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Posted: August 28, 2012 9:09 p.m.

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Council approves adjusting utility rates

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 increase 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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