Washington Gas Light Co. asked yesterday for an across-the-board increase in rates for its District customers averaging 10.29 per cent.
At the same time, the gas company announced that earnings per share for the year ending June 30 were more than double the previous year.
Despite this jump in profits, Washington Gas President Paul E. Reichardt said in a statement he had "no choice" in seeking a rate increase because both operating and capital costs of the utility are rising faster than revenues, Reichardt said the utility is seeking the rate increase because it must raise its return on investment in order to get investors to buy the firm's stock and bonds.
Washington Gas also gave notice to customers in Maryland and Virginia that it would file for rate increases in both states before the end of the year.
The District filing marks the second time this week a local power company has sought higher rates. Potomac Electric Power Co. Tuesday requested a $45.5 million increase in revenues, representing rate increases of about 16 per cent for all classes of D.C. customers.
Gas company officials were unable to say how much the 96,000 residential gas users in the District can expect to pay if the proposed increases are approved by the city's Public Service Commission. Unlike most previous rate increase proposals, this one is coupled to proposed changes in the rate structure which have yet to be made final, according to Washington Gas spokesman Paul D. Young.
"Normally we could tell you the effect," Young said. "This case is an exception."
On the average, residential heating service customers spend $460 annually for gas. Nonheating service customers pay about $113 annually. Under the proposed rates, assuming there is no change in rate structure, the heating customer would pay $46 more each year, and the nonheating customer $12 more.
Washington Gas plans to proposed a new rate structure that would shift more of the rate increase burden onto commercial users and give residential users a slight break.
Washington Gas last received a rate increase in the District in November, when rates were allowed to rise 10.5 per cent on the average to yield additional revenues of $6.7 million.
Also in November, the utility was granted 8.63 per cent increase in Maryland rates and a 5 per cent surcharge on Virginia rates.
These increases were intended to earn for the utility roughly a 9.25 per cent return on investment. But WGL president Reichardt said the utility is currently earning less than 6 per cent return on investment. The return on investment is the ratio of earning to the amount owners have invested in the firm.
The requested rate increase would boost WGL revenues by $8.6 million annually, representing a rate of return of 9.85 per cent.
For the 12 months ended June 30 Washington Gas yesterday reported a net income of $17,503,000 ($3.35 per share). This compares with a net income for the previous year of $9,875,000 ($1.57 per share).
Commenting on this gain, Reichardt said, "A year ago we were at one of those all-time lows when the company was not even earning at a rate sufficient to cover our common dividends. And despite the improvement since then, the company is still not earning its allowed rate of return.
"This can be attributed primarily to increased labor costs and other inflationary factors not covered by existing rates."