The average customer would save $31 a month.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
YOUNGSTOWN -- Dominion East Ohio intends to cut a major part of many customers' bills by 29 percent.
The utility wants to reduce rates because the supply of natural gas is increasing, which is pushing down prices on the wholesale market, said Neil Durbin, a spokesman for the Cleveland-based company.
Being cut is the gas cost recovery rate, which makes up about three-fourths of a customer's bill if the customer buys gas from the utility.
Choice program customers: About 43 percent of Dominion East Ohio's 1.2 million customers buy their gas from other suppliers under the company's energy choice program. Their rates would not be affected by this proposal, but they will see another type of rate reduction.
A transportation charge amounting to $1.05 per thousand cubic feet of gas has been charged to energy choice customers to pay for gas that the utility bought while they were still in the company's system. State regulations allowed Dominion East Ohio to add the fee for 12 months but now it is expiring.
For customers who still buy their gas from Dominion East Ohio, the company is proposing the new gas cost recovery rate take effect July 30. The plan was developed jointly with the Public Utilities Commission of Ohio, but the state agency still must give final approval.
Savings under plan: The plan calls for the per-thousand-cubic-feet rate to be cut from $8.70 to $6.17. The company said the average residential customer would save more than $280 over the next nine months, or $31 a month.
The plan calls for the rate to be effective until April 29.
If market prices fall further during that time, the company could reduce the rate. If prices rise, however, it would keep the rate at $6.17, Durbin said.
State regulations require the company to pass along its cost of buying gas with no profit.
The rate reduction follows several rate increases last year. Company officials said wholesale prices rose last year because demand was rising and supplies were not. Not many new gas wells had been drilled in recent years because prices had been low. The rate in January 2000 was $3.76.
Falling now: Durbin said wholesale prices are falling now because gas from wells that were drilled last summer is now in the supply chain.
The volatile prices of the past year has caused Dominion East Ohio to change the way it buys gas, which is allowing it to offer the $6.17 price for nine months instead of the normal three months.
The PUCO is allowing the company to buy gas with longer term contracts, Durbin said. These contracts allow the company to obtain better prices, he said.