CONCORD — The Public Utilities Commission on Friday approved a rate increase for Liberty Utilities, the state's largest provider of natural gas, that will nearly double the rate from just 14 months ago.
Liberty warned in September that increases in the cost of gas on the wholesale market could cause heating bills to rise by 10 percent this winter. Based on the company's most recent filing with the Public Utilities Commission, bills will be going up a lot more than that for homes that heat with gas.
Robert F. Foster, owner of the Beacon Mill in Laconia, wrote the PUC in opposition to the rate hike, which would bring the current rate of approximately $1.11 per therm to $1.29 per therm for gas supply charges as of March 1.
"A year ago, the price was 68 cents per therm," Foster writes in his comments to the PUC, dated Feb. 19. "I do not claim to understand the factors that go into the assessment of reasonable rates for natural gas, but I want to bring to the board's attention the unanticipated financial burden that is created by close to a doubling in price of a resource that is a substantial component of total expenses required to operate a building in the winter in New Hampshire."
Foster urged regulators to, "Please give this request by Liberty Utilities your careful and skeptical attention and please give consideration to all stakeholders in this matter."
His appeal appears to have been misplaced, because the PUC actually encouraged Liberty to seek a higher rate.
"On January 31, we asked the PUC to allow us to increase our cost of gas rate by 13 cents per therm for the remainder of the winter billing period," wrote John Shore, a Liberty spokesperson.
"After discussions with PUC and the Office of the Consumer Advocate, they recommended we ask for an increase of 18 cents per therm," he continued. "This would reduce the projected under-collection of funds that would need to be recovered during next year's winter season. So we amended our request for increase to 18 cents per therm."
The commission ruled on Feb. 28 in support of the increase, effective March 1 through April 30.
Passing along costs
Liberty serves 86,956 natural gas customers in communities located throughout the Merrimack River valley from Nashua to the Lakes Region, with some in Berlin as well.
The regulated utility does not mark up the cost of gas. It proves to the PUC what it has paid for the gas, and is allowed to pass that cost along to customers, as long as the costs are deemed prudent.
Gas utilities are allowed to increase the price without PUC approval by as much as 25 percent between filings, to keep up with prices on the wholesale market, in what are called "trigger filings."
Despite PUC-approved increases granted throughout last year (see chart on Page 1), and trigger increases in January and February, Liberty still spent $9.3 million more to buy gas than it was able to recover from consumers.
With the rate increase that took effect on March 1, the company will still be $6.2 million in the hole on its natural gas purchases, according to the PUC docket.
That's money that will be recovered from consumers in rate cases and trigger filings in the months ahead. The PUC encouraged the higher-than-requestd increase to soften the impact on customers by spreading the recovery over a longer period of time.
Consumers will continue to pay for the costly, cold winter of 2013-14 well into the summer and fall.
Utilities like Liberty are supposed to protect consumers from such wild price swings by ordering sufficient supplies well in advance of the heating season, and locking in a good price.
"Liberty does have contracts for gas supply that help protect customers from price swings. but the contracts are based on base load, or what we think will be a typical usage for that month," wrote Shore.
"If our customers use more than projected, we need to purchase more gas on the spot market. Those prices are very volatile. This year we had extreme cold for long periods of time across the country which drove prices sky high. And in New England we have a restricted pipeline infrastructure that can only bring so much capacity to the region. That also drives prices up."
The only other major supplier of natural gas for home heating in the state, Unitil/Northern Utilities, serves nearly 30,000 customers in the southeastern and Seacoast areas.