With the escalating price of natural gas, the last thing customers want to see is another cost increase on their monthly gas bill.
However, the Public Utilities Commission has reached a settlement with Greeley Gas Company which approves a rate hike to help offset the company's current operating expenses.
"People need to realize that this increase in price is not because of the rising cost of gas, but rather it is because of the fact that, just like any other business, the gas company needs to see a profit as well," said Karen Wilkes, public affairs manager for Greeley Gas. "These costs will help to cover some of the technological improvements that we have made at the gas company in the last seven years. Just like everyone else, we have moved into the computer age, and we have needed to upgrade our equipment along the way."
The increase is not in the price of natural gas, it is in the set rate facilities charge used to help Greeley Gas pay for its infrastructure. This is the first time in seven years Greeley Gas has increased its facility charge.
The increase in rates is separate from several rate hikes customers saw over the winter, when they were forced to pay more on their bills because of the sharp rise in the commodity prices of natural gas. Greeley Gas does not earn a profit on the price of natural gas that cost is passed on to the customers on a dollar-for-dollar basis.
"We never see a profit when there is an increase in the cost of natural gas," Wilkes said. "The PUC monitors any increase that we make and we have to show proof of why we are doing it. We have to sell gas on a regulated basis and cannot charge the customers more just because the price increases."
As a result of this settlement, rates in Greeley's northwest/central division, which includes Craig and Steamboat Springs, will increase 2.43 percent. The southeast division will increase 2.71 percent, customers in the southwest will pay .067 percent more, and the northeast division will see the largest increase at 12.82 percent.
"We made the increases geographically specific to the amount of gas that is used in each area," Wilkes said. "Since the customers in the southwest use the least amount of gas, they will see the smallest increase."
Gone are the days of meter readers who tote a notebook and pencil as they travel from house to house. Meter readers now carry a small, handheld computer that registers customer readings.
"We have had to make necessary improvements in all facets of our company," Wilkes said. "Along with our meter readers, our customer service department, is on call 24-hours-a-day, seven-days-a-week, has also seen upgrades. Our trucks all have computer systems in them now as well, which also helps to increase efficiency."
Greeley Gas originally asked for an increase of $4.3 million, but the PUC would only approve a $2.75 million increase.
The $4.3 million proposed rate hike would have increased Greeley Gas's profit margin to 12.5 percent. However, with the $2.75 million increase, the company will retain its existing 11.25 percent return on equity.
"It's a negotiation process where you have to make your best attempt at getting a figure that you can work with," Wilkes said. "It would have been good to get the $4.3 million, which was a very legitimate figure, but we can figure out ways to work with the $2.75 million that was approved. We always try to make every attempt possible to work in an efficient manner and save costs wherever possible."
Since Greeley Gas Company is a legal monopoly, every financial decision it makes must be approved by the PUC, which not only regulates Greeley Gas, but other public utilities as well.
"We oversee water companies, telecommunications companies, other natural gas companies and even some transportation/courier services," PUC representative Barbara Fernandez said. "Since most of these are publicly owned, shareholders need to see some return on their investment or they won't continue to buy stock in these companies. We do regulate the amount of profit that these companies see, so it is not as though they can ask for an unreasonable amount."
Customers will see the increase on their July gas bills.