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Industry Brief

January 28, 2004
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Industry Brief

Chattanooga Gas Co. (CGC), which serves 60,000 customers in southeast Tennessee, has asked the Tennessee Regulatory Authority (TRA) to adjust its rates beginning in March to cover rising costs of providing natural gas to its customers. CGC last increased its rates nine years ago. If the rate hike is approved, a typical residential customer would pay about $3.20 more per month. The total rate increase requested is approximately $4.5 million. However, a reduction in gas costs of over $1 million dollars will be put into effect in the spring of 2004; this change will reduce the amounts charged for gas on customers' bills. CGC's new proposed rate plan will provide relief to low-income elderly customers and align customer rates to more accurately reflect CGC's costs of maintaining its natural gas pipeline system. It will also enable the company to replace 100 miles of aging pipe, consistent with CGC's goal of continually modernizing the gas infrastructure that has served customers for almost a century. Lindsey cited other pressures that have lead to CGC's decision to request a rate adjustment, including growing employee benefits costs and bad debt, or uncollectible customer bills. CGC also asked the TRA to approve a cost tracking mechanism for additional expenditures to permit the replacement of a 100-mile segment of its over 1400-mile pipeline system. Some of the pipeline is almost 100 years old and needs to be replaced. Construction is expected to begin during 2004.

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