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Posted: May 3, 2012 9:50 p.m.

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Social Circle mulls raising gas rate 8 %

During a budget work session on Tuesday, the Social Circle city council debated whether or not it should increase gas rates for customers for the first time in about 10 years.

City Manager Doug White explained that the mild winter was to blame for the rate increase.

"Because of the mild winter, gas funds suffered mightily this year so we're looking at maybe as much as an eight percent increase in our gas rates for the coming year," White said.

The city council is also looking at increasing the sewer rate while the water rate would not increase.

For example, a $70 gas bill would increase to $75.60 next year, according to Councilmen Steve Shelton.

John Hewitt, the rate analyst for the city, stated that residential natural gas sales have seen a "substantial reduction."

"Our residential revenues are about $250,000 less than this time last year," Hewitt said. "That's where our profit margin is taking a huge hit."

After the unexpected loss of the residential natural gas revenue, the increase will be necessary to meet the city's current bond covenant requirements.

"It's going to be necessary, unfortunately, to adjust gas revenues in order to maintain the bond covenants...Without the increases, they will not be met," Hewitt said.

Social Circle Councilman David Keener was hesitant about the increase.

"I'm looking at customers out there who [are] homeless [and] jobless. The range goes all over the board and we're going to tell them we're going to charge them another eight percent? It's going to be difficult for some people to swallow and I might be one of those people to question whether we really need to do that or not," Keener said.

Keener suggested that the council find some money to transfer to subsidize the gas revenues in hopes of decreasing the raise.

Hewitt advised the council to consider it, but to be aware of the consequences of subsidizing the gas revenue with other funds.

"To the extent that you have unspoken-for-reserves, I don't know that there is any law that says you can't subsidize your revenues with your reserves," Hewitt said. "That would be a question you got to ask yourself. Once you do that, that money's gone. You ain't going to get it back."

Hewitt also said that with an approximate $200,000 gas revenue shortfall to make up for it would be difficult to shift other numbers around to cover it.

While the increase will make up for the lack of residential sales, the increase will apply to all customers - residential and commercial.

Social Circle Mayor Hal Dally said that while it was unfortunate that the gas rate would have to be increased, the city will still be able to offer a comparatively low rate to other gas marketers in the area.

"We're still competitive. Not too many people beat us," Dally said. "There [are] only 20 gas marketers around here. We're at the bottom three and we're only pennies apart from the bottom two."

Typically, gas revenues have been used to subsidize water and sewer rates in the past said White and Hewitt.

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