Nicor Inc. has added a
news release to its Investor Relations website.
Title: Nicor Gas Announces Plan to File Rate
Relief Request with Illinois Commerce Commission
Date: 4/18/2008 4:05:00
PM
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New rates would recover capital investments, higher operating costs and expand energy conservation programs
NAPERVILLE,
Ill.--(BUSINESS WIRE)--April 18, 2008--Nicor Gas
announced today it intends to
ask the Illinois Commerce Commission
(ICC) for an increase in rates
to help ensure that it continues to
provide its 2.2 million
customers in northern Illinois with safe and
reliable natural gas service.
The requested new rates
are expected to add approximately $4.60
per month to the average
residential customer bill. If granted after
ICC review, the new rates would
likely take effect in the spring of
2009. Nicor Gas said it expected
to file for the new rates near the
end of April.
Even with the requested
new rates, Nicor Gas would still be the
lowest-cost natural gas provider
among major Illinois utilities and
among the lowest-cost natural
gas utilities in the country.
The rate increase would
not apply to the cost of the gas itself,
which Nicor Gas purchases on the
wholesale market and passes along to
consumers without any mark-up. The
increase would only apply to what
Nicor Gas charges to deliver the
gas to homes and businesses -
typically between 15 to 20
percent of a customer's annual bill.
The increase is needed
to cover higher operating costs and
investments in the gas company's
distribution system. The utility also
seeks to expand energy
conservation programs.
System investments
include new compressors for the underground
storage fields that allow Nicor
Gas to purchase less expensive natural
gas for customers in the
off-season; and replacement of older cast
iron mains with polyethylene
plastic or coated steel pipes that are
more reliable and easier to
maintain over time.
When calculated as a
percent of the total monthly bill for the
typical residential customer -
including gas costs, taxes and delivery
charges -- the increase would be
about 5 percent.
Nicor Gas expects to
seek an overall increase in business and
residential rates of about $140
million. It is also expects to seek an
allowed rate of return of
approximately 9 percent on a rate base of
about $1.5 billion. In its last
rate case, filed in 2004, the company
was granted an allowed rate of
return of 8.85 percent. The company's
requested allowed rate of return
reflects a return on equity of about
11 percent.
Nicor Gas said that
existing rates are not sufficient, given
increased costs of doing
business. Sustained high natural gas prices
and the sluggish economy have
had a negative impact on company
expenses, and Nicor Gas has been
earning less than its allowed rate of
return.
As part of its rate
case, Nicor Gas also plans to propose a new
Conservation Partnership Plan to
encourage greater energy efficiency
and conservation by utility
customers in partnership with utilities.
The plan will include two
components: (a) use of a new rate mechanism
that supports conservation and
(b) increased investment in energy
efficiency programs.
The new rate mechanism,
known as decoupling, is designed to break
the link between recovery of the
company's costs - largely fixed in
nature -- and the quantity of
gas used by customers. It aligns the
interests of Nicor Gas with its
customers by allowing the company to
encourage and promote
conservation and energy efficiency programs to
help customers manage their
bills. At the same time, it provides the
company the opportunity to earn
a fair rate of return on its system
investments.
This progressive
ratemaking approach has been approved by public
utility commissions in Illinois
and 12 other states, including
California, New York, New
Jersey, Ohio, Indiana, and is under active
consideration in several others.
The second component of
the Conservation Partnership Plan would
establish a new conservation
fund. This fund would be administered by
an independent board and would
invest in energy efficiency and
conservation projects throughout
Nicor Gas' service territory.
"We will keep our
proposed rate relief request to the minimum
necessary to meet our
obligations to provide safe and reliable service
and to keep our company - an
important contributor to the Illinois
economy - financially healthy
and moving forward," said Russ M.
Strobel, Nicor Gas Chairman,
Chief Executive Officer and President.
"Nicor Gas
understands the impact of utility bills on its
customers, and we work hard to
keep costs down. We've put a special
emphasis on managing our costs,
and that's reflected in rates that are
lower than those of every other
major Illinois gas utility, and among
the lowest in the entire
nation," Strobel said.
Nicor Inc. (NYSE: GAS)
is a holding company and is a member of the
Standard & Poor's 500 Index.
Its primary business is Nicor Gas, one of
the nation's largest natural gas
distribution companies. Nicor owns
Tropical Shipping, a
containerized shipping business serving the
Caribbean region and the
Bahamas. In addition, the company owns and
has an equity interest in
several energy-related businesses. For more
information, visit the Nicor Web
site at www.nicor.com.
Nicor Gas is one of the
nation's largest natural gas distribution
companies. Owned by Nicor Inc. (NYSE:
GAS), a holding company, Nicor
Gas has provided safe and
reliable natural gas service for 50 years.
Its service territory
encompasses most of the northern third of
Illinois, excluding the city of
Chicago. For more information, visit
the Nicor Gas Web site at
www.nicorgas.com.
Caution Concerning
Forward-Looking Statements
This document includes
certain forward-looking statements about
the expectations of Nicor and
its subsidiaries and affiliates.
Although Nicor believes these
statements are based on reasonable
assumptions, actual results may
vary materially from stated
expectations. Such
forward-looking statements may be identified by the
use of forward-looking words or
phrases such as "anticipate,"
"believe,"
"expect," "intend," "may,"
"planned," "potential,"
"should,"
"will," "would," "project,"
"estimate," "ultimate," or
similar phrases. Actual results
may differ materially from those
indicated in the company's
forward-looking statements due to the
direct
or indirect effects of legal contingencies (including
litigation)
and the resolution of those issues, including the effects
of
an ICC review, and undue reliance should not be placed on such
statements.
Other factors that could
cause materially different results
include,
but are not limited to, weather conditions; natural
disasters;
natural gas and other fuel prices; fair value accounting
adjustments;
inventory valuation; health care costs; insurance costs
or
recoveries; legal costs; borrowing needs; interest rates; credit
conditions;
economic and market conditions; accidents, leaks,
equipment
failures, service interruptions, environmental pollution,
and
other operating risks; tourism and construction in the Bahamas and
Caribbean
region; energy conservation; legislative and regulatory
actions;
tax rulings or audit results; asset sales; significant
unplanned
capital needs; future mercury-related charges or credits;
changes
in accounting principles, interpretations, methods, judgments
or
estimates; performance of major customers, transporters, suppliers
and
contractors; labor relations; and acts of terrorism.
Readers are cautioned
not to place undue reliance on these
forward-looking
statements, which speak only as of the date of this
release.
Nicor undertakes no obligation to publicly release any
revision
to these forward-looking statements to reflect events or
circumstances
after the date of this release.
CONTACT: Nicor Gas Financial Contact: Mark Knox, 630-388-2529 or Media Contact: Annette Martinez, 630-388-2781 SOURCE: Nicor Gas |