Coun­cil mem­bers ap­prove ad­just­ing util­ity rates

The Covington News - - The Second Front - DANIELLE EVER­SON deverson@cov­news.com

So­cial Circle coun­cil mem­bers dis­cussed and ap­proved ad­just­ing nat­u­ral gas util­ity rates to in­crease the city’s rev­enue at their meet­ing last Tues­day night.

John He­witt, So­cial Circle’s Con­sul­tant Rate An­a­lyst ex­plained to coun­cil mem­bers that they needed to in­crease their nat­u­ral gas rate by 8 per­cent due to re­duc­tions in the mar­ket rate of nat­u­ral gas.

He­witt said the stock mar­ket price for nat­u­ral gas was much lower than it had been in the last few years. He con­trib­uted the low com­mod­ity cost of nat­u­ral gas prices to this past year’s mild win­ter.

“The stock mar­ket cost of [nat­u­ral] gas was sub­stan­tially lower in 2012 and [will be] even lower in 2013. We had such a mild win­ter in 2012 this year,” He­witt said. “It was so warm that no one needed it.

“The com­mod­ity charge is go­ing down sub­stan­tially. We don’t have any con­trol over that. Our dis­tri­bu­tion charge is go­ing up by 8 per­cent. The sum of those two is a net de­crease,” He­witt said.

He­witt said in 2011, the av­er­age nat­u­ral gas util­ity bill per month for a res­i­den­tial cus­tomer was $52.49. But in 2012, based on rates from July 2011 to Fe­bru­ary 2012, the av­er­age cost was $27.98.

He­witt said by in­creas­ing the city’s dis­tri­bu­tion charge by 8 per­cent, the av­er­age nat­u­ral gas util­ity bill for 2013 will be about $47.43.

He­witt said an 8 per­cent in- crease would still net a smaller bill for cus­tomers than they paid last year be­cause the cost of gas was so low.

In 2011, the av­er­age rate per thou­sand gal­lons was $10.59, but in 2012 the rate was $10.47. He­witt said they es­ti­mate that the rate will drop to $9.45 in 2013 with the in­crease.

“[We] will in­crease the base rates on nat­u­ral gas; we’re go­ing to in­crease rev­enues by 8 per­cent and we’ll do that by in­creas­ing the base charges and dis­tri­bu­tion charges that’s how will get that.”

So­cial Circle city man­ager Doug White said the city needed the 8 per­cent rate in­crease so that the city could in­crease their rev­enue.

“We build our bud­gets based on what we need rev­enue wise to run the city and we just needed a slight bump,” White said. “We didn’t re­ally make any money with gas over a year’s time and that’s just not a good way to run your sys­tem.

“We tried to look at what it [would] take to give us a lit­tle mod­est in­crease par­tic­u­larly since most of the heavy in­dus­trial users, which is where all the gas sales went for the most part last year are pretty much on fixed rates based on their sched­ule of what they’re mak­ing and how much they’re go­ing to burn. We had ne­go­ti­ated rates with them based on the amount of us­age each year.”

There was no dis­cus­sion on what the ex­act amount of the nat­u­ral gas rate in­crease would be or when the rate in­crease would go into ef­fect.

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