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HomeMy WebLinkAboutOrdinance 9491~+~-- _. y ., ,, Attachment "C" ORDINANCE N0. ~~ 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. 8690, PROVIDING A PENALTY CLAUSE; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, on May 29, 1985, Lone Star Gas Company made applica- tion for an increase in Residential and Commercial gas rates de- signed to produce .additional revenues of $7,220,499 from its Fort Worth Distribution System consumers; and, -~ WHEREAS, public hearings have 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 s on said rate increase application have now been concluded and closed and the City Council has duly consid- ered 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- cises of its sound legislative discretion finds the following facts to be established: a. That Lone Star Gas Company's distribution properties used and useful in serving. the consumers in the Fort Worth Distribution System comprise an Invested Capital Rate Base of $43,571,980 and an Adjusted Value Base Rate of $72,326,442. b. That Lone Star Gas Company is entitled to a 14.6 rate of return on its Invested Capital Rate Base and a 7.2~ rate of return on its Adjusted Val ue Rate Base; and that said rates of return are fair, rea- sonable and just under the facts and circumstances presented; ~~ c. That Lone Star Gas Company requires a net operating ~ income of $5,258,132 on revenues from Residential and Commercial gas sales of $90,259,756 to achieve the foregoing fair rates of return. ~~ w v r~ 1 d. That the rates hereinafter fixed are determined to be fair, just and reasonable; and that all previously adopted rates and charges for gas service to residential customers in the City of Fort Worth should be and are hereby re- pealed effective November 1, 1985. SECTION 2. That for all gas consumed on and after November 1 , 1985, and billed on and after November 1, 1985, all tion or associations of persons engaged in ing, distributing or delivering natural commercial consumers in the City of Fort We to charge for their product and service following sched ules A. Residential & Commercial Rates persons, firms, corpora- the business of furnish- gas to residential and ~rth are hereby authorized in accordance with the 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. Summer rates shall be applicable between the meter reading dates in May and October (five months). Winter rates shal l be applicable at al l other times . 1. Residential: Winter Summer Customer Charg a $6.00 $6.00 All Consumption @ $5.2846 Per Mcf $4.9346 Per Mcf If the service period is less than 28 days the customer charge is $ .2143 times the number of days sere ice . 2. Commercial: Winter Summer Customer Charg a $9.00 $9.00 All Consumption @ $5.2846 Per Mcf $4.9346 Per Mcf If the service period is less than 28 days in the winter months, the winter customer Charg a is $.3214 times the number of days service. B. Gas Cost Adjustment Each monthly b ill at the above rates shall be adjusted for g as cost as follows 1. The City gate rate increase or decrease applicable 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 1.0294 determined in establishing the above rates for the distribution system as the ratio of adjusted purchased volumes d iv id ed by ad- j usted sales volumes . -2- b) The City gate rate estimated to be applicable to volumes purchased during the current calendar month, expressed to the nearest $0.0001 per Mcf (shown below as " Re") . c) The base City gate rate of $4.0200 per Mcf . 2. Correction of the estimated adjustment determined by Item B 1. above shall be included as part of the adj ust- ment for the second following billing month. The correct- ing 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 commercial sales Mcf recorded on the Company's books during the pr for 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 1.06213 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 B 2.] X Item B 3. GCA = [(1.0294) (Re - $4.0200) + C] X 1..06213 C. Tax Adjustment The tax adjustment shall be an amount equivalent to the pro- portionate part of any new tax, or increased tax, or 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 January 1 , 1985, upon or allocable to the Company's distribu- tion operations, by any new or amended law, ordinance or contract. D. 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 sere ice through" date, subjects the customer to immediate termination of gas service unless they have made other payment arrange- ments with the Company. 2. Restoration of service is subject to the following sche- dule of reconnect charges: In addition to the charges and rates set out above, the Company shall charge and collect the sum of; -3- o-~ +, e ,.t. ,, a., i ,. Charge 8 a.m. to 5 p.m. Monday through Friday $20.00 Night, week-end and holiday $30.00 as a reconnect charge for each reconnection or reinaugura- tion of gas service, where service has been discontinued at the same premises for any reason, with the following exceptions: a) For a builder who uses gas temporarily during con- struction or for display purposes. b) For the first occupant of the premises. c) Whenever gas service has been temporarily interrupted because of system outage, service work or appliance installation done by Company; or d) For any reason deemed necessary for company o pera- tions. 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, in- valid signature or improper preparation. 4. A charge of $5.00 shall be made whenever it is necessary to send a company employee to a customers 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 nat- ural gas within the corporate limits of the City of Fort Worth as well as Company, City reserves unto itself the right and privilege 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 . I'n so doing , City further reserves unto itsel f the right and privilege of exercising any power granted it under statu- tory law, administrative rule or regulations, or otherwise. SECTION 4. By acceptance of this Ordinance, Lone Star Gas Company agrees that the rates set herein are sufficient to recover past losses re- sulting from its 1978 case styled Gas Utilities Docket No. GUD-1604 Consolidated presently pending before the Railroad Commission and will dismiss that case. -4 - y d --.~ SECTION 5. Lone Star Gas Company shall pay all reasonable rate case expenses to the City of Fort Worth, Texas not to exceed $22, 500.00. SECTION 6. If any section, subsection, sentence, clause, phrase or por- tion of this ordinance is for any reason held invalid or unconstitu- tional 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 7. All ordinances or parts of ordinances in conflict with this ordinance are hereby repealed. SECTION 8. 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 exceed Two Hundred Dollars ($200), and each day's violation shall constitute a separate offense. 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: City Attorney Date : ~, ~ 1 ~ ~ ~ ~ ADOPTED: EFFECTIVE D TE: ~j_,/~ 111 -5- w~ .; M1~A,~'.tc F2~ w:4~L: J pity of Fort worth, ~eacc~s i iZfst~Jf d~1A'.i4 F~.1}~{~a~i~.¢/k~~~R///~-/~//3'7gG/!^~p ~~~7(/J~ (/(//~-, u/~/J~ `/'//^~-, A', Imo, 1'I~~A~, ~r~',~~ n. A~`~~/~/~ t1cfER AGMINIS'IRAYi6Cd 1.~ "~ "'~~®~ ~~~L+IV `L/®~~~~W `i./~~/ u W// ~/ ~/~/~/~WV/'~,Af/~~®~ L,: i°J 1 ~' a..C..~ REFERENCE SUBJECT PAGE NUMBER Lone Star Gas Company Request 2 9/24/85 G-6439 For Increase In Local Rates ' °' RECOMMENDATION It i s recommended that: 1) An ordinance (attachment C) be adopted establishing new residential and commercial gas rates to be charged by Lone Star Gas Company, wi thin the City of Fort Worth, as recommended in the McMorries and Associates Report, and , 2) The Lone Star Gas Company be invoiced ~ reimburse the City of Fort Worth for the funds expended to engage the consultant, in the amount of $22,500.00. BACKGROUND AND RATE HISTORY The present gas rates in effect in Fort Worth were approved by City Council in M&C G-5475 and established by Ordinance No. 8690, adopted November 23, 1982. This rate schedule replaced old rates established August 26, 1980 (Ordinance No . 8160) . On May 29, 1985, the Lone Star Gas Company filed a request for authority to increase its residential and commercial rates in Fort Worth and the 16 other cities compri sing its Fort Worth Distribution System. The requested rates are designed to produce additional revenues of $7.220 million. On July 2, 1985, the City Council approved M&C C-9102, which authorized the engagement of a consul tant, McMorries and Associates of Amarillo, Texas, to eval uate the propriety and justification for the rate request. This firm has been the City's consul tant in several other major rate cases in past years. In addition, the Council approved Ordinance No. 9414 which suspended the implemen- tation of the new rate until October 1, 1985, pursuant to Article 1446C, V.A.T.S., the Public Utility Regulatory Act (PURR). The consultant now has compl eted his study and report (Attachment A) and recom- mends a smaller increase than that requested by the company. The consul tant recommends that $4.824 mil 1 ion additional revenue wi 11 be required , which i s 66 percent of the company's requested increase of $7.220 mill ion. The canpari son between the canpany' s and consul tant McMorries' findings i s summarized as fol 1 ows Co a (Consultant IN MILLION 1. Operati ng Revenues at Present Rates, Adjusted $139,459 $139,487 2. Proposed Additional Revenues 7,220 4,824 3. Total Operatin Revenues (1•+2) ~ ~bZTS ~4~iT 4. Operati ng Expenses Less (adj usted 136, 598 136,171 5. Less Federal Income Tax 3,669 2,882 6. 7. Net Operati ng Income (3-4-5) Rate Base (Adjusted Value of Property) $~i,~'I~ $ 79,472 $-5;~5g $ 72,326 8 Rate of Return(Line 6/7) 8.06 7.20 .~ DATE 9/24/85 REFERENCE NUMBER G-6439 SUBJECT Lone Star Gas Cam any Re Uest p 4 PAGE 2af 2 The Consul tant has worked cl osel y wi th the Ci ty' s Administrative staff on the rate-design segment of the case. The Consul tant and staff agree on the proposed ; increased "insufficient funds check charge" of $7.50, and the- establishment of anew charge of $5.00 for collections in the field (in lieu of service termina- tion) . These charges are cost-based and cost justi fied. However, the Consul tant does not agree with the company's proposed "customer charge" and cost-per-Mcf rates; Lone Star Gas has proposed awinter-summer rate differential in both the "customer charge" and the "per-Mcf charge." The Consultant has recommended the seasonal differential for the "per-Mcf" rate, but favors a fixed year round monthly rate for the "Customer-charge", as shown in the following tabulation: Pre sent Lone Star Gas Consultant' s Rate Proposed Rate Proposed Rate CUSTOMER CHARGE Residential/Mo. $5.00 Sum. * $ 4.50 $6.00 Win. * 6.50 Commercial/Mo. $8.00 Sum. * $ 6.50 $9.00 Win. * 10.50 CONSUMPTION CHARGE Per Mcf $4.1223 Sum. * $5.0295 Sum. * $4.9346 Win. * 5.3795 Win. * 5.2846 * 5 summer months, 7 winter months The rate structure shown above has been designed to lessen the impact on custo- mers in the high usage months and will provide for smaller increases in custo- mer bills than wi 11 the company's proposed rates. The effect of the two proposals, as compared with present cost per Mcf 1 evel s i s shown in Attachment B-1. The impact upon the annual gas bills of three typical customers homes, for small , medi um and 1 arge annual use of gas, consumptions of 126 Mcf, 146 Mcf and 218 Mcf per year, respectively is shown on Attachments B-2, -3 and -4. These three studies are representative of the majority of residential users' bills in Fort Worth. Taken together wi th the effect on bil 1 s of the more moderate rate structures devised by the Consultant and staff, the cost of gas purchased by the company at the City "gate" has been gradually declining since the last rate case in 1982. Fran avail able information reported by the ,nations leading energy eco- nomic experts, future prices for natural gas are anticipated t4 be more stable, with slight and gradual decl ini rg price 1 evel s continui rg over the next 24 months. The tabulation shown in Attachment B-5 illustrates this price decline for monthly purchased gas prices at the City gate, for years 1983 through September 1985 and estimated through September 1986. APPROVED BYi CITY COUNCIL ra.l hh EP ~~~ 1~ S ~ SUBMITTED FOR THE CITY MANAGER'S ,, pp// DISPOSITION BY COUNCIL: /~~G~. RU~~S ffl~BY~ OFFICE BY ~ [] APPROVED a OTHER (DESCRIBE) nure.uty o l t}zo ORIGINATING DEPARTMENT HEAD: Wade Adkins . of Fort W~ ~ C~~ECRETARY FOR ADDITIONAL INF TION 679 CONTACT ~i chard Aughi nbaugh Ext ;~,ted Qrdmance Noo ~. ~ y{ DATE .