The Connecticut Department of Public Utility Control (DPUC) on Wednesday approved, with modifications, an amended request for an 8.4% rate hike for Southern Connecticut Gas Co. (SGC) to begin Jan. 1. SGC serves about 170,000 customers in the Greater New Haven and Bridgeport areas of the state.

The modified settlement agreement was reached by the state and several parties, including the Office of Consumer Counsel, the prosecutorial unit of the DPUC, Select Energy Inc. and Amerada Hess Corp. The modified settlement to increase revenue $26.7 million includes $3.1 million annually for conservation and hardship grants to help customers reduce their bills. SGC originally asked for an increase of $34.9 million or 11%, and during the course of the proceedings, prior to settlement negotiations, amended that request, raising it to a total of $39.2 million or 12.3%.

The revenue increase will be applied equally to the per-100 cubic feet delivery charge for all firm customers, and bills for all classes of firm customers will increase depending on usage. A residential non-heating customer using 3 Mcf/month of gas per month will see a bill increase of approximately $3.29. A residential heating customer using 15 Mcf per month will see a bill increase of approximately $16.44. The monthly Purchased Gas Adjustment on customers’ bills, which adjusts for the difference for the cost of gas approved in a local distribution companies’ most recent rate case and the actual cost of gas, will be re-set.

“I am gratified that the parties to this proceeding were able to reach an agreement,” said Jack R. Goldberg, DPUC vice chairman and lead commissioner for the settlement. “This has been an intensely contested matter necessitating more than one thousand requests for complex and detailed information. It is always in the best interest of the ratepayers when the company and the public parties can agree without further contention. In this case the gas marketers, a crucial part of the gas supply chain, also participated and I thank all of the settlement participants for their efforts. The settlement, as modified, produces a fair balance between the needs of the company and the interests of its customers.”

State law requires DPUC to calculate rates to provide safe, adequate and reliable service and also to set an allowable rate of return on equity so that a company can earn a return on its investment and attract needed capital. SGC’s current return on equity is set at 10.71% and under the modified settlement will be reduced to 10% effective Jan. 1.

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