Anchorage Daily News

Southcentral Alaska's gas utility announced Monday that it plans to reduce its rates by 16 percent next year, decreasing the average residential customer bill by $24 per month.

If state regulators approve the rate decrease, it will go into effect in January, Enstar Natural Gas Co. officials said.

The decrease will be a boon to Anchorage residents, most of whom heat their homes and their water with natural gas, said state Rep. Pete Petersen, D-Anchorage.

He said the high price of gas was a constant refrain that he heard last year while campaigning door-to-door in East Anchorage for his legislative seat. Enstar announced a 22 percent rate increase for 2009 last fall.

"People were worried about where they would find that money in their budgets," Peterson said.

It's welcome news from the utility after customers gave the company a public thrashing in recent weeks over its decision last year to charge its customers for a billing error it made at Fort Richardson. That charge -- $2.60 per month -- was included in last year's 22 percent rate increase but state regulators are only now deciding whether to let those charges stand or require Enstar to pay its customers a refund.

Enstar ratepayers will not be charged for the billing error on next year's bills, the utility said Monday.

Enstar said next year's proposed rate reduction coincides with the price adjustments made each October to its Cook Inlet gas supply contracts. The basis of those annual price adjustments is fluctuating oil and natural gas prices in the Lower 48.

Oil and gas prices started rising dramatically earlier this decade, with oil hitting historic highs last year.

As a result, Enstar raised its rates 22 percent this year. The utility's rates have more than doubled in the past five years.

"Enstar is encouraged to see the high costs and volatility of oil and gas prices stabilizing," said Colleen Starring, the company president.

Enstar's rate reductions don't mirror the annual fluctuations in oil and gas prices because some of its natural gas contracts with Cook Inlet producers are pegged to three-year price averages.

The utility, based in Anchorage, said Monday it plans to file its proposed rate decrease with the Regulatory Commission of Alaska in November.

Despite their approval of last year's rate increase, the RCA is still reviewing whether it was appropriate for Enstar to charge Southcentral customers for the Fort Richardson billing mistake. Depending on the outcome of the commission's review, Enstar might have to refund those charges to its customers.

A decision from the RCA on that matter is expected early next year, according to Enstar.

Find Elizabeth Bluemink online at adn.com/contact/ebluemink or call 257-4317.

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