The Arizona Corporation Commission (ACC) Friday pared down a natural gas utility rate increase for a unit of Tucson-based UniSource Energy Corp., approving a $5 million increase for its UNS Gas utility, which serves 146,000 customers. The vote was 4-1.

UNS Gas had requested a $9.5 million increase in what the regulators said was the utility’s first full rate case since 2003, and ACC staff recommended a $4.3 million increase, while the independent Residential Utility Consumer Office (RUCO) opted for a $2.7 million recommendation.

After evidentiary hearings, however, the ACC administrative law judge in the case recommended that regulators grant slightly more than $5 million ($5.04 million), and the majority of commissioners went along with that, saying it offered a “balanced” approach. The judge and the regulators rejected certain parts of the utility’s case.

The lone dissenter, Commissioner Kristin Mayes, said she believes the commission “needed to do more to require growth to pay for itself.” In the future, Mayes said in her dissent, “we should do more to mitigate the need for rate increases by requiring developers to pay for some utility infrastructure costs.”

Nevertheless, ACC Chairman Mike Gleason thought he and his colleagues “missed an opportunity to address growth in northern Arizona” because the case was based on 2005, not current, data.

As part of the rate increase UNS Gas was authorized to expand its portfolio of demand-side management (DSM) programs and various gas-fired equipment retrofit programs.

“The company’s gas procurement practices from September 2003 through December 2005 were found to be prudent and reasonable,” an ACC spokesperson said. “The administrative judge rejected UNS Gas’ proposal to pre-approve future gas purchases, however, citing the importance of periodic commission prudence reviews.”

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