Roanoke Gas rate increase closer to approval

Roanoke Gas is one step closer to state regulators approving its second base rate increase in two years.

But even if that increase is approved, customers will still pay less on their bills than they did two years ago thanks to lower natural gas prices, a Roanoke Gas executive said.

The base rates are separate from gas costs, which Roanoke Gas is required by nonprofit law to pass on to its 64,000 Roanoke Valley customers.

The base rates cover the utility’s operating, maintenance and capital costs, and the company says it must increase them because inflation is driving up costs.

“Inflationary pressures in the broader economy continue and we are sensitive to customer price 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 increase would add $4.02 to the average residential customer’s monthly bill, according to a proposed compromise that Roanoke Gas and staff from the State Corporation Commission, which regulates Virginia’s utilities, jointly presented to the SCC last week have submitted.

An average private customer uses 5.6 dekatherms of gas monthly.

The combination of the new proposed increase, a separate increase approved last year and recently passed bills would add a total of $9.72 to the average customer’s bill compared to two years ago, Oliver said.

But because natural gas prices are relatively low, the average residential customer’s total monthly bill would actually be $15.70 lower compared to two years ago, even if the latest base rate increase is approved, he said.

Cheap natural gas is not guaranteed. Prices can vary based on factors such as production, weather and world events such as the war in Ukraine, and such factors contributed to a rise in prices two years ago that has since subsided.

In asking for higher base interest rates, Roanoke Gas has said it needs more revenue to offset inflation, wage increases and higher interest rates on its short-term credit.

Oliver said the base rate increase would ensure “the Roanoke Gas system remains safe and reliable.”

“For example, during the recent Hurricane Helene, Roanoke Gas did not experience any customer outages or system issues,” he says.

In March, Roanoke Gas asked the SCC for permission to earn $4.33 million more in revenue each year. Last month, SCC officials recommended that SCC commissioners grant the company $3.33 million, or $1 million less than Roanoke Gas had requested.

The compromise proposed by the utility and SCC staff would allow for an additional $4.08 million in revenue each year, or an increase of about 5%.

Ultimately, the decision rests with the SCC commissioners. Roanoke Gas is asking them to approve the proposed compromise in time for it to go into effect on November 1 and before the public hearing on November 7.

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