Citing a 60% boost in wholesale natural gas prices during the past 12 months, Puget Sound Energy (PSE) asked Washington state regulators Monday to raise its retail natural gas utility rates by an average of 14.7% across all customer groups. The increase would be more, but the utility has hedged a large amount of required supplies.
Residential customers would be hit with an average 13.3% hike on Oct. 1, the date the Puget Energy utility has asked for the gas cost offset to be made effective.
PSE said the rate change requested would bring the average monthly residential gas bill to $96.48. The utility made a formal filing to the Washington Utilities and Transportation Commission.
Projected wholesale gas prices have jumped from $5.56/MMBtu to $8.92/MMBtu, PSE told the state regulators in its filing. "The jump in price is being driven primarily by increased consumer demand, tight supplies and record crude oil prices," said a spokesperson for PSE.
The new rates would expect a 60% wholesale price increase to play out from October 2005 through September 2006, according to the utility's projections. "A key reason the proposed rate increase [average 14.7%] is much lower than the predicted [wholesale] spike in gas prices over the coming year is because PSE has hedged a large share of its gas supply needs at lower prices," the utility spokesperson said.
Noting that it is hedging either through fixed-price forward contracts or storage of lower-priced gas supplies, PSE customer services Vice President Darren Brady said the utility minimizes the full impact of wholesale price volatility, noting that it "takes various steps, including the hedging strategies."
The utility already has hedged half of the gas its customers will need through September 2006, Brady said. "These hedges, when weighed against the expected market price for natural gas over the next year, should save PSE customers about $97 million."
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