Athens Utilities Board (AUB) was recently informed by its natural gas supplier that it will increase the Purchased Gas Adjustment (PGA) on all gas that the local utility buys, which will affect every gas customer on AUB’s system.
AUB’s natural gas rate has two components, the base rate and the PGA. AUB’s base rate is not changing.
For residential customers, it remains at $0.4348 per therm. A therm is equal to about 100,000 BTUs of energy.
The increase affects only the PGA portion of AUB’s rate. That’s the portion that changes a little each month based on the cost of gas from the region’s natural gas supplier, which is East Tennessee Natural Gas.
The PGA will rise by approximately 9% for most customers as a result of the coming rate action.
The pipeline officials said that the increase is prompted by extra costs they have incurred via regulatory issues integral to maintenance, and by the Pipeline Integrity Program.
These changes in cost primarily are the result of a pipeline explosion in Middle Tennessee in December 2018.
“The East Tennessee Natural Gas pipeline’s demand charge is increasing pretty drastically, in our opinion, and our base load of demand for natural gas is on that particular pipeline,” said AUB’s Wayne Scarbrough.
The “demand” charge is the portion of the rate that a company such as AUB pays the pipeline whether they use the service or not, something like a reservation charge. These charges cover fixed costs that are incurred whether or not gas is consumed.
AUB has what are known as “firm” and “interruptible” natural gas customers. Interruptible customers are large industries that can afford to have their service interrupted, usually during extreme cold.
Because all AUB natural gas customers have the PGA as a portion of their rate, all will be affected.
“We expect the increase to be about 9% for most of our customers and about 4% for our large, interruptible customers,” Scarbrough said.
The increase will go into effect pursuant to the February PGA.
“We will keep doing our level best to ensure that the base rate stays where it is for the foreseeable future,” Scarbrough said.