Aquila, Inc. filed a request June 2 with the Iowa Utilities Board for a natural gas rate increase.
    Aquila is seeking a 10.3 percent increase for average residential customers, and a 2.9 percent rise in rates for average commercial customers.
    The average residential customer would pay an additional average of $7.40 per month if Aquila’s request is accepted. An average residential customer uses 791 therms of natural gas a year. (One therm of natural gas will run the average home furnace for an hour.)
    Commercial customers using the average of 3,303 therms of natural gas a month would pay an extra average of $7.93 each month.
    This is the first rate increase Aquila has sought since 2005.
    The primary reasons for the rate increase request are to recover investments in updating and improving its natural gas distribution system during the past three years, as well other operating costs, Aquila officials said. These costs include gasoline, payroll and health care costs, among others.
    The proposed rate increase is based only on the company’s Iowa operations.
    The rate increase would not cover the cost of natural gas supplies. The company sells gas to customers at the same price it pays, without a mark-up, an Aquila official said.
    Aquila will place interim rates into effect June 13. The interim rates will be effective until the Iowa Utilities Board makes a decision on the company’s full request, which could be early in 2009. If final rates are lower than interim rates, customers will be refunded for the difference.
    The interim increase for residential customers will be 6.5 percent, or an average increase of $5 a month. The commercial interim rate will increase by 2.7 percent. An average commercial customer would have an increase of about $7.86 a month.
    The interim rates are subject to customer refund based on the final rate increase approved by the Iowa Utilities Board. The interim rates will be in effect until April 2009 when the IUB reaches a final decision on the request.
     Aquila also is asking the IUB for permission to shift the recovery of more daily operating costs to the “customer charge” portion of the customer bill. In the past, most of these costs were recovered on the basis of the amount of natural gas consumed by customers.        

    Aquila is seeking this change because costs to serve customers have been increasing, while energy efficient home heating systems and efficient natural gas appliances are reducing the actual amount of natural gas each customer is using. The result is Aquila is not recovering all of its costs under the current rate design.
    Aquila officials say the company is a proponent of efficient energy usage. However, the cost of necessary investments in service lines and related equipment to bring natural gas to the customer’s residence are fixed regardless of the quantity of gas used by a customer.
    “One of the customer benefits of the proposed rate design is our customers’ monthly bills will not fluctuate as much as they have in the past. In addition, this method of billing accurately reflects the costs of providing energy our customers need and want,” said Tracy Peterson, vice president of Aquila natural gas operations in Iowa.
    The current rate request affects the smallest portion of each customer’s bill, which is the cost to deliver natural gas supplies. The natural gas cost portion of each customer’s bill typically comprises about 75 percent of a monthly bill, so Aquila officials say it still makes sense for customers to use natural gas as wisely and efficiently as possible.
    Before the Iowa Utilities Board makes a decision on the proposed rate change, they will likely schedule public hearings later this year to gather public input.
    A notice of the proposed new rates was mailed to customers June 2. To receive more information about the current and proposed rate schedules, call Aquila at 1-800-303-0752 or email custserv@aquila.com.