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Published March 05, 2009, 10:08 AM

Gas firm serving Troy seeks rate hike from state PSC

While below-average temperatures boosted St. Croix Gas’ revenue last year, the local utility is seeking a 6.99 percent rate hike this year, according to a document filed with the Wisconsin Public Service Commission.

By: By Kevin Murphy, Hudson Star-Observer

While below-average temperatures boosted St. Croix Gas’ revenue last year, the local utility is seeking a 6.99 percent rate hike this year, according to a document filed with the Wisconsin Public Service Commission.

The last St. Croix Gas rate hike was 3.02% authorized in October 2005.

St. Croix Gas, River Falls, serves roughly 6,000 customers in Hammond, Prescott, River Falls, and the towns of Hammond, Troy, Kinnickinnic, Clifton and River Falls.

In preliminary testimony filed earlier this month, St. Croix Valley’s President Don Piepgras said the company needs an extra $688,000 this year to offset the $194,445 cost of energy-efficiency programs as well as labor and other business expenses that are estimated to increase 4.5 percent this year.

Without the rate hike, Piepgras said the utility would incur an operating loss based on projected expenses and income. The specific financial data Piepgras referenced wasn’t available as Piepgras is out of the country and unavailable for comment, said Stephanie Brown, office manager.

Other preliminary testimony from St. Croix Gas included these points:

  • An increase in uncollectible accounts was also driving the need for higher rates. The company has written off an average of $65,000 in uncollected billings the past two years and expects the same amount this year.

  • Other expenses are due to the utility converting from a S-Corporation to a C-Corporation since the last rate increase and are now subject to state and federal income taxes. Brown said the company and company’s owners incurred other expenses when the utility was organized as S-Corporation.

  • St. Croix Gas will spend $162,500 on infrastructure this year and $137,500 in 2010, which it also needs to recover over time with higher rates, according to Piepgras.

  • The company estimated the cost to prepare the rate case and compliance in other regulatory matters would be $20,000 this year.

    St. Croix Gas is seeking rates that will allow it to earn an overall 10.95 percent return on its investment. It projects a minus 1.3 percent return this year if current financial projections continue.

    Cold temperatures in 2008 allowed the company to earn a 9.99 percent return last year, slightly higher than the rate last authorized by the PSC.

    PSC spokesperson Teresa Weidemann-Smith declined to give a range on the rate of return the commission recently had been authorizing for gas utilities similar to St. Croix Gas.

    Instead, she said, the PSC reviewed each utility individually and based on its rate of return decision on the financial information the company supplies.

    The PSC normally takes six months to analyze a utility rate case, hold a public hearing and set new rates, but Weidemann-Smith expected the St. Croix Gas case to take less time.

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