Utilities asks City Council for gas rate hike

Summer is here, and furnaces in Colorado Springs are finally still after a long winter's work.

That's probably a good thing, because Colorado Springs Utilities wants to raise natural-gas rates, starting July 1. If approved by City Council on June 23, average summer residential bills will increase about $5 a month and winter bills will go up $12 a month.

The increase, 13.38 cents per hundred cubic feet, comes at a time when natural-gas prices have fallen dramatically across the country and some utilities are dropping rates.

The economic slowdown and new gas discoveries have dropped the price last summer from $13 per million BTUs, the common unit of measurement, to less than $4 today.

Utilities buys natural gas through a hedging program, locking in prices for the future at a discount and passing on to customers a three-year average, so it has not fully taken advantage of the current low natural-gas prices, said Bill Cherrier, Utilities chief planning and finance officer.

The impact on other Colorado utility companies has been mixed. Xcel Energy, the state's largest energy provider, increased gas rates by 39 percent this month, while Black Hills Energy this month dropped rates by an average of $20 a month.

"There are times we will be higher than the market and there are times we will be lower than the market. What we were doing is providing price stability to (customers)," Cherrier said. "Utilities you see lowering their bills, likely in the next four, six, eight months will be seeing substantial increases to their bills, while our customers won't be seeing that."

In fact, he said Utilities hopes to be able to drop rates in December or January.

Under the rate increase proposal, which was presented Wednesday to City Council - sitting as the Colorado Springs Utilities Board - typical industrial utility bills would go up 4.7 percent and commercial bills would go up 11.1 percent.

Utilities last fall projected a residential gas rate hike of 30 percent. By the time the rate case went to City Council in January, there was no increase, though water, wastewater and electricity all saw substantial rises.

Utilities last raised natural gas rates in January 2008.