An agreement allowing a $13.8 million rate increase for SourceGas Arkansas is in the public interest, the state attorney general's office told the Arkansas Public Service Commission on Thursday.
The commission heard testimony about the settlement from representatives of the attorney general's office, the general staff of the commission and SourceGas Arkansas' customers, all of whom support the settlement.
"The settlement is $4.9 million less than originally requested," Assistant Attorney General Emon Mahony said in supporting the deal.
SourceGas sought the rate increase last year, first requesting an $18.7 million increase. But SourceGas and the parties to the case began negotiating a settlement this year.
Among the commercial and industrial customers that intervened in the case were the University of Arkansas, Washington Regional Medical Center and poultry producers Tyson Foods Inc., George's Inc., Simmons Foods Inc. and Cargill Inc.
All the parties eventually agreed to a $13.8 million increase in SourceGas' rates for its 154,000 customers primarily in northwest and northern Arkansas.
That is an overall increase of 23.5 percent for all SourceGas customers, including industrial and commercial customers. SourceGas supplies more natural gas to its industrial and commercial customers than its residential customers, said Rich Davis, a SourceGas spokesman.
If the commission approves the settlement, residential customers will see a 9.53 percent rate increase.
That means a residential SourceGas customer who had a monthly bill of $100 last year will have a bill of $109.53 this year using the same amount of natural gas.
SourceGas delivers 5 million ccf ( 100 cubic feet) of natural gas annually to the University of Arkansas, about 2 percent of SourceGas' annual volume, said Elizabeth Smith, an attorney for the university.
The outcome of the case "will directly and substantially affect the University of Arkansas," Smith said. The university supports the proposed settlement.
The other industrial customers who intervened in the case consume 570 million ccf of natural gas annually, said N.M. Norton, a Little Rock attorney who represents the industrial customers.
"The price of natural gas reflects itself in the price of their products," said Norton, who said his clients hope the commission adopts the settlement.
The commission is required to make a ruling in the case sometime in July, although it could be earlier, said John Bethel, executive director of the commission's general staff.
"The parties have indicated this is a reasonable settlement," Bethel said. "And based on the commission's questioning, they didn't express any areas of serious concerns about the settlement. But I can't predict how they'll [eventually rule]."
SourceGas, based in Golden, Colo., acquired Arkansas Western Gas in 2007, the last year the company received a general rate increase.
Public comments on SourceGas' proposed rate increase will be taken Tuesday at 6 p.m. at Fayetteville High School and Thursday at 6 p.m. at Blytheville High School.
Business on 05/23/2014