Rate schedules and tariffs proposed by the Texas Gas Service have received approval from the Borger City Council.
A resolution approving the schedules and tariffs was finalized by the council Tuesday. The resolution pertains to a limited rate filing that allows TGS to implement an increase in rates pursuant to the Cost of Gas Adjustment (COSA) clause that was previously approved in 2008.
The request was to allow the increase for 2011 to not be limited by the Consumer Price Index cap, according to Borger City Manager Eddie Edwards. This will amount to an average residential customer’s monthly bill increasing by approximately $1.27.
Also falling under the resolution is the allowance of an incremental annual rate increase that will be capped by the greater of 3.5 percent or the CPI.
In 2008, Edwards said the TGS filed a full rate case with the City of Borger, which ultimately was approved. The issue at that time was an automatic COSA clause, which was set at the CPI. Over the last three years, he said the CPI has been depressed due to the national economy.
“The result of that clause has been detrimental to its [TGS] ability to recoup a return on its investment and continuing to put in necessary new infrastructure, replacing old infrastructure, and upgrading the gas system,” he said.
At one time, Edwards said TGS had an eleven and a half percent return on its investment, and it was lowered to around eight percent, which he said he thought was a good gesture on the part of TGS. He said TGS has been working to put new infrastructure into the system to reduce the loss of gas, which is a benefit to customers in the long run.
“The customers ultimately pay for the loss of gas,” he said.
He said TGS is ultimately asking for about $158,000, which would cover Borger, Skellytown, and the inroads of those two areas. The increase to Borger would be around $138,000. An outside consultant was not brought in to look over numbers, as Edwards said that would have cost an additional $60,000 to $70,000 in the rate case.
Initially, he said TGS wanted an annual rate increase capped by the greater of five percent or the CPI. However, Edwards said he was uncomfortable with this number, and after some negotiations, he and TGS officials agreed on three and a half percent.
“The clause now reads it can annually adjust its rates by the greater of 3.5 percent or the CPI,” he said. “I think that’s a fair clause. Generally, when the economy is going good, you’re looking at a CPI of three percent anyway.”
According to TGS Town Manager John Jordan, the service spent close to $1.3 million in this area on infrastructure, replacements, upgrades, and new additional lines in 2010. A lot of this work has been done to help supply gas to the north side of Borger. He also said work has been done out in the Bunavista area.
He said TGS is surveying all three of its districts every year, which include Borger, Bunavista, and Skellytown. All of the leaks are being repaired each year.
Originally, the service was doing surveys every five years, which was bumped down to three years before the move was made to an annual system.
“That’s helping keep the costs down by reducing the lost and unaccounted for gasses,” Jordan said.
He said there has been a massive increase in the work that’s happened, and TGS is actually focusing more on replacement than maintenance at this point and time.
This year, TGS has spent close to $400,000 to $500,000 in Borger alone, which has just been on leakage repair. Three major replacements are scheduled, which include a project in the Marigold addition, and work in the northwest section of town.
“There’s a lot of work that has been done, and still a lot of work to come,” Jordan said.