If PSNC Energy's rate increase request is approved by the N.C. Utilities Commission, the average monthly bills for the company's residential customers would increase by 4.4 percent, or about $3.75. PSNC said it needs to raise rates by $21 million a year to continue providing safe and reliable service.

The Gastonia utility said it is making the request to pay for building and maintaining the natural gas mains that take the gas to homes and businesses. The company has added 2,200 miles of gas mains since its last rate increase, to accommodate a 25 percent boom in customers in eight years. PSNC serves 428,000 customers in 28 North Carolina counties.

Natural gas customers have been paying wildly fluctuating prices in the past year. The cost of the gas spiked after twin hurricanes struck the Gulf of Mexico and wiped out pipelines and refineries. But the cost of the gas is an expense that utilities pass along to their customers. About two-thirds of a residential natural gas bill is the cost of the gas itself.

The other one-third, which PSNC is asking to increase, is called the base rate. This is the portion of the customer's bill that contributes to the utility's profit.

PSNC last changed its base rate in 1998. At that time, the utilities commission set a profit margin of 11.4 percent for PSNC. But the company is not making the allowable profit and is asking to increase the profit margin to 12 percent.

"Revenue [per customer] stayed flat. Costs went up. So obviously our profits were down," said Bill Williams, PSNC's general manager for gas supply and sales. "Our cost of doing business today is much higher today than in 1998."

PSNC's request will be reviewed by the Public Staff, the consumer advocacy arm of the utilities commission. Public Staff director Robert Gruber said PSNC's quarterly financial reports to the commission show that "they've been under-earning for quite a while."

However, as part of a rate request, Gruber's staff will conduct a thorough audit of PSNC's financials to make sure the company is conducting business in a fiscally responsible manner and not wasting money. "You examine everything in a rate case," Gruber said.

The Public Staff could decide to challenge the rate request, negotiate a settlement or go to a hearing before the Utilities Commission, which would decide the case.

PSNC's rate request would result in a 1.9 percent increase for small commercial customers, but would leave rates unchanged for large industrial customers.

PSNC's parent company, Scana Corp. of South Carolina, reported a profit of $327 million in 2005, up 24 percent from 2004, according to filings with the Securities and Exchange Commission. Williams credited excellent management with boosting the bottom line.

"When you start cutting into the muscle, you're not going to be able to continue to move your business forward," Williams said.