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Judge recommends much smaller hike in National Fuel rates

A state administrative law judge has recommended that National Fuel Gas Co.'s request for a 15 percent increase in its delivery charges be reduced by 80 percent.

The recommendation by Administrative Law Judge Dakin D. Lecakes would reduce the amount of money that National Fuel would be allowed to raise through higher rates to $8.5 million, rather than the $41.7 million in additional money the company sought when it filed for a rate increase last April.

The recommendation, while not binding on the state Public Service Commission, is a strong sign that the Amherst energy company's rate increase will be significantly smaller than the one it had wanted. The commission, which will accept comments on the recommendations over the next 35 days, will consider the law judge's recommendations heavily when it makes its decision on the National Fuel case in the coming months, but it is not binding on them.

"We continue to review the information and determine potential ramifications," said Karen Merkel, a National Fuel spokeswoman.

National Fuel's proposal would have increased a typical customer's monthly bill by about $5.75 per month, from about $80 to $86. While the judge's recommended decision did not include a breakdown on how the reduced rates would impact different types of residential and commercial customers, an 80 percent reduction in the amount of money National Fuel would raise through higher rates likely would lower the increase for residential customers significantly.

Lecakes also rejected National Fuel's request to funnel most of the rate increase for residential customers through a $4 increase in the monthly customer service charge that all of its customers pay, regardless of whether they use natural gas or not. That charge currently is $15.54 a month for residential customers.

Critics, including a coalition of groups representing low-income groups in Buffalo, opposed the higher minimum monthly charge, arguing that it would make it more difficult for energy-conscious consumers who reduce their natural gas consumption to reap noticeable savings from their conservation efforts. It also would hurt consumers who use the least amount of gas the most.

National Fuel's delivery rates have not changed since 2007.  The company's delivery rates are regulated by the PSC and include the cost of getting the natural gas to Western New York and transporting it to the homes and businesses of its customers. The company's profits also are derived from the delivery rates. The other component of a customer's bill is the actual cost of the natural gas, which is passed on to consumers at cost.

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