NUI Corp.’s City Gas Co. of Florida subsidiary has received approval from the Florida Public Service Commission (PSC) to increase its natural gas base rates by $6.7 million, which includes an interim rate increase of $2.9 million that the PSC approved for City Gas in October.

The new rates are scheduled to go into effect with meter readings on and after Feb. 23 and will increase the monthly bill of an average residential customer using 20 therms of gas by $0.95, or 2.8%, from $34.09 to $35.04.

City Gas said other classes of customers will see increases that vary based on annual usage. While commercial customers will be charged in the same manner as residential users to better reflect the varied usage of this class of customer, certain industrial customers will receive a demand charge for the first time to better reflect the cost of meeting their consumption needs.

City Gas filed for the base rate increase in August, citing significantly rising pension, health care and insurance costs, as well as higher accounting and corporate governance expenses relating to the Sarbanes-Oxley legislation. The company noted that higher gas supply costs also negatively impacted City Gas’ earnings and growth, as existing customers tend to burn less gas and prospective customers often choose alternate fuels over natural gas.

The utility noted that it has also made considerable investment to improve operations and plans additional investment in the near future. City Gas spent approximately $9 million on expansion and systems improvement projects during fiscal year 2003 and plans to increase that figure to about $12.6 million in fiscal 2004.

The utility serves more than 100,000 Florida customers in Miami-Dade, Broward, Brevard, St. Lucie, Indian River and Palm Beach counties.

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