UE REQUESTS 19.5 PERCENT GAS RATE HIKE

Union Electric Co. has filed a request for a 19.5 percent increase in natural gas rates.

Citing substantial investment in new facilities and higher operating costs since the company's last general rate increase 10 years ago, UE filed the rate-hike request Friday with the Missouri Public Service Commission.

UE, which provides energy to 1.3 customers in Missouri and Illinois, has 102,000 natural gas customers, mostly in the central and Southeast portions of Missouri.

Company officials said the request for higher rates isn't expected to have any immediate effect on customer bills because the PSC normally doesn't act on rate requests until completion of a full audit and review. Missouri law provides for up to 11 months for the process.

The proposed new rates are designed to produce an additional $14.3 million in annual revenues. It would result in an average increase of about $8.62 a month for a typical residential customers with gas heat.

The proposal would not effect the company's electric rates.

UE officials said the rate hike would be the first since 1987 in the portion of its rates charged for cost of constructing, operating an maintaining its gas-distribution system.

"We have added more than $83 million in system improvements and new facilities since 1986, the test year on which current rates are based," UE vice president William J. Carr said. "In addition, our annual operating and maintenance expenses are more than $3 million higher than in 1986."

Complying with state regulations enacted in 1989 for gas pipe replacements was a major reason for higher costs, Carr said. The utility has replaced about 162 miles of pipe, he said.

The new rate would not affect the wholesale cost of natural gas UE buys to supply its customers, Carr said. That cost, which comprises 65 percent of a typical gas customer's bill, fluctuates monthly because it is established by the competitive marketplace.

As part of the request, however, UE proposed several rate modifications, including an experimental plan that would allow customers to share the benefits when savings are achieved in certain categories of wholesale costs from UE's gas suppliers.