The retail natural gas base rates of South Carolina Electric & Gas Co.’s (SCE&G) would increase 11.3% for all of the company’s 283,000 residential customers, while smaller commercial customers would pay 4.8% more and large industrial customers would pay 6.4% more than they currently pay, according to a settlement agreement with the state’s Office of Regulatory Staff (ORS).

If the agreement for the 5.69% overall increase is approved by the Public Service Commission of South Carolina (PSC), the new rates would take effect in November. The settlement agreement provides for an increase in SCE&G’s annual natural gas revenues of about $22.9 million, and the rates are based on an allowed return on common equity of 10.25%.

In addition to the ORS, all other interveners in the case agreed to the settlement, including Frank Knapp Jr., a commercial customer of SCE&G, the South Carolina Energy Users Committee, a consortium of large industrial customers, and the U. S. Department of Defense.

The utility, which is SCANA Corp.’s principal subsidiary, had originally requested an increase to its retail gas base rates of $28.5 million, or 7.09%, in late April. The original request was based on an adjusted test year that ended Dec. 31, 2004 and an 11.75% allowed return on common equity. It was the company’s first request for an increase in retail natural gas base rates since 1989, and was largely associated with recovering capital and operating costs for expanding and operating SCE&G’s natural gas system in the last 16 years.

“It is very much in the best interest of all parties to settle cases such as these whenever possible,” said SCE&G COO Neville Lorick. “We were prepared to justify the full amount of the requested increase. However, we believe that we can operate our gas system reliably and efficiently based upon these rates.

“The proposed new rates would provide us the opportunity to earn an adequate return on our current natural gas assets and would enhance our ability to make additional capital investments that will be necessary to support future growth and economic development in our state,” Lorick said. “We hope the commission will approve the settlement agreement as submitted.”

A residential customer using 100 therms currently pays $121.11 in a typical winter month. Under the rates contained in the settlement agreement, a residential customer would pay $125.61 (under residential value rates) or $133.35 (under residential standard rates). Part of the increase in standard rates during the winter months will be off set by a reduced minimum charge in the summer months. Value rates apply to customers using an average of 10 or more therms during the months of June, July and August.

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