who intervened in the case, the University of Arkansas System and the general staff of the commission.

For all parties represented, the settlement will produce reasonable rates, said N.M. "Mac" Norton, attorney for several primarily large manufacturers who intervened in the case.

It is the result that counts and not necessarily how they come to those results, Norton said.

"You can get to Heber [Springs] through Rose Bud or you can get there through Greenbrier, but either way you're going to end up at [Greers Ferry Lake]," Norton told the commission. "How you got there, in the law of utility rate-making, is of little importance. So long as the result, objectively considered, is just and reasonable. And that's what you have in front of you."

The rate increase that SourceGas received in 2013 and the increase it is seeking in this case are in the same neighborhood, Norton said.

The commission should ignore Norton's "passionate arguments" because they are not evidence, McMurray said.

The commission has to decide if it agrees with the settling parties' issues or the attorney general's arguments, said John Bethel, executive director of the commission's general staff.

Or the commission can choose to make adjustments of its own, Bethel said.

"The commission may or may not accept the settlement," Bethel said. "They may modify portions of it. The parties would have to determine if they agree that those outcomes are reasonable. The commission's rules give the parties an opportunity to respond if the commission changed the terms of the settlement."

The commission should make a decision in the case in February, Bethel said.

CenterPoint Energy, the largest natural-gas utility -- with more than 408,000 customers -- in the state, filed last month for a 12.2 percent rate increase. The commission will hear CenterPoint's request next summer.

Business on 12/09/2015

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