A typical Washington area homeowner will pay $84 more a year for natural gas as a result of new wholesale gas price increases announced yesterday by Washington Gas Light Co.
The increase, effective Sept. 1, will amount to about 15 percent a year for the typical customer with a gas furnace, water heater and stove, which now burns about 1,500 "therms" or $525 worth of gas annually.
For customers who use gas for cooking and hot water but not heating, the increase will average $24 a year, said gas company spokesman Paul Young.
The higher gas prices will be paid by all Washington Gas customers in the District of Columbia, Maryland and Virginia.
Totaling $50 million a year, the higher gas rates will go into effect automatically without review of state or local regulators under Purchased Gas Adjustment clauses that allow Washington Gas to pass on higher wholesale prices to consumers.
Young said Washington Gas was notified this week of wholesale price increases by both of its suppliers, Columbia Gas Transmission Corp. and Transcontinental Gas Pipeline Corp.
The wholesale price increases, Young added, are the first major result of the decontrol of natural gas prices by Congress last year.
The higher wholesale price increases will be temporarily offset at some point in the next few months, by two refunds that Washington Gas will receive from Columbia for overcharges on previous gas purchases.
Columbia earlier agreed to refund $7.5 million to WGL and now will pay back the local gas company another $12.5 million as a result of a recent ruling by the Federal Energy Regulatory Commission that a prior rate increase was not justified.
The$20 million in refunds will be passed on to customers and will have the effect of temporarily reducing the $84 a year rate increase to $54 a year for home heating customers.
The precise impact of the wholesale price increase and the refund on monthly bills will depend on when WGL receives its second refund.
Yound said Washington Gas will appeal the latest wholesale gas price increase to the regulatory commission in hopes of obtaining another refund (Although Congress decontrolled natural gas prices at the wellhead last year, prices charged by gas pipeline suppliers are still regulated.)
Washington Gas Light got a $7.2 million a year rate increase in the District of Columbia in February that raised the average bill for a gas heating customer by $3 a month.
A request for another $6.1 million rate increase is still pending and Washington Gas officials have said they plan to file an application for a new rate increase in the District sometime in the future.
Another upcoming electric rate increase request was forecast Thursday for customers of Virginia Electric and Power Co.
Vepco officials told the Virginia State Corporation commission the company needs a rate increase of at least $2 per month per customer and may need a second rate raise later this year because its fuel costs are also rising.
If rates aren't raised. Vepco warned, it may have to stop work on a $1 billion project meant to protect consumers against blackouts on hot summer days.
The latest increase in natural gas bills is the price consumers are paying for improved gas supplies.
Since Congress lifted the ceiling on natural gas prices, the amount of gas available has increased to the point that Washington Gas can take on additional customers.
Even with the extra $84 a year, natural gas heating is still cheaper than heating with oil or electricity, the company officials said.