Gas Co. Seeks 10.5% Residential Rate Increase : Utilities: The request follows a $124-million hike in June. Officials say the higher fees are part of efforts to end a longtime subsidy of non-commercial users.

The utility that delivers gas to 4.4 million homes between Santa Maria and the Mexican border asked Wednesday for a $134-million rate increase that would raise the average household bill about $4.90 a month in the winter and $1.90 a month in the summer.

The Southern California Gas Co.’s request for a 10.5% increase--which could be heard by the California Public Utilities Commission and decided as early as April--would continue an action begun in June, when the commission approved a $124-million residential rate hike, company spokesman Ron Owens said.

The June increase was the first step in efforts to end a longtime subsidy to residential users and meet competition from other sources to serve industrial and large commercial customers, said Nancy Day, the gas company’s vice president for regulatory affairs.

“Changes in the rate structure are intended to eliminate the high subsidy that large gas customers have paid for at least the past two decades to provide artificially low rates to residential and small commercial customers,” Day said.

The increase would align residential rates with the true cost of providing the service, officials said. The company said it intends to lower industrial and large commercial rates, although the amount has not yet been determined. It was unclear how small commercial users would be affected.

Gas rates are set every two years, based on estimates of sales and the actual cost of the gas supplies. Gas sales have been lower than forecast and the price of gas has been higher than forecast, so the shortfall in the revenues required to recover the cost of gas service is included in this rate request, Day said.

She cited last winter’s mild temperatures, the state’s sluggish economy and its effect on the utility’s commercial customers, along with competition from new pipeline operators in the wake of federal deregulation.

Day said the company has taken several steps to reduce costs and become more competitive, including reducing its work force from 10,000 seven years ago to 9,000 by the end of 1994, with a savings of $50 million annually in salaries and benefits.