The North Dakota Public Service Commission is holding formal hearings on a natural gas rate increase proposed by Xcel Energy.
The increase would come on the monthly base charge, for the delivery of the gas. Utilities do not make money off of the gas itself. Xcel had proposed increasing the monthly charge from $18.50 to $25.00. But in a proposed settlement worked out with PSC staff, the charge would be $22.50.
"I think it's important for customers to understand that this is the first increase in that customer charge since 2006," said Xcel senior regulatory consultant Dave Sederquist.
AARP is an intervenor in the case. It does not agree with the rate spelled out in the proposed settlement. AARP state director Josh Askvig said the organization doesn’t like the fact that larger gas customers have charges based on the amount of gas they use, after a fixed monthly charge.
"The one thing we have heard (from Xcel) is that if we lower the fixed charge, then there will be an additional charge that's variable with the cost of gas," Askvig said. "We're saying, 'Yeah' — it gives customers the ability to control more of their bill."
But Sederquist said there’s a reason Xcel has only a fixed cost for residential customers, rather than a volumetric charge.
"The company incurs generally the same cost to serve every residential customer," Sederquist said. "Pretty much the same size pipe and the same services. That's why it doesn't make sense to charge customers on a volumetric or usage rate, because you're starting to deviate from matching the revenue with the cost to serve."
Askvig said if the agreement is adopted, North Dakota residential customers will be paying the highest monthly charge of all customers served by Xcel. In its filing, AARP said customers in Minnesota pay only $9.00 per month.
Askvig said AARP does agree with the amount of “return on equity” proposed in the settlement – which is 9.8 percent. The settlement includes a provision that, if Xcel makes more money than allowed, customers will be given a refund or bill credit.
