By JEFF NAGEL PACIFIC NORTHERN Gas should decrease its Natural gas rates further ‘than it has proposed, user groups told the B.C. Ulili- ties Commission here last week, The utility wants regu- lators to approve the 1 per cent rate cut that took effect Jan. 1. The actual-cost of the gas has dropped by 27 per cent. '. That. means customers would be. enjoying a con- siderably deeper rate cut than 1] per cent right now except for. the fact PNG wants a-.major increase in its delivery charges. “Tt says it needs to in- crease those charges by 17.5. per cent to cover in- “creased — administrative costs and a higher return on equity for PNG share- ‘holders. “Commissioners heard local. industries argue the -delivery charge increases should: be rejected and more dramatic rate cuts _Shauld be imposed. © Eurocan paper mill gen- efal manager Lon: Schroe- der said high rates are threatening to drive off “Customers; pushing PNG “into even deeper trouble. ' > -“Eurocan believes that -PNG is fully engulfed in- the death spiral,” Schroe- der said. “It seems PNG’s concept of fair, just and reasonable is limited only by the amount of punish- ment its customers can absorb,” | What regulators do to “protect customers already ‘at the limit of what they .can‘afford will determine whether PNG can escape-. TERRACE “STANDARD | Business Review Users urge deeper cuts to PNG’s natural gas rates ethan aemuaaiccncproersrerg Soocerwsssssareat Beccemattanes PACIFIC Northern Gas officials field questions under cross-examination at a Public hearing at the Best Western Terrace Inn last week. the death spiral, he added. Richard Gathercole, ex- eculive director of the B.C. Public Interest Advocacy Centre, said the drop in gas costs doesn’t mean’ it’s an acceptable time to hike delivery charges, He warned recent price drops may not last long. PNG and Methanex - its biggest customer — are negotiating a new reduced gas transmission rate for the Kitimat methanol plant to end a lengthy dispute, Gathercole said such a deal would boost PNG gas rates for all other users to make up for the loss of re- venue fram Methanex. The likely terms for a settlement could Jeave PNG with an $8.3 million deficit for 2002, Gather- cole estimated. “If that were to happen that would wipe out all of the 27.1 per cent commod- ity cost decrease,” he said, adding residential customers may see an overall rate hike of around seven per cent. Gathercole also said natural gas commodity --costs could easily go back eet Si ats up soon as North American economies recover, PNG argues its return on equity should be in- creased to reward investors because it’s a riskier util- ity than most. But Gathercole says that’s dangerous logic, A higher return helps drive rates up, which spurs big industries to look at different fuels, he said, “Therefore it becomes more risky.” PNG president Roy Dyce confirmed there is an “ongoing liquidity pro- blem” at the utility, which has seen its credit ratings downgraded by bond-rating agencies, “We're having extreme difficulty attracting a new short term lender,” he said, “The market deems there is just too much risk around the company,” PNG has prepared the rates on the assumption Skeena Cellulose won't Tun its pulp mill this year. Dyce pointed to pos-- sible new industries in the northwest that could boost PNG revenues. A lifting of the ban on ee ee »f Stratéple B _Bomigy emer a”, - - Summer Jobs IMPORTANT NOTICE . To Employers n Resdute Development Cana Summer Career Placements is a wage subsidy program that enables employers to hire students during the summer for a period of 6 to 16 weeks. Private, public and not-for-profit employers are invited to submit their application by: April 2, 2002" - The objective of the program is to provide students with work experience related to their field of study. Applications will be evaluated based on the quality of the experience offered, local and regional priorities as well as available budgets. To apply or to find out more about this program, please contact your nearest Human _ Resources Development Canada office or call 1 800 935-5555. Internet: www.hrdc-drhe.gc.ca _* Please note that the application deadline for the: . Northwest Territories and Nunavut is April 9; 00 exploration for offshore oil and gas could someday create a new source of bu- siness for the pipeline. “Certainly in the long term it could have signif- icant impact and some- thing that you can appreci- ate we're very excited about,” Dyce said, He also revealed PNG believes a 250-megawalt power generating plant could be located in the Terrace-Kitimat area, con- suming as much gas as Methanex now uses, He said construction would take three years. PNG officials said they have yet to find a develo- per to build the plant, and the idea hinges on the pro- vincial government dere- gulating electricity prices, Opening the way for inde- pendent power producers, The developer would choose the site from sey- eral that PNG has scouted. If the commission dis- agrees with the utility and orders lower rates, custo- mers will get refunds or credits to their accounts. “The. hearing continues this: week-in, Vancouver. 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