BROOKLYN UNION SAYS A RATE HIKE WOULD BE MODEST
Brooklyn Union Gas <BU>, a New York gas
utility company, said it will try to limit any rate hikes to
customers by arranging alternative supplies to replace the spot
natural gas that Transco Energy Co <E> no longer delivers, a
company official told Reuters.
    Edward Sondey, vice president of supply, said that under a
grandfather clause Brooklyn Union could request Transco to
transmit 165 mln cubic feet (mcf) a day of spot natural gas
after purchasing 250 mcf of contract gas from Transco.
    Brooklyn Union has been taking only 30 pct, or 75 mcf, of
the contract gas from Transco, and acquiring about 120 mcf on
the spot, or non-contract, market, he said.
    Lacking access to spot gas through Transco would not cost
Brooklyn Union more than 50 cts per mln btu for now,
Sondey said, as Transco contract gas costs 2.55 dlrs per mln
compared to about two dlrs for spot gas.
    "The rate increase will not be serious," Sondey said.
    The contract price at 2.55 dlrs per mln BTU has been
effective since May 1 after Transco lowered its commodity rate
to reflect seasonal weakness, making it the lowest in the 12
months ended May 31, according to report submitted by Brooklyn
Union to New York Public Utility Commission.
    In peak demand season, Transco's contract gas reached as
high as 4.30 to 4.40 dlrs per mln btu, a commission official
said.
    Industry analysts expected little adverse effect from
interrupted spot supplies on Brooklyn Union's earnings for its
current fiscal year ending September 30.
    But if the open access problem to Transco is not resolved
this winter, high cost of contract gas could cut into the
company's profit, they said.
 Reuter
