Mo. appeals court upholds PSC's decision on gas rates

KANSAS CITY, Mo. -- An appeals court on Tuesday upheld regulators' 2004 decision allowing Missouri Gas Energy to raise its rates by $22.5 million, about half of what the company wanted.

The Missouri Court of Appeals for the Western District determined the Missouri Public Service Commission, which regulates utilities, was correct when it approved the rate increase in October 2004.

The decision overturns a ruling by a Cole County Circuit Court judge who said the PSC's calculations were unreasonable and based on flawed testimony.

MGE, a subsidiary of Scranton, Penn.-based Southern Union Co., had asked to increase rates by 9.8 percent, or $44.9 million. MGE's last rate increase not tied to wholesale gas prices had been in 2001.

In its appeal, Kansas City-based MGE said the smaller rate increase provided a rate of return that was unreasonably below national averages.

The appeals court, however, said the commission adequately balanced the potential risks to stockholders and the cost to the company's 500,000 customers in western and central Missouri.

MGE spokeswoman Pam Levetzow said the company was reviewing the ruling and considering its next step. She said the decision would have no effect on customers, because the $22.5 million increase already went into effect.