CHICAGO, March 9 /PRNewswire-FirstCall/ -- Integrys Energy Group, Inc. , announced today that two of its subsidiaries, The Peoples Gas Light and Coke Company (Peoples Gas) and North Shore Gas Company (North Shore Gas) have filed rate cases with the Illinois Commerce Commission, the first rate cases in 12 years.
Rate Case Summary
Peoples Gas North Shore Gas
Revenue Increase Request $102,500,000 $6,300,000
Rate Base $1,308,007,000 $197,107,000
Percent of Equity Requested in Capital
Structure 56% 56%
Requested Return on Equity 11.06% 11.06%
Actual Return on Equity for Year Ended
September 30, 2006 4.2% 9.1%
Currently, Peoples Gas and North Shore Gas have an authorized rate of return on equity of 11.1% and 11.3%, respectively.
The filings include a proposed increase in the current base rates for customers of Peoples Gas and North Shore Gas and proposed new rate mechanisms in their tariffs. The proposed rate increases are being requested to allow the companies to recover their current cost of service and earn a reasonable rate of return on their equity investment. New programs and rate mechanisms are being proposed to help mitigate the effects of weather and natural gas prices on customers' natural gas bills.
The Peoples Gas filing includes a proposed rate mechanism to accelerate the investment in the replacement of the cast iron and ductile iron main system in Chicago.
The rate case process in Illinois requires receipt of a written order from the Illinois Commerce Commission within 11 months from the date of filing, which would be the first quarter of 2008.
Elements of the Proposed Rate Structure
The companies are proposing to move to a normal degree day measure based on 10-year averages rather than 30-year averages, which is the current measurement being used. By setting volumes based on more realistic weather expectations, the companies will be more likely to recover costs.
A decoupling mechanism is also being proposed to position the companies to recover fixed costs. The mechanism would allow the companies to adjust rates to recover or return under or over collections of margin revenues due to variations from the margin revenues that are approved in the rate case. Such variations may be the result of weather, customer conservation, or other factors. Under this mechanism, customers will experience less variability in their monthly bills due to weather. This is complemented by a proposed conservation program that will fund energy efficiency.
The Peoples Gas filing also proposes recovery outside of a rate case for costs associated with the acceleration of the installation of a state-of-the art natural gas distribution system replacing the cast iron main. Under the program, costs would only be recovered after the money is spent, but the company would not be required to go through a litigated rate case process to obtain recovery.
The companies are also seeking approval of an uncollectible balancing adjustment mechanism that would allow recovery of the actual natural gas cost portion of bad debt expenses.
Peoples Gas
This rate filing is the first since 1995 for customers of Peoples Gas. In 1995, Peoples Gas was authorized a rate of return of 11.1% on common equity. The actual earned rate of return on average common equity was 4.2% in 2006 (excludes the effect of the settlement of Peoples Gas' 2001-2004 gas charge cases). A typical residential customer who uses natural gas to heat their home as well as for cooking and hot water will see an increase of less than $10 per month.
Peoples Gas has been unable to earn a reasonable rate of return on equity due to a continuing decrease in the volume of natural gas delivered to customers resulting from milder weather and customer conservation efforts, the costs of investing over $800 million in facilities and information technology infrastructure since their last rate case in 1995, and an increase in operating expenses.
Peoples Gas is seeking an increase in its base rates of $102.5 million in additional annual revenue.
Peoples Gas serves approximately 840,000 residential, commercial, and industrial customers within the city of Chicago and owns approximately 4,000 miles of natural gas main. Its service territory covers about 228 square miles and has a population of approximately 3 million people.
North Shore Gas
North Shore Gas is seeking an increase in its base rates of $6.3 million in additional annual revenue.
This rate filing is the first since 1995 for customers of North Shore Gas. In the order that became effective on November 14, 1995, North Shore Gas was authorized a rate of return of 11.3% on common equity. North Shore Gas' actual earned rate of return on average common equity was 9.1% in 2006 (excludes the effect of the settlement of North Shore Gas' 2001-2004 gas charge cases). North Shore Gas has been unable to earn a reasonable rate of return on equity due to increased operating expenses and increased investments in facilities to serve customers. Bad debt costs and employee benefits costs have increased substantially since 1995. The increased investment in facilities is required to maintain a safe, adequate, and reliable distribution system to provide service to customers. North Shore Gas has invested nearly $110 million in both new and replacement facilities since 1995. While increasing the company's total capital investment, it has also increased the need for a related return on that investment. North Shore Gas is requesting an 11.06% return on equity in the rate case. A typical residential customer who uses natural gas to heat their home as well as for cooking and hot water will see an increase of less than $5 per month.
North Shore Gas transports, purchases, stores, distributes and sells natural gas to approximately 158,000 residential, commercial, and industrial customers within the 54 communities in Lake County and Cook County in Illinois. The company owns a 2,270 mile natural gas distribution system and serves one of the fastest growing regions in the state of Illinois.
About Integrys Energy Group, Inc.
Integrys Energy Group, Inc. , headquartered in Chicago, Illinois, is a holding company for energy related subsidiaries which includes regulated utilities and nonregulated subsidiaries.
The six regulated utilities consist of:
-- The Peoples Gas Light and Coke Company is a natural gas utility serving
more than 840,000 customers in the City of Chicago.
-- Wisconsin Public Service Corporation is a regulated electric and
natural gas utility serving more than 429,000 electric customers and
312,000 natural gas customers in northeastern Wisconsin and an adjacent
portion of Michigan's Upper Peninsula.
-- Minnesota Energy Resources Corporation is a natural gas utility serving
approximately 207,000 customers throughout Minnesota.
-- Michigan Gas Utilities Corporation is a natural gas utility serving
approximately 166,000 customers in lower Michigan.
-- North Shore Gas Company is a natural gas utility serving 158,000
customers in the northern suburbs of Chicago.
-- Upper Peninsula Power Company is an electric utility that serves
approximately 52,000 customers in Michigan's Upper Peninsula.
The nonregulated subsidiaries include:
-- Integrys Energy Services, Inc. is a diversified nonregulated energy
supply and services company serving commercial, industrial and
wholesale customers and aggregated groups of residential customers.
Its principal market is the northeast quadrant of the United States and
adjacent portions of Canada. Its principal operations are in Illinois,
Maine, Michigan, Ohio, Texas, Virginia, and Wisconsin in the United
States and Alberta, Ontario, and Quebec in Canada. Integrys Energy
Services also owns and/or operates nonregulated electric generation
facilities.
-- Peoples Energy Production Company is primarily engaged in the
acquisition and development of proven onshore natural gas reserves with
upside potential in a limited number of strategic supply basins. Value
is then added through drilling programs, production enhancements and
reservoir optimization.
More information about Integrys Energy Group, Inc. is available online at http://www.integrysgroup.com/ .
