The City of Covington is planning to increase its natural gas rate, water rates and garbage collection fees. Monday the city council approved the first reading for the three proposed price changes.
Utilities Director Bill Meecham said the city is raising its natural gas rate because the rate has remain unchanged since 2004 and the city has not been making much money off the gas system for the past few years due to inflation and the rising cost of materials and labor, including much higher steel prices.
Meecham said even though the city hasn’t changed its rates, citizen’s bills have changed because the city’s cost to buy natural gas has changed. A natural gas bill is made up of multiple parts, including a base cost charged for maintaining and servicing a customer’s account, the rate that is based on how much gas you use and a charge based on the market wholesale price of natural gas that utilities pay.
The monthly base cost for residential customers would increase to $11.95 from $9.50, the base cost for small commercial businesses would increase to $13.50 from $11.00 and the base cost for medium and larger commercial businesses would also increase.
The consumption rate is also increasing to $7.05 per MCF from $6.55 per MCF. An MCF is a measure of volume and is equal to 1,000 cubic feet of gas. In total dollars, based on average gas use during April, a resident’s bill would increase to $59.75, up from $55.28. Even with the increase, Covington will still have among the most competitive rates in the state, Meecham said. The lowest price offered on the Atlanta Gas Light system was $59.39, offered by Walton Electric Membership Corporation.
Meecham said the city raised the rates by the amounts they did because they wanted to recover the amount of profit they were making before the natural gas prices spiked so high after Hurricane Katrina in 2005, while keeping prices competitive.
The natural gas fund, like the electric and water funds, is an enterprise fund, which essentially means it’s a profit-making business within the government, Meecham said. These funds provide money to run the government and approximately $1 million to $2 million is transferred per year to the general fund from the gas fund. However, recently the profit margin has been declining, and with some large capital projects in the gas budget for fiscal year 2010, like relaying pipe because of the expansion of Ga. Highway 142, the city felt the time was right to raise the rates.
Rates can only be changed by the city council, which acts as the regulatory body for the enterprise funds.
Water and Solid Waste
The city is also proposing to raise its water and solid waste rates because the county is planning on raising the rates it charges the city.
The county would raise its wholesale rate to its customers by 8 cents per every 1,000 gallons to $1.59. In response, the city would raise its consumptions rates by 8 cents per 1,000 gallons and its base rate, which is the amount charged for everyone for the first 3,000 gallons, to $13.80 from $13.55. For usage between 3,001 gallons and 50,000 gallons, the city would charge $4.40 up from $4.32 and for usage more than 50,000 gallons the rate would increase to $4.58 from $4.50.
The final $4.58 total for water usage amounts over 50,000 gallons includes a 98 cent increase per 1,000 gallons, which was approved in September.
Public Works Director Billy Bouchillon said one of the reasons why the county might be increasing its rates is due to the increased cost of chemicals needed to treat water and waste water. Also, water sales have been down because of the drought restrictions.
Bouchillon said the city buys about one billion gallons a year from the county. He said the city rate increases will mainly cover increased costs, but the previous 98-cent increase will provide about $80,000 extra in revenue.
The city is also increasing its garbage collection fees in response to increased tipping fees at the county landfill. The county is increasing its tipping fees to $35 per ton from $33 per ton, so the city will now charge its customers $1 more per month, increasing the collection rate to $22. The senior citizen rate will increase to $15 from $14.70.
Bouchillon said the city based their increased rates on how much garbage city residents produce. Bouchillon said the city had no intention of increasing rates until the county proposed increasing their rates.
Mayor Kim Carter said she actually hoped that the county was going to lower its tipping fees for the city, because the city residents have paid so much in the past. She said city residents have paid collection fees to the city as well as county taxes.
"Not only did we find out we’re not getting a break, but we’re actually getting an increase," Carter said.
Carter said she understands the county’s financial struggles, but she said she will continue to push for lower rates for the city. She mentioned at the city’s work session that the city had filed a law suit years ago, but the courts ruled in favor of the county. She said the city will continue to support the county, but she raised the possibility of contracting with a private garbage company in the future. The city loses between $250,000 and $300,000 per year on the solid waste services.
The first reading of the natural gas increase was passed unanimously by the council, but the water and solid waste increases were opposed by council members John Howard and Ocie Franklin.
The city has approximately 8,400 natural gas customers, 7,000 water customers, 4,200 residential solid waste customers and 700 commercial solid waste customers.
The city will vote on the final readings of the proposed increases at the May 18 meeting.