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HomeMy WebLinkAboutCP 21 aY V a pT MMUCSWylswomoia� 16r .i or N III POLICY PROPOSAL DATE FILE NUMBER SUBJECT Denial of March Gas Cost PAGE 1 OF 2 2/22/77 CP-21 Adjustment PROPOSAL PROPOSED BY: Councilman CITY MANAG E IEW Hugh Parmer In August, 1976, the City Council adopted Ordinance No. 7401 effective August 16, 1976, containing the following section: "Finding 9. That City Council of the City of Fort Worth shall be advised monthly of the increase or decrease in the Gate Rate of Lone Star Gas Company as determined in accordance with GUD No. 588 and Exhibit "A" thereto, as the same is modified by the fluctuating weighted average cost of gas and, subject to the exceptions set out in Finding 8, above, said new gate rate shall become an integral part of the burner tip rate for gas used and consumed by the resi- dential and commercial consumers of natural gas within the City of Fort Worth on the 1st of the month following determination of such new gate rate unless the City Council shall, in its sound discretion take action prior to such effective date to suspend, modify or defer such charge." During the past 90 days the temperature in Fort Worth has been much lower than normal and Lone Star Gas has been selling a much larger than normal volume of gas. It is possible that as a consequence Lone Star may have substantial increased profits above their authorized level. Proposal oil It is proposed that in accordance with Finding 9: 1) This Council temporarily modify the proposed March GCA to hold it at the February level of $.2570 per MCF; 2) The staff be directed to determine if the high volume of gas sold during the recent cold weather has resulted in- excess profits for Lone Star Gas. City Manager's Comments One of the basic elements of utility rate regulations is insure that earnings of a utility do not exceed approved levels. In recent years the major effort of regula- tiop has been directed toward rate increases because inflation has increased more rapidly than revenues, which, along with dwindling gas reserves have caused limited opportunities for excessive rates of return. Unusual sales volume without increased LEGALITY FISCAL NOTE CITY MANAGER'S COMMENTS POLICY PROPOSAL (cont'd) PAGE_OF 2 expenses could possibly create such an opportunity. Another element of rate making is the attempt to stabilize rates. For this reason test periods for reviewing rates of return normally cover at least an annual period. Analysis over a shorter time could produce undesirable fluctuations because of seasonal variations. To avoid this and to account for rapidly rising costs, it is increasingly becoming the practice to use projected test periods rather than historical test periods and in some cases Adjustment Clauses are being expanded to include more than fuel costs. The staff does not recommend a full rate of return analysis of any utilities earn- ings over less than a twelve month test period. Seasonal analysis could lead to both ups and downs in rates which are expensive to administer and might be disturb- ing to consumers. However, the staff could make a review of revenues and expenses during the months of December, January, and February to see if any unusual items appear. Complete results for 1976 will soon be available and the staff could make a rate of return study for the full year rather than a partial year. Legality See attached. Fiscal Note The work proposed can be performed by existing staff by deferring other work. jOLI Hugh P er, Councilman CITY OP FORT WORTH, TAPAS MM 30JECT MATTER OF T Ly S H. &C. C. WAS PRESElTTED TO TT?^� Ci'2•1 CJUNCIL AND WAS 0 � A2�F"�.a, .,_✓ Approved attached r@!3glution in lieu _gR _ CP-21. Q 2li City cax,T - - CITY OF FORT WORTH ; 44 � i$R p, 4� % ,• t�f t ill. l t �, a Ft 4 n u t"S Fri . Ps' , .�` iG� t.�t >•t d ,t �r it k '�� ytd�`yl�,�. p}� � ,� i�JJa��+T fA7 • It � Z 0 N r t �iy �pk „meo¢ths b have bees rcharacterized by unusually cold 4 + Y'�'' nc►d.l, e ''`,-� i I�I{{r j i'r °b '�1 ys A S i4 ,,tt �. �♦;° d 1 �•}yi a!t iI1$i t 1{ti7�,y°t.dJS't,�r��� ;� ay VA JP I!U � A b!x'l }}p r.t P , t� I � , 5} g.t F 7a7 S•b � ;hay ,>esult© is w►udnelly high natural gas bills for : } ,.,; tt J, ”s 'T r °• i " ortaTgith �Cesideutfal and commercial customers of Lone Star 'i }r "T _,i_r, r�r: ' � 1 x C has i4orted unusually high volumes of gas,sold }to .t` �a'tP l�;and co�rcial customers during this period which' ,la .temporary curtailment of industrial customers, and, ;Wf r.EA& g `volume oaleA to residential and commercial customers ; r' in higher .thank usual profits for the company, and q A , � 'j•,r � � 1.77 t�:tasy paint.Lone::Star to make profits in execs&- ��, 'j�ylhgrls ad, n the acet®u,approved under Ordinnnca Noe*. i' �.,.I�,t.1*{�'t� ydf i3 � �}) i.' [ r 'i�t! 1. � !,ib F J+.}• r, y _:� ��, tJ .Jil M 1 f r� a r177 x sl }_ ,t�{ toicitoq'. of, the'consumer and the maintenance of a heai'ttry e'>ea onsioilities of this council and1*4 r'r ''' t"''� "►� 6 � r �a, +�� ,� �$�►t' el�tti�Dt` ty for ,this council to suspend, modify, or '�►y�it�cxcjeo or decreases in the Gas Cost Adjustment is n; p 1"'Oontaine4 yin. Ordinance No. 7401, and yb . ' W0ZRk" , 'f W to,suspe�ns on of Gae Cost Adjustments was made by unanimus `F' '�►1Rxaf ' tis cQt uO.L'. on March 17, 1976 4i'�1 `�s� �?✓, tthF�g;; 3+1i , II v, !>✓' I .. ridd� +..,,M; F i4 { ,.{ �i .ns:,l fi•n Y i �r pp ' I I i - i i"rt,l -, r'. , ,-s• •^ ,r4��5 F t �� b�,t}{,, d• I },� { ANI s7's 'F) yMfWl{F� �ri �l�*l� atvi ��1 that this couneil telmporarily modify . Ittl r * t r ' ` X11;^ft'" p o q►+ Q�#I t h , Q'h4 dr.it �at ,the rebruar level of S 2570`x' . f T qi j r F�• �r �Nf�s y;�,? i�4v r, ,� Ilt t .�, "`` i.b•� R M j ,��t,4Ht� �c{i, •{rkl'aiid4 f�;4� t.� hLf� �t f try - 4i r a . . i � 4o- ie.31I t War imodixoatie�t► be in effect until such time aei'the.:.'{,,14 e��ef f' + #i; ` +v sw'1,64l`Ater'.p,.financial reports for the nago:off,Qrdinsace No. 7401 in order to determine �' , aoC Loat `Star e'profits on an annualized basis irk �y 4s ,a'��t3 � 1�Ke � eutegd a ,rata qa return authorised in that ordinte� �,t�•�,�y �ndf��h�'" Cyl , t��t(�Y.t��r - ,. 4 t {Y: ,.t'Iaf a�kFr � !f Y :a` ��,'a.";�.;�a s'�„+� R t vfrf, � t - t r •A; •},+ tP. f v -,I sTi 4� Y I!t'�Yfffir y7l-r`�ics.Y�`�'I�t., � ,a�, 1#;;r�,`t,}:���,, �e1 r ��. , r k s ��'' r,+� + i.., >!i ,�. r 9 r t^:i x•�� t >+r�. cr vll �}liiv 1t F. e;i! µi r .�w�' r rw �y��`• �f,/ n qt �R� nq ry,''tkth�. �'K � �be inAt d; to conduct such an i ui ud `" y ' •'� � �� ��''� a i } "ay'1i .Yd !4 "� t } ts y •�'' ., ,,. a'" r. �. 4ft r.t ±rki,, fy F �' t A " + � + � tIR a,.i � d 4•'': li{� , ;: , >r 1 I a r'"A d .s r� tt,, �" �.1k e. Yr -^tt•{ rr � I f i' .-, - • i ,,ld , } E''I` •Y r .i•. 7� 1uJi t6 � ��"�� d I iN; ', (•�, a iv51 �I dZ A � •,.{' - wiP ',��. ,1 .. 7 �, is Y .4'r, r tt4,°d., rti�l A� 3 r , s,l d!: I - I •'�l'r a��n �,y �' r i�rh hquiry Indicate# exceseive profits ate''not the`'b�„-' 9 addition GCA be authorize to be. billed I ';��;+ .%, }^ 9 $'upQt� ' a_rpsu�te o£.such s"iudings by tine Council's' {3 �'i,IS IHyP �^4,,tyyt;l�" ars r ry�i,, ' ,: ' i stla • }: q, �jl �rt.� } fi- 7t�na N1 ,,, 1y ,AW�� dCuiiied foxa 'twelve-wontt� period'ending Deccmbet` 31;:; �f� �.SYrI„�•I 4^� Il "R �� rht y 1 1 i 3v 5 S r :Ar t .I r�r j�.,k� ' 'u t y q S-r.�.�, �"it�'9•r.�tyPP_yz�.h ( f�4i,� �Ft,l�•�a?11e itll�rYt'i y',�Fi ,! •. 1 ' i....,% I thn proPttions be made with current rates in Meffectj','Oddi t i' N .4",, A>...'k x i•at it }i'j?11,r�'' },ot �Y.fS�P�S Y `� 1 �I w�pr , • ar, •- )1 1• ,x rr ,ti�!'('�Y 1,i t, .1,v' ' ,r+ [b�.��� Ali fi,. t`�ti i ,�IIYI'• t{�. �r r ��9:}'�d�'`�,. tr y� tal no'Flan oY than ;sixty Idaya sad bo, �lik d` ,t �. w , H r .,'•a • Isrd l - ��re_M V t." u� 2L,r+1 ha�IpaRl�+� s�poa lbie sand � :rl • Y r . ,it fact aass-through is justified, it be billed to',. 1a7usSmer over the three-month period of June, July, and Adguat s'1 M,l. g•M1 t��kEiE.� Ir e•,r ' .%1�a' ! 't` t• + `'°, . h"tit �j lk' �9�s iB °the effective date of the pass-through, if there is one'"�' F '�aj�Ya �d '► larch 1 1977 and that if the stud indicates nes• °'( ►Sr�ht�idrais ,'srw �e�al�,�iad tlraer_ fnnlr Mney ante' witheeaneeane, .raen-.lr ten.bk 9:' .