Bellevue, WA-based Puget Sound Energy (PSE) announced Wednesday it was filing with state regulators for about a 17%, or almost $10 monthly, retail natural gas rate increase in response to what the combination utility under Puget Energy called “steeply rising wholesale prices.”

It is requesting a straight pass-through, effective April 10, of its increased wholesale gas costs. Specifically, the utility is seeking a bump up of 13 cents/therm, taking the average monthly bill to $62.40.

Since the utility’s gas rates were adjusted last September, Puget Sound Energy said its forward-looking price for gas supplies has increased by about 50%. The Washington Utilities and Transportation Commission is expected to make a decision by early April, and the company emphasized that even with the increase, its retail gas rates would still be “among the lowest” in the state.

“Several factors appear to be propelling the jump in wholesale gas prices: (a) an exceptionally cold winter east of the Rocky Mountains that pushed up gas demand nationwide; (b) lagging exploration and drilling of new gas fields across North America; (c) an expected increase in demand for gas-fired electricity in the West because of low precipitation this past winter; and (d) an unstable international petroleum market,” the utility said in its written announcement of the rate hike request.

The rate hike is being sought as part of the state regulatory commission-established “purchased gas adjustment” (PGA) process that periodically adjusts customer rates (up or down) to reflect changes in the wholesale cost of gas. The Puget Energy utility emphasized it would not make any profit from the proposed increase.

Last year, under the PGA process, Puget rates were dropped three times for a total of about 30% overall, reflecting lower costs in the wholesale gas market. The year before, 2001, in the midst of the western supply/price meltdown, average monthly gas bills had shot up to almost $80. After more than a year of relief, the tide has turned once again, Puget officials said.

“Unfortunately, the gas market has now turned the other way,” said Kimberly Harris, PSE’s vice president of governmental and regulatory relations. “It’s indicative of the volatile price swings we have seen the past few years in the energy markets.”

Harris noted that PSE takes various steps to insulate customers from the market’s volatility and to limit sharp spikes in rates at the retail level. For example, the utility purchases large amounts of natural gas when wholesale prices are low — typically in spring and summer — and stores it underground to reduce supply purchases when energy market rates are higher. The company said it also employs supply “hedges” and a mix of short- and long-term supply contracts with a variety of sellers in order to stabilize its gas purchase costs as much as possible.

©Copyright 2003 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.