Smith: Natural gas should be lower this winter

Wednesday, September 19, 2001

Democrat Editor

Lavenski Smith, commissioner of the Arkansas Public Service Commission, told Trumann Rotarians Thursday that natural gas prices should be lower this winter than last if the season is mild.

There was no rate increase last year by the PSC, which regulates monopoly utility and telecommunications companies.

"The Public Service Commission did not grant any general rate increase of our natural gas companies last year," the former associate justice of the Arkansas Supreme Court said. "What produced those bills was the incredible increase in the price of natural gas, which is a commodity that has been deregulated by the federal government. Natural gas distribution companies, where you purchase your gas from, simply passed on what it cost them to purchase that gas."

Smith said the price of natural gas quadrupled last year because of "supply and demand". He said the commission responded with several meetings this year to encourage natural gas companies use financial devices to cut down on cost of natural gas.

"A portion of natural gas has been moderated substantially since last year," Smith said.

Last year the price of natural gas was about $8 per thousand cubic feet (mcf).

"We don't expect it to get back down where it used to be at $2 to $3," Smith said, "but it will be well below $5 and 4 and that range."

He said there were many people without heat last year because they couldn't afford the bills. They were disconnected for non-payment and will have to pay a fee and what they owe before their service is reconnected.

The commission is working with the natural gas distributors, however, recommending they waive deposits.

"In Arkansas, we're probably going to get a frost in 10 weeks, and these people are going to need gas," Smith said. "The problem is under our rules, the gas companies can require these people to pay delinquencies, plus a deposit. Many of these people have hundreds of dollars in delinquencies and would be required to come up with a substantial amount of money."

He said the PSC is encouraging people that have been disconnected to set up a financing plan and get it turned on now and not in October.

"It will be a major headache in late October when the frost comes, and everyone shows up to the gas company wanting to get reconnected," he said.

Smith also spoke about telecommunications issues around the state.

He said companies like CenturyTel were changing plans for long distance.

CenturyTel took over GTE customers, who had a plan that one long-distance number could be local for a fee. The plan was set up for person-to-person, but some ran up thousands of hours for internet use.

"The PSC can set rates but cannot force a company to lose money," Smith said.

He said "the commission's hands are somewhat restricted in the area of telecommunications unlike natural gas and electricity because functionally telecommunications in Arkansas are deregulated. It has been deregulated since 1984.

The PSC also watches over electric companies.

"We have a primary obligation to see that utility services are provided in a manner that is affordable, safe and reliable," he said. "Electricity is one of the largest issues facing Arkansas today."

He said a lot of California's electrical shortages and high prices were blamed on deregulation in the electrical market.

"Naturally there is a concern, 'Is Arkansas going to experience those kind of cost swings?'" he asked. "The question is 'Are we going to deregulate? If we do, are we going to experience those types of occurrences?' My answer to you is Arkansas is not deregulating its electricity industry."

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