Gas costs rise, but bills ease

The rates for Bay State Gas are going up but, ironically, customers' bills will be going down - way down.

The state Department of Public Utilities approved a 3 percent increase in rates on Friday, about half what the utility had requested to pay for higher costs to distribute gas.

However, the charge to customers each month is affected by both that rate and the wholesale price of natural gas that Bay State Gas pays to buy its gas supplies. And a sharp drop in those prices will mean an overall 14 percent drop in bills for a typical heating customer starting Nov. 1.

According to the state, the rate increase will add about $6 to the monthly bill while the drop in gas prices will mean an overall drop of $29 a month for the typical heating customer.

Bay State Gas had sought a rate increase that would have increased revenues by $34 million. State regulators approved a $19 million increase. The regulators also approved the utility's proposal to recover costs associated with replacing aging steel pipes.

Bay State Gas spokeswoman Sheila A. Doiron said the decision "strikes a balance that gives Bay State Gas and its customers a fair and reasonable result."

Bay State Gas distributes natural gas to its customers, but it has to buy the fuel from gas producers. As a result, there are two parts to the utility's bills. One part reflects the generally fixed costs for the utility to distribute the gas. The other part reflects the variable cost for the utility to purchase the gas supply for customers.

The utility sought an increase in its rate covering fixed costs.