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City supports TGS cost of service adjustment filing

June 22, 2012

The City of Borger has given its support to Texas Gas Service as it seeks to approve a cost of service adjustment filing.
The action was taken by the Borger City Council at its regular meeting on Tuesday afternoon.
Eddie Edwards, Borger City Manager, said that TGS last filed a full rate case with the City of Borger in 2008. During that case, one of its requests was a cost of service adjustment clause.
“An appropriately designed COSA (cost of service adjustment) can be a benefit to TGS, City, and ultimately the citizens,” he said. “The COSA allows TGS to annually adjust rates based upon changes in capital investment and expenses incurred over the prior year.”
A COSA streamlines the number of issues in dispute, and reduces the administrative burden on both TGS and the City of Borger by greatly reducing or even in some cases eliminating rate case expenses.
When the COSA was reviewed in 2008, it was the recommendation of the staff to approve the tariff. The Borger City Council approved it, but for the first three years it was in effect, it was more restrictive than TGS originally thought it would be.
Last year, TGS filed a request to amend the COSA wording to allow an annual revenue increase of five percent or the percentage increase in the CPI-U (Consumer Protection Index), whichever is greater. This change put a five percent cap on annual revenue increases, negating any CPI-U wording.
Edwards said that he, TGS Town Manager John Jordan, and Area Manager Wyatt Irby negotiated a reduction in the proposed five percent cap, lowering it to 3.5 percent, which he felt was more realistic when compared to the historical percentage change in the CPI-U.
All other COSA calculations and/or restrictions remain unchanged from the previously approved 2008 tariff and the council ultimately approved the tariff.
In late May, TGS filed a request to change rates under the previously approved COSA tariff. Under the tariff, any revenue increases would be capped by the current calculated CPI Cap, which is 2.9624 percent or a 3.5 percent cap, whichever is greater.
City staff has reviewed the TGS filing in detail and finds the increase to be only be around 0.55 percent and well below the allowed increase under the currently approved COSA tariff.
Edwards said that over the last several years, TGS has made significant improvements to the distribution system in an effort to reduce the unaccounted for gas percentage.
“These improvements significantly contribute to a 2012 actual calculated revenue increase as well as previous increases,” he said. “Since in the end the customer ultimately pays for the total cost of gas (including unaccounted for gas) through a surcharge, a reduction in the unaccounted for ratio is beneficial to all customers and may have the potential to reduce or even offset said increase.”
A residential customer using 56 Ccf (cubic feet) of gas per month (average monthly use for 2011) would experience a monthly bill increase of $2.35.

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