Southern Union Co.’s Missouri Gas Energy (MGE) on Tuesday said it has filed a proposal with the Missouri Public Service Commission (MPSC) to increase base rates and to reduce the volatility of customer bills caused by dramatic changes in winter conditions.

The proposed rates would generate $44.8 million in additional annual revenues, or an increase of approximately 9.8%, with an average residential customer’s bill rising about $6.50 a month.

The utility said that if the filing receives commission approval, the proposal will help stabilize bills for the company’s approximately 500,000 natural gas customers and will help the company recover expenses associated with operating and maintaining its 8,000-mile distribution system. It will also help with costs related to substantial capital expenditures for safety projects, public improvement relocations and new construction.

After receiving its last base rate increase in 2001, MGE said, it has shelled out nearly $55 million on a variety of capital projects, including the MPSC-ordered Safety Line Replacement Program, line relocations ordered by municipalities and other political subdivisions and new construction due to growth in the company’s service territory.

“We have expended approximately $380 million on new gas service facilities since February 1994, including continuation of the Safety Line Replacement program pursuant to which more than 230,000 service lines and about 300 miles of cast iron mains have been replaced since 1990,” said Robert J. Hack, vice president of MGE’s pricing and regulatory affairs. “Nearly $55 million of this capital has been used to install new facilities since base rates were last set. MGE customers are receiving the benefits of these expenditures, but our current rates do not reflect these higher costs. Unfortunately, current rates have proven insufficient to permit MGE to achieve its authorized rate of return.”

Because the commission can take up to 11 months to issue a ruling on the proposal, new rates might not go into effect until late in the summer of 2004, at the earliest. MGE made sure to note that the proposal is not related to “cost of gas” charges and will not affect prices this winter.

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