Natural gas customers will see a small decline in bills through March
The Susanville City Council approved the new natural gas rate schedule at its public hearing on Wednesday, Jan. 24, giving all customers a chance to save money by staying with natural gas.
All standard rate customers, primarily residential customers, will be given a rate of $2.19 per therm for the first 30 therms of natural gas used per meter reading cycle during the winter months of November through March. Before the change, which took place immediately after the public hearing, customers paid $2.44 per therm.
Customers will continue to pay the $2.44 per therm after the first 30 therms unless they use enough natural gas to qualify for one of two other rate structures approved by the council.
Customers who use more than 450 therms a month are given two rate tiers to choose from. Those using more than 450 therms had been paying $2.26 per therm unless a special agreement was made with the city.
Lassen Community College had such an agreement. It received natural gas at $1.02 per therm for two years. That contract expires tomorrow, Jan. 31.
The council unanimously approved offering customers who use more than 450 therms, all commercial customers, a rate of $1.99 per therm, a saving of 27 cents per therm.
With the new rate the city would lose about $99,000 in new revenue but, as Dan Bergmann, of Interstate Gas Services, Inc., continued to remind the council during the two-hour public hearing, “the city was better off eating into the revenue than losing any customers.”
Councilmember Doug Sayers at one point agreed. He said, “We are in a catch-22 situation. If we lose customers or revenue we are in trouble.”
Bergmann projected the city would net $340,000 in revenue for the fiscal year 2006/2007. That number will be decreased by about $85,000 with the new rate structure and if things go as Bergmann predicts.
The council approved a third option for natural gas customers and though currently this option only affects about three commercial users, Bergmann said it was a necessary addition to keep the customers.
As of today, the three primary users that can take advantage of what is called the Variable Natural Gas Rate are the college, Safeway and Diamond Mountain Casino.
The variable rate applies to customers who use more than 30,000 therms of natural gas a year.
By using a formula based on one, or both, propane and heating oil indexes the city can set a monthly variable rate based on those numbers. Customers will receive the lowest price after a formula converting propane and heating oil gallons used to therms.
Customers who choose this rate plan can switch off the plan at anytime but cannot return to the plan for a period of 12 months.
Qualifying customers can also choose to lock in their rate for all or a portion of their supply. The price will be agreed on by the city and customer and the customer elects to commit to taking all the fixed price gas volume committed to or otherwise pay the market difference in price in the event subsequent natural gas costs decline.
In other words, if a customer commits to buying 100,000 therms at $2 a therm and the price drops to $1 after the customer used 75,000 therms, the customer must continue to pay $2 for the rest of the 24,000 committed therms.
Bergmann said finding the variable rate is as simple as plugging numbers into a formula. With the formula, which is available at city hall to anyone interested, the college would pay $1.66 per therm and the casino and Safeway would each pay $1.80 per therm.
City Administrator Luann Rainey said the new rates would be looked at in the next month, 60 days and 90 days. She said staff would look to see if the city is offering enough incentive to keep natural gas customers or if the rates are too low.
As of the paper’s deadline Friday, Jan. 26, there was no word if the new rate schedule would be acceptable to the LCC Board of Trustees. Rainey said she was confident the college would stay with natural gas since the city would give them the best rate.
Rainey did tell the council that the board did receive some inaccurate information from college staff and she has been working hard to rectify the misconceptions.
To date four commercial users have left the natural gas system for more competitive prices offered by alternative fuel companies. Those users are Billington Ace Hardware, Happy Garden Restaurant, Matzalan Grill and Maria Walkers.
Financial Director Robert Porfiri said after the Wednesday meeting, that the only way to keep natural gas rates low is to have more customers added to the system. He also said it was important for Susanville residents to understand the city owns the Natural Gas Enterprise Fund and under law it is not allowed to make a profit.
“If for some reason we made a profit of $100,000 we would have to give it back to the customer in the form of a rate reduction,” said Porfiri, “We can’t keep it unlike the other fuel companies who are out to make a profit.”
Rainey agreed and said on Thursday, Jan. 25, “That is in essence what we are doing with the $118,000 of new revenue generated by the college. We are giving it back to the customer.”
On Sept. 15, 2004, the council approved adding a 22-cent per therm construction surcharge to customer’s bills to help offset the expense of putting in natural gas.
The goal of the council at the time was to eventually remove the surcharge. However, at the Oct. 12, 2006 meeting the council directed staff to roll the 22-cent surcharge into the rate per therm to make reading the monthly bill easier.
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