Regulators approved reduced AGL rate increase

Baker said the proposal included two changes in the rules governing AGL that will hurt its customers over time.

One overcharges customers for depreciation, according to Baker.  The other allows the company to sweep costs from an unregulated AGL side business into gas rates, he said.

"The door has been cracked open," Baker said. "I can just see other unregulated affiliates having a portion of their expenses run through the regulated business."

In a recommendation circulated Tuesday afternoon, the commission's advisory staff had recommended that the company have its rates reduced by $7 million, in part because so much of its infrastructure costs are now being collected from customers in other ways.

In response, Craig Dowdy, a McKenna, Long Aldridge attorney representing AGL, blasted the staff and its recommendation in a public meeting before Wednesday's vote, accusing the staff of bias, calling its hired consultants "extremists" and comparing both to a list of famous liberals. He likened the staff recommendation to "something proposed by George Soros or Michael Moore," referring to the liberal financier and to the documentarian.

Company executives praised the ruling, although they said they had made a strong case for more.

AGL hasn't had a rate increase since the early 1990s and has been under a five-year rate freeze since 2005.

But a series of PSC decisions over the years have allowed AGL to recoup much of its bricks and mortar costs through special riders and fees that can change annually. Because of that, its request for more money was focused on programs to improve service and retain customers and to help the company recover from the effects of the recession.

The company also wanted to charge customers for what PSC staff called "phantom costs," a term that angered AGL.

It refers to expenses AGL said it would have incurred if it hadn't achieved economies of scale when its parent bought utilities in other states. The company wanted to be able to bill  ratepayers $14 million per year for half of the savings it said stemmed from acquisitions in 2000 and 2004.

The PSC allowed $4.4 million of that, for a period of five years.

On a motion from PSC chairman Lauren McDonald, the commission also reduced the company's allowed return on equity, from its current 10.9 percent to 10.75 percent.

The Wednesday increase will go into effect on Nov. 1.

Although it adds $1.14 to the typical bill, a drop in one of AGL's surcharges will go into effect the same day. The net increase on bills will be 90 cents.

AGL president Suzanne Sitherwood praised the decision in a written statement.

"We recognize the economic climate weighed heavily on the commission as it worked to find the right balance for the company, our customers and shareholders," Sitherwood said.

"It is never an easy decision to raise rates, particularly in a difficult economy."

The company also said the changes cited by Baker -- and the one dealing with the side information technology company in particular -- will save ratepayers money. David Weaver said ratepayers would be on the hook for $1 million more if the company's services were handled the standard way.