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Xcel may increase gas rates

Xcel Energy served notice Friday that it seeks to increase natural gas rates for its North Dakota customers by 3 percent to cover increased distribution costs.

Xcel Energy served notice Friday that it seeks to increase natural gas rates for its North Dakota customers by 3 percent to cover increased distribution costs.

If approved by regulators, the new rate would boost the natural gas bill for a typical residential user by $3.51 per month, to $84.55 from the current $81.04, said Dave Sederquist, Xcel Energy's senior regulatory and financial consultant.

"Since our last rate case, Xcel Energy has invested about $3.9 million to maintain and improve the safety and reliability of our natural gas system," he said. Those costs included relocating a gas line along Main Avenue in Fargo, a project that cost $1.5 million.

"We've also added 2,750 new customers," Sederquist said, meaning the utility had to increase its distribution system. Xcel serves 43,600 North Dakota customers in Fargo, Grand Forks and surrounding communities.

Xcel estimates the new gas distribution rate, if approved by the North Dakota Public Service Commission, would take effect next summer. Under its rate filing, however, it is asking for a 2.7-percent interim rate increase that would take effect Feb. 13.

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If approved, the new natural gas distribution rate would be the first granted Xcel in North Dakota since November 2004, Sederquist said.

Tony Clark, president of the Public Service Commission, said commissioners probably would conduct a hearing on the proposed rate increase.

In the last rate increase, the distribution fee was modified to be collected year-round, flattening customers' bills and decreasing them during the winter heating months, when it was a "double whammy," Clark said.

The largest part of the gas bill, the price of the fuel itself, is allowed to fluctuate with market rates. The commission reviews the so-called "fuel clause adjustment" to ensure customers are paying no more than a dollar-for-dollar "pass-through" reflecting Xcel's costs for natural gas. The commission regulates the distribution cost.

As part of its rate application, Xcel proposes greater conservation measures, including discounts for home energy audits and free "low-flow" shower heads, as well as incentives to purchase high-efficiency gas furnaces or water heaters.

"Things that people do pay back year after year," said Bonnie Lund, an Xcel spokeswoman.

Conservation programs are becoming more popular in rate cases, Clark said.

"I think because of higher energy costs, it's become a little bit more fashionable to talk about conservation," he said. "It's probably too early to tell what the reception will be to that, but it is getting more common."

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Readers can reach Forum reporter Patrick Springer at (701) 241-5522

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