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HomeMy WebLinkAboutOrdinance 10849ORDINANCE NO. ~~ ~`/ / AN ORDINANCE REGULATING THE RATES AND CHARGES OF ALL PERSONS, FIRMS, CORPORATIONS OR ASSOCIATIONS OF PERSONS ENGAGED IN THE BUSINESS OF FURNISHING, DISTRIBUTING, OR DELIVERING NATURAL GAS TO RESIDENTIAL AND COMMERCIAL CUSTOMERS IN THE CITY OF FORT WORTH, TEXAS; REPEALING ORDINANCE NO. 9491; PROVIDING A PENALTY CLAUSE; PRO- VIDING FOR PUBLICATION IN THE OFFICIAL NEWSPAPER; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, on February 6, 1991, Lone Star Gas Company made application for an increase in Residential and Commercial gas rates designed to produce additional revenues of $3,715,813 from its Fort Worth Distribution System consumers, including $2,610,154 from customers in the City of Fort Worth; and WHEREAS, a public hearing has been held on this application of Lone Star Gas Company, at which all interested parties were given a full opportunity to be heard on the requested rate increase; and WHEREAS, the hearing on said rate increase application has now been concluded and closed and the City Council has duly con- sidered all matters presented to it; NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FORT WORTH, TEXAS: SECTION 1. That the City Council of the City of Fort Worth, in the exer- cise of its sound legislative discretion, finds the following facts to be established: a. That Lone Star Gas Company's distribution prop- erties used and useful in serving the consumers in the Fort Worth Distribution System comprise an Invested Capital Rate Base of $47,113,562 and an Adjusted Value Base Rate of $73,422,435. b. That Lone Star Gas Company is entitled to a 12.5 rate of return on equity, a 10.71$ rate of return on its Invested Capital and a 6.87$ rate of return on its Adjusted Value Rate Base; and that said rates of return are fair, reasonable and just under the facts and circumstances presented. c. That Lone Star Gas Company requires a net oper- ating income of $5,045,862 on revenues from resi- dential and commercial gas sales of $92,619,269 to achieve the foregoing fair rates of return. d. That the rates hereinafter fixed are determined to be fair, just and reasonable; and that all previ- ously adopted rates and charges for gas service to residential customers in the City of Fort Worth should be and are hereby repealed effective July 1, 1991. SECTION 2. That for all gas consumed on and after July 1, 1991, and billed on and after July 1, 1991, all persons, firms, corpora- tions or associations of persons engaged in the business of furnishing, distributing or delivering natural gas to residential and commercial consumers in the City of Fort Worth are hereby authorized to charge for their product and service in accordance with the following schedules: A. Residential and Commercial Rates The following rates are the maximum applicable to residential and commercial consumers per meter per month or for any part of a month for which gas service is available at the same location. 1. Residential: Customer Charge $7.00 All Consumption @ $5.2020 Per Mcf 2 An off-peak sales discount of $.25 per Mcf will apply to residential customers' volume purchased in excess of $ Mcf for each of the billing months May through October. If the service period is less than 28 days in a month, the customer charge is $0.25 times the number of days' service. 2 . Commercial Customer Charge First 20 Mcf @ Next 30 Mcf @ Over 50 Mcf @ $12.0000 5.4478 Per Mcf 5.1478 Per Mcf 4.9978 Per Mcf If the service period is less than 28 days in a month, the customer charge is $0.4286 times the number of days' service. B. C. Rate Schedule for Schools The Rate Schedule for Public Free Schools is with- drawn from the Fort Worth Distribution System. Service will be provided to public schools under the Commercial Rate established herein. Upon expiration of the current contract year of the Commercial Public School Rate contracts now in effect, the Commercial Public School Rate will no longer be available. Gas Cost Adjustment Each monthly bill at the above rates shall be adjusted for gas cost as follows: 1. The City gate rate increase or decrease appli- cable to current billing month residential and commercial sales shall be estimated to the nearest $0.0001 per Mcf based upon: a) A volume factor of 1.0312 determined in establishing the above rates for the distribution system as the ratio of adjusted purchased volumes divided by adjusted sales volumes. b) The City gate rate estimated to be appli- cable to volumes purchased during the current calendar month, expressed to the nearest $0.0001 per Mcf (shown below as "Re"). 3 c) The base City gate rate of $4.0200 per Mcf . 2. Correction of the estimated adjustment deter- mined by Item B 1. above shall be included as part of the adjustment for the second fol- lowing billing month. The correcting factor (shown below as "C") shall be expressed to the nearest $0.0001 per Mcf based upon: a) The corrected adjustment amount based upon the actual City gate rate, less b) The estimated adjustment amount billed under Item B 1. above, divided by c) Distribution system residential and com- mercial sales Mcf recorded on the Company's books during the prior year for the month that the correction is included as part of the adjustment. 3. The adjustment determined by Item B 1. and Item B 2. above shall be multiplied by a tax factor of 1.06226 to include street and alley rental and state occupation tax due to increasing Company revenues under this gas cost adjustment provision. In summary, the gas cost adjustment (GCA) shall be determined to the nearest $0.0001 per Mcf by Item B 1., Item B 2., and Item B 3. as follows: GCA = [Item B 1. + Item B2.] X Item B 3. GCA = [(1.0312) (Re - $4.0200) + C] X 1.06226 D. Weather,Normalization Adjustment Effective with bills rendered during the October 1991 through April 1992 billing months and annually thereafter for the October through April billing months, the above residential and commer- cial consumption rates for gas service will be subject to a weather normalization adjustment each billing cycle to reflect the impact of variations in the actual heating degree days during the period included in the billing cycle from the normal level of heating degree days during the period included in the billing cycle. The weather normalization adjustment will be implemented on a per Mcf basis and will be applicable to the volume consumed by each customer during the period included in the billing cycle. It will be deter- mined separately for residential and commercial 4 customers based on heating degree data recorded by the D/FW weather station. The adjustment to be made for each billing cycle will be calculated according to the following formula: WNA = NDD-ADD x M ADD Where: WNA = Weather normalization adjustment NDD = Normal heating degree days during the period covered by the billing cycle ADD = Actual heating degree days during the period covered by the billing cycle M = Weighted average margin per Mcf included in the commodity portion of the rates effective during the October through April billing months The weather normalization adjustment will be calculated to the nearest $.0001 per Mcf. E. Tax Adjustment The tax adjustment shall be an amount equivalent to the proportionate part of any new tax, or increased or decreased tax, or increase or decrease of any other governmental imposition, rental, fee or charge (except state, county, city and special district ad valorem taxes and taxes on net income) levied, assessed or imposed subsequent to July 1, 1991, upon or allocable to the Company's distribution operations, by any new or amended law, ordinance or contract. F. Rate Case Expense It is the intention of Lone Star Gas Company to recover the current and any unrecovered prior rate case expense through a surcharge designed for a six-month nominal recovery period. The surcharge per Mcf will be calculated by dividing the rate case expense to be recovered by one-half of the adjusted annual sales volume to residential and commercial customers. When a surcharge is applicable, monthly status reports will be pro- vided to account for the collections. G. Special Provisions and Adjustments 1. Bills are due and payable when rendered and if not paid within 15 days of the date shown on the bill as the "present meter reading" date or the "for service through" date, sub- jects the customers to immediate termination 5 of gas service unless they have made other payment arrangements with the Company. 2. Restoration of service is subject to the fol- lowing schedule of reconnect charges: In addition to the charges and rates set out above, the Company shall charge and collect the sum of: Schedule Charge 8 a.m. to 5 p.m. Monday through Friday $25.00 Night, week-end and holiday $40.00 as a reconnect charge for each reconnection or reinauguration of gas service, where ser- vice has been discontinued at the same premises for any reason, with the following exceptions: a) For a builder who uses gas temporarily during construction or for display pur- poses. b) For the first occupant of the premises. c) Whenever gas service has been tempo- rarily interrupted because of system outage, service work or appliance instal- lation done by Company; or d) For any reason deemed necessary for Company operations. 3. A returned check handling charge of $7.50 will be made for each check returned to the Company for reasons of non-sufficient funds, account closed, payment withheld, invalid signature or improper preparation. 4. A charge of $7.00 shall be made whenever it is necessary to send a Company employee to a customer's premises to collect amounts owed for gas service. SECTION 3. For the purpose of assuring rates to be charged by Lone Star Gas Company which are just and reasonable to the consumers of 6 :.a ,. natural gas within the corporate limits of the City of Fort Worth as well as Company, City reserves unto itself the right and privi- lege at any time to increase, decrease, alter, change or amend this ordinance or the rates herein established and provided for, or to enact any ordinance or adopt any such rates which would effectuate such purpose. In so doing, City further reserves unto itself the right and privilege of exercising any power granted it under statutory law, administrative rule or regulations or other- wise. SECTION 4. Lone Star Gas Company shall pay all reasonable rate case expenses to the City of Fort Worth, Texas, not to exceed $26,000.00. SECTION 5. If any section, subsection, sentence, clause, phrase or por- tion of this ordinance is for any reason held invalid or unconsti- tutional by any court of competent jurisdiction, such shall be deemed a separate, distinct and independent provision and such holding shall not affect the validity of the remaining portions thereof. SECTION 6. All ordinances or parts of ordinances in conflict with this ordinance are hereby repealed. SECTION 7. That any person, firm or corporation who refuses to comply with the terms and provisions of this ordinance shall be deemed guilty of a misdemeanor and, upon conviction, may be fined not to 7 exceed Two Hundred Dollars ($200.00), and each day's violation shall constitute a separate offense. SECTION 8. The City Secretary of the City of Fort Worth, Texas, is here- by directed to publish the caption, penalty clause and effective date of this ordinance for two (2) days in the official newspaper of the City of Fort Worth, Texas, as authorized by Section 52.013, Texas Local Government Code. SECTION 9. That this ordinance shall take effect on and after the date of its passage and publication as required by law. APPROVED AS TO FORM AND LEGALITY: C/~-i'" City Attorney Date : S - 2 GY ADOPTED : "~~ 1=~~' ~ ~ EFFECTIVE DATE: 8 >A' ~';~~` MASTER FILE~11 ACCOUNTIN6.2 ~/f~/~ //®~° TRANSpORTATION~PU9LIC .WORNg.>r ~l.Wel{iyJ/ 0 M o't'ER ADMINISi LAi'J 1 ~~. ~ata~ ®f 1F®~°~ ~®rth, ~~~~~ ~~,~1 cC®~,+c~~c~lC c~®~,~,~~,~~~~~c®~, ,TQ,nr~, REFERENCE SUBJECT LONE STAR GAS COMPANY REQUEST PAGE NUMBER FOR INCREASE IN LOCAL RATES 3 5-21-91 G-9158 1 °' RECOMMENDATION: It is recommended that: 1. An ordinance (Attachment A) be adopted by the City Council establishing new residential and commercial gas rates to be charged by Lone Star Gas Company, within the City of Fort Worth, as recommended in the McMorries and Associates Report; and 2. Lone Star Gas Company be invoiced to reimburse the City of Fort Worth for the funds expended to engage the consultant, in an amount not to exceed $26,000. BACKGROUND AND RATE HISTORY: The present gas rates in effect in Fort Worth were approved by City Council in M&C G-6439 and established by Ordinance No. 9491, adopted September 24, 1985. These rates replaced old rates established November 23, 1982 (Ordinance No. 8690). On February 6, 1991, the Lone Star Gas Company filed a request for authority to increase its residential and commercial rates in Fort Worth and the 18 other cities comprising its Fort Worth Distribution System. The requested rates are designed to produce additional revenues of $3.716 million on Lone Star's Fort Worth Distribution System. That portion of the requested increase attributable to customers in the City of Fort Worth would be $2,610,154. On March 5, 1991, the City Council approved M&C G-9065, which authorized the engagement of a consultant, McMorries and Associates of Amarillo, Texas, to evaluate the propriety and justification for the rate request. This firm has been the City's consultant in previous rate cases In addition, the Council approved Ordinance No. 10801, which suspended the implementation of the new rate until June 12, 1991, pursuant to Article 1446e, V.A.T.S., the Gas Utility Regulatory Act (GURA). The consultant now has completed his study and report (Attachment B). The consultant recommends that $1.674 million additional revenue will be required system-wide, which is 45 percent of the Company's requested increase of $3.716 million. The amount attributable to customers in the City of Fort Worth would be $1,176,834. The comparison between the Company's and consultant McMorries' findings is summarized as follows. Com an Consultant IN TH OUSAND 1. Operating Revenues at Present Rates, Adjusted $90,691 $90,945 2. Proposed Additional Revenues 3,716 1,679 3. Total Operating Revenues (i+2) 94,407 92,619 4. .-Less (adjusted) Operating Expenses 86,889 86,063 5. Less Federal Income Tax 1,823 1,510 ,~ Present Summer Winter $6.00 $6.00 4.9346 5.284b DATE REFERENCE sus~~cTLONE,., STAR GAS COMPANY REQUEST FOR NUMBER INCREASE IN LOCAL RATES 2 5-21-91 G-9158 et Aerating Income 3-4-5 7. Rate Base (Adjusted Value of 8. Rate of Return (Line 6/7) .FI J,V./J y J,V ~V Property) 82,123 73,422 6.93% 6.87% PAGE _ of 3 The consultant's recommended rates differ from Lone Star Gas Company's proposed rates in the monthly "customer charge" and the per unit charge. The following table shows the current, proposed and recommended rates. RESIDENTIAL Customer Charge All Mcf Peak Period Off Peak ('nMMFR(` T AI Customer Charge All Mcf First 20 Mcf Next 30 Mcf Over 50 Mcf Company Proposed Consultant $8.00 5.3020 5.0520 $7.00 5.2020 4.9520 $9.00 $9.00 $14.00 $12.00 4.9346 5.2846 - - - - 5.3112 5.4478 - - 5.0112 5.1478 - - 4.8612 4.9978 A bill comparison using current, proposed and recommended residential and commercial rates is attached (Attachment C). There are three important changes proposed in this rate application that should be noted. The first change is the elimination of the present summer/winter rate differential. Lone Star Gas is proposing a three step declining block rate for commercial customers, designed to recover the cost of serving this customer class and to encourage business growth. For residential customers the Company proposes an off-peak discount for amounts used in excess of 8 Mcf during the billing months of May through October. The second change is the elimination of the public school rate offered under contract. As these contracts expire, the school districts will become commercial customers and be billed under the same uninterruptable commercial rate approved by the City of Fort Worth. The third chap a is a weather normalization adjustment, which would automatically adjust rates for winter weather which is abnormally cold or warm. Lone Star Gas Company also has requested increases in certain miscellaneous charges as shown below: APPROVED BY CITY COU~CiL PLAY ~8 1991 Cite Secxetozp of the Cite of Port Worth, 2exc11 DATE REFERENCE suB~ECT:LONE STAR GAS COMPANY REQUEST FOR PAGE NUMBER INCREASE IN LOCAL RATES 3 of 5-21-91 G-9158 From To Reconnect Charge 8 a.m. to 5 p.m. Monday through Friday $20.00 $25.00 Nights, Weekends and Holidays $30.00 $40.00 Collection Charge (per trip) $ 5.00 $ 7.00 The consultant concurs that these increases are fair and reasonable. WA:b 12GASRAT I APPROVED DY CITY COUNCIL MAY ~~ 1991 ~n ~. `,~l K~ ~~ City Secretary of the City of Fort V1/orth, TexC1! SUBMITTED. FOR THE CITY MANAGER'S Mike Groomer 6140 DISPOSITION BY COUNCIL: PROCESSED BY OFFICE BY ^ APPROVED ORIGINATING Wade Adkins 7623 DEPARTMENT HEAD• ^ OTHER (DESCRIBE) CITY SECRETARY FOR ADDITIONAL INFORMATION Wade Adkins 7623 Adopted Ordinance (Vo. CONTACT DATE.