ATLANTA - Faced with a possible $42.1 million rate reduction, Atlanta Gas Light Co. has cut its request for a rate increase by $5.4 million - to $44.9 million a year. <br>
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The Public Service Commission will rule next week whether to grant an increase or follow the advice of the PSC staff and cut the gas rate. <br>
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AGL had asked for a $50.3 million boost. An increase of $44.9 million a year would amount to about $2 a month for the average household. <br>
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The PSC will meet on Monday, and the new rate would go into effect two days later, May 1. <br>
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AGL spokesman Russ Williams said the company would like to settle the case, but its lawyers also have filed a brief contending the PSC ``unlawfully commenced'' the rate case last year, and petitioned the commission for a dismissal. <br>
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The lawyers argued that only the company can initiate a rate proceeding, but PSC Chairman David Burgess said the commission's authority is clear and has precedent. <br>
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The commission initiated a rate case in 1989 that led to a $149 million reduction in telephone rates for BellSouth, Burgess noted. <br>
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``The commission is going to make a decision Monday,'' Burgess said. "We have to take a balanced approach so that consumers have reasonable rates and the company has the wherewithal to provide the services that consumers demand.'' <br>
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The scaled-back rate hike request reflects a reduction of $2.3 million for recovering depreciation costs from the earlier proposal. <br>
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The company also has agreed to forgo $1.6 million it has sought for reimbursement of costs such as severance payments related to its transition to deregulation, and another $1.2 million to recover bad debt related to the 1999 bankruptcy of natural gas marketer Peachtree Natural Gas. <br>
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The PSC last set AGL's rate in 1998 at the start of the state's deregulation of the natural gas industry, which left the utility as the regulated distributor of gas sold by unregulated marketers. <br>
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The commission authorized a rate of return on equity of 11 percent. According to the PSC staff, the utility is now earning a return on equity of between 15 percent and 17 percent, and rates should be reduced. <br>
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AGL's base charges account for about 40 percent of the typical residential gas bill. The suggested reduction would amount to an average of just under $2 per month.
