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Mountaineer Gas customers can expect hike in bills

August 26, 2005|by DANIEL J. SERNOVITZ

daniels@herald-mail.com

Mountaineer Gas customers in West Virginia, including some 4,000 residents in the Berkeley County area, can expect to see their natural gas costs climb by as much as $3.70 a month by Nov. 1, 2006, as part of two separate base-rate increases the West Virginia Public Service Commission approved late Wednesday, according to Mountaineer parent company Allegheny Energy.

Allegheny Energy spokesman Allen Staggers said the company requested the increases as a condition of its $130 million sale of Mountaineer and associated facilities to a limited partnership formed in July 2004.

"One of the conditions of closing the sale with the new buyers was that the base rate for Mountaineer Gas would increase," Staggers said. "The new owners couldn't come in and raise rates because they don't own it yet."

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Most of the customers are in Martinsburg, W.Va., though Mountaineer's service area extends along the U.S. 11 corridor to the Virginia line, Staggers said.

Allegheny, based in Greensburg, Pa., has been in the process of selling what it considers its noncore assets, including the natural gas distribution plant, as part of an ongoing financial recovery plan. Allegheny subsidiary Monogahela Power Co. bought Mountaineer in 2000.

Mountaineer serves about 205,000 retail customers in West Virginia, including those in the Berkeley County area, according to Staggers and filings with the SEC. SEC filings indicate Allegheny and Monogahela entered into an agreement in August 2004 to sell Mountaineer to Mountaineer Gas Holdings L.P., formed just a month earlier.

Following a Tuesday hearing, the Public Service Commission gave Allegheny permission to sell Mountaineer Gas, to increase its base rates by $15.3 million starting in November and to increase them again by another $2 million in November 2006. Offsetting the increases, Staggers said, Allegheny will forgive $11 million of its customers' debt for the fiscal year from Nov. 1, 2004, to Nov. 1, 2005.

As a result, residential customers using 13,000 cubic feet of natural gas per month will see their rates increase in November by about $2.47, or 5 percent, and by another $1.24 on Nov. 1, 2006. In approving the rate increases, the Public Service Commission imposed a moratorium under which Mountaineer's new owners will not be able to request another rate increase until Jan. 1, 2009, and that rate increase, if requested and approved, would not go into effect until November 2009.

The Securities and Exchange Commission still needs to approve Mountaineer's sale, but Staggers said he expects the base rate increases to go into effect even if the SEC does not uphold the sale.

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