HomeMy WebLinkAboutOrdinance 7401 ORDINANCE NO. --74-01
AN ORDINANCE REGULATING THE RATES AND CHARGES
OF ALL PERSONS, FIRMS, CORPORATIONS OR ASSO-
CIATIONS 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 ORDI-
NANCES NOS. 7238, 7301 AND 7316; PROVIDING A
PENALTY FOR THE VIOLATION HEREOF; AND PROVIDING
AN EFFECTIVE DATE.
WHEREAS, by City of Fort Worth Ordinance No. 5299,
adopted December 21, 1964, Lone Star Gas Company was granted
a franchise to use the streets, alleys and public thorough-
fares of the City in the operation of its business as a gas
utility for a term of 25 years; and
WHEREAS, by City of Fort Worth Ordinance No. 7238
adopted October 13, 1975, as amended by City of Fort Worth
Ordinances Nos. 7301 adopted February 23, 1976 and 7316
adopted March 22, 1976, the rates to be charged Fort Worth
commercial and residential consumers of natural gas for all
uses were last set; and
WHEREAS, heretofore, on about March 29, 1976, Lone
Star Gas Company made application for authorization to in-
crease its charges of and to all its residential and commer-
cial customers in the City of Fort Worth and
WHEREAS, hearings have been held on the said 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, after a thorough consideration of all the
facts made available to it, the City Council finds:
1. That Lone Star Gas Company was last granted an
increase in its gate rate by the Railroad Commission of
Texas in the Opinion and Order of said Commission filed on
June 30, 1975, in GUD No. 588; and
2. That said Order of the Railroad Commission of Texas
found, inter alia, that Lone Star Gas Company experienced a
weighted average cost of purchased gas during February, 1975,
of 72.29 cents per Mcf, that the fair value of Lone Star's
Transmission Division's plant and property used and useful in
rendering domestic and commercial natural gas service to the
cities, towns and villages in Texas, (Rate Base) was $162,045,665;
that Lone Star Gas Company was entitled to an 8% return as a fair
rate of return on the fair value rate base found; that a city gate
rate of $1.0399 per Mcf would produce the approximate rate of a
return to which it found Lone Star entitled so long as the weighted
average cost of purchased gas remained at 72.29 cents per Mcf; and
that a gas cost adjustment rule was necessary in the public in-
terest and, therefore, an increase or decrease in the authorized
gate rate of $1.0399 per Mcf is authorized by 85% of the amount
by which Lone Star's weighted average cost of purchased gas dur-
ing the base period (of any given month) is more or less than
72.29 cents per Mcf as computed in accordance with the gas cost
adjustment formula detailed and set out in Exhibit "A" to said
Order in GUD No. 588; and
3. That Lone Star Gas Company's application for a rate
increase dated March 29, 1976, seeks an 8% rate of return on a
Fair Value Rate Base of $45,144,127.00 in properties used and
useful in providing natural gas service to the citizens of the
City of Fort Worth necessitating an increase in gross annual
revenues of $8,050,117.00; and
4. That the Fair Value of the Company's properties used
and useful in providing natural gas service to the citizens of
the City of Fort Worth is $33,145,546.00; and
5. That a fair rate of return on the Company's Fair
Value Rate Base is 7 1/2%; and
6. That utilizing the interim "frozen" rate of $1.1863
per Mcf as established by Ordinance No. 7316 to calculate reve-
nue deficiency, a net revenue deficiency of $2,485,916.00 for
calendar year 1976 is projected for the company which will re-
quire an increase in gross annual revenues to achieve the a-
bove found fair rate of return in the amount of $5,333,458.00,
with and subject to the following observations and qualifica-
tions:
a. Allowance is made in this calculation for charitable
contributions in legally authorized amounts to legally authoriz-
ed charitable, civic and other worthwhile objectives whose situs,
objectives and activities are located within the corporate limits
of the City of Fort Worth;
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b. Discounts for increased natural gas consumption
for the purpose of air conditioning by residential and comm-
ercial customers of Lone Star Gas Company should be phased
out over the next three years with a discount of only 15/
authorized on consumption over 8 Mcf monthly during the
remainder of the May-October cooling season of 1976; a dis-
count of only 10/ authorized on consumption over 8 Mcf
monthly during the May-October cooling season of 1977; a dis-
count of only 51 on consumption over 8 Mcf monthly during
the May-October cooling season of 1978; and no discount there-
after.
C. The past practice of rendering "gross" and "net"
bills shall cease.
d. Due to regulatory lag, Lone Star Gas Company will
experience a loss in gross revenues between June 1, 1976,
(roughly 62 days following their application for rate in-
crease) and August 16, 1976, (the date upon which it is anti-
cipated the new rates hereinafter set will become effective
for gas thereafter used and consumed) in excess of $600,000.00
which amount should be recoverable by the Company over no less
than a 4 month period following implementation of the new rate
schedule in the form of a surcharge expressed in cents per
Mcf for gas used and consumed following implementation of the
new rate schedule, which surcharge shall cease once the exact
amount of loss has been recovered (billed) .
7. That while the jurisdiction of the Texas Railroad
Commission to regulate the Gate Rate of Lone Star Gas Company
is recognized and that consistent with the Commission's most
recent order in GUD No. 588 and Exhibit "A" appended thereto,
the Gate Rate effective July 20, 1976, is recognized as
$1.3010 per Mcf, the propriety of including out-of-period gas
costs in current gas cost statements is still the subject of
protest and controversy before said Commission and cannot be
resolved by the City Council of the City of Fort Worth; and
8. That pending a resolution of all protests filed
with the Texas Railroad Commission by the City of Fort Worth,
the gate rate set by the said Commission pursuant to its order
in GUD No. 588 and the Purchased Gas Adjustment Rule promul-
gated therein shall be authorized as an integral part of the
burner tip rates hereinafter specified for the residential
and commercial customers in the City of Fort Worth; Except, that
all out-of-period gas costs, i.e. charges for gas delivered by
the Transmission Division during periods prior to the immediately
preceding month for which the Gas Purchased Statement is render-
ed, shall be disallowed in determining the weighted average cost
of gas for the basing (preceding month) period; and
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 fluctuat-
ing weighted average cost of gas and, subject to the exceptions
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set out in Finding 8, above, said new gate rate shall become
an integral part of the burner tip rate for gas used and con-
sumed by the residential and commercial consumers of natural
gas within the City of Fort Worth on the lst 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.
NOW THEREFORE,
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY
OF FORT WORTH, TEXAS:
SECTION 1.
All previously adopted rates and charges for gas service
to residential and commercial customers in the City of Fort
Worth and, specifically, City of Fort Worth Ordinances Nos. 7238,
7301 and 7316 are repealed effective upon adoption and publication
of the rates and charges hereinafter specified according to law.
SECTION 2.
For all gas consumed on and after August 16, 1976, all
persons, firms, corporations 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 said service in
accordance with the following schedules:
A.
For Service Exclusive of Consumption for Air
Conditioning Purposes
First 1,000 cu. ft. (1 Mcf) or fraction thereof $2.5968
All additional consumption at per Mcf rate of $2.0968
B.
For Consumption for Air Conditioning Purposes
(1) For quantities of natural gas less than 8,000
cubic feet consumed by residential customers using
gas for air conditioning purposes during billing
periods between the meter reading dates in May and
October of each year, the rates prescribed in Sec-
tion 2A of this Ordinance shall be charged.
(2) For quantities of natural gas in excess of 8,000
cubic feet consumed by residential customers using
gas for air conditioning purposes during billing
periods between the meter reading dates in May and
October:
(a) 1976, the rates shall be 85% of the rate shown
in Section 2A of this Ordinance, i.e. $1.7823
per Mcf.
(b) 1977, the rates shall be 90% of the rate shown
in Section 2A of this Ordinance, i.e. $1.8871
per Mcf.
(c) 1978, the rates shall be 95% of the rate shown
in Section 2A of this Ordinance, i.e. $1.9920.
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(d) 1979 and subsequent years the rates shall be
the rate shown in Section 2A of this ordinance.
(3) For quantities of natural gas separately metered and
consumed by commercial customers for air conditioning
purposes during billing periods between the meter read-
ing dates in May and October of each year, the rate
shall be that shown in B(2) above.
(4) For quantities of natural gas not separately metered
and consumed by commercial customers for air condition-
ing purposes during billing periods between the meter
reading dates in May and October of each year, the rate
shall be that shown in B(2) above applied to volumes
computed as follows:
June 8 Mcf per nominal ton installed capacity
July 9 Mcf
August 9 Mcf
September 8 Mcf
October 5 Mcf
Installed capacity shall mean name-plate capacity of the
plant normally and regularly used for maximum conditions
and does not include standby or unused facilities. The
Mcf so computed shall not exceed 95% of the total monthly
consumption. All gas consumed in excess of the quantities
determined above shall be billed in accordance with
Section 2A of this ordinance.
C.
Special Provisions and Adjustments
(1) No gas bill will be rendered to any residential or
commercial consumer served under the above rates
not consuming any gas during any monthly billing
period, except that where customer's only use of gas
service is for an outdoor grill and/or a fireplace
starter, the rate specified for the initial increment
of consumption (the 1000 cu.ft. rate step) in para-
graph 2A of this ordinance, shall constitute a minimum
monthly bill.
(2) Bills are due and payable when rendered and if not
paid within 20 days of the date shown on the bill as
the "present meter reading" date or the "for service
through" date, subjects the customer to immediate
termination of gas service unless they have made other
payment arrangements with the Company. Restoration of
service is subject to the Company's reasonable regula-
tions and charges as authorized in paragraph C(4) below.
(3) The above rates are applicable to each residential and
commercial consumer per meter per month or for any part
of a month for which gas is used at the same location.
(4) In addition to the aforesaid rates, Company shall
have the right to collect such reasonable charges
as are necessary to conduct its business and to
carry out its reasonable rules and regulations in
effect. A current copy of such charges shall be
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lag between June lst, 1976, and the effec-
tive date of this Ordinance.
The exact amount of such loss is to be
determined upon this ordinance taking effect
by determining the gas sold to residential
and commercial consumers in the City of Fort
Worth between June lst, 1976, and the then
established effective date. The difference
between the amount billed for the quantity
of gas so determined and the amount which
would have been billed had the rates herein
set been effective on June lst, 1976, will be
the exact amount of lost revenue to be re-
covered by the surcharge authorized.
The amount of the surahaxge shall be determined
by dividing the amount determined as lost
revenue by the anticipated gas consumption by
residential and commercial customers in the
City of Fort Worth during the months of September,
October, November and December of 1976. The
result of that calculation, to the nearest one-
hundreth (1/100th) of a cent, shall be the sur-
charge.
Application of the surcharge shall be only to
gas used and consumed after the effective date
of this ordinance and shall be terminated when
the amount determined as lost revenue has been
recovered.
If, due to uncertainties in the weather and its
effect on gas consumption, the lost revenue
is not recovered with billings for gas used
and consumed in the 120 days following the
effective date of this ordinance, the surcharge
may be applied until the full amount of the
loss is recovered.
Lone Star Gas Company shall submit a statement
to the City Council upon making its calculations
of both the amount of its gross revenue loss
and the amount of the surcharge and shall there-
after submit a monthly statement at the time of
its monthly Purchased Gas Cost Statement of the
amounts recovered through application of the
surcharge until the revenue loss shall have been
recovered.
(c) Plus an amount equivalent to the proportionate
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 July 1,
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filed with the Consumer Protection
Division of the City of Fort Worth.
(5) The amount of each monthly bill computed
at the above ratesshall be subject to the
following adjustments:
(a) Plus or minus the amount of any increase
or decrease, respectively, above or be-
low the current city gate charge. (For
the purposes of this rate ordinance only,
the current intra-company city gate
charge to Lone Star Gas Company is
recognized as being $1.3010 per Mcf effec-
tive July 20, 1976) . Such amount of in-
crease or decrease shall be predicated
upon either:
i. An amount expressed in dollars or
cents per Mcf specified and authorized
by the Texas Railroad Commission which
is neither pending protest nor being
litigated in the courts; or
ii. An amount expressed in dollars or
cents per Mcf computed and arrived
at utilizing the Purchased Gas Cost
Adjustment Rule as contained in and
promulgated by Exhibit "A" to the
Texas Railroad Commission Order in
GUD No. 588 dated June 30, 1975,
and only costs for gas actually
purchased during the preceding cal-
endar month ("Basing Period" as
that term is used in said Exhibit "A") ,
and
Provided, the City Council takes no action to
suspend, modify or defer such adjustment after
being advised thereof and prior to its taking
effect under the provisions of paragraph c(5) (d)
below; and
Provided further that the Company shall credit to
current residential and commercial customers any
amount collected pursuant to the adjustment
authorization contained in this subparagraph (5)
(a) which is subsequently determined to be ex-
cessive, invalid or unreasonable by order of the
Texas Railroad Commission or by final judgment
of a court.
(b) Plus a surcharge applied to each Mcf of con-
sumption calculated on estimated consumption for
a period of not less than four (4) months; such
surcharge being authorized only to recover gross
revenues lost by the Company due to regulatory
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1976, upon or allocable to the Company's distri-
bution operation by any new or amended law, ordi-
nance or contract.
(d) No adjustment shall become effective until the
first of the month following the Company's written
advice to the City Manager of its intention to
make such adjustment and in no event in less
than ten (10) days following receipt of such
advice. Upon receipt of such advice, the City
Manager shall apprise the City Council thereof
and make any recommendation he deems appropriate
in the premises for the Council's consideration
and appropriate action.
(e) Failure of the Company to apply any adjustment
shall not constitute a waiver of the Company's
rights from time to time, or at any time, to
make any adjustment authorized, in whole or in
part, in any subsequent monthly bill that may
be applicable to such bill.
(f) The authorization for adjustments herein contained
notwithstanding, NO ADJUSTMENT RESULTING IN A
RATE INCREASE MAY EVER BE APPLIED RETROACTIVELY,
VIZ. TO GAS ALREADY USED AND CONSUMED.
SECTION 3.
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 4.
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:
/ I
City Attorney
ADOPTED. August 9, 1976
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City of Fort Worth, Texas
LM .mayor and Council Communication
SAIEW
GRAHAM DATE REFERENCE SUBJECT: Proposed Lone Star Gas Rate PAGE
NUMBEAUGNINB 8/9/76 G-3133 Ordinance 1 of 2
The City Council in its regular session of August 2, 1976, approved an increase
in gas rates in Fort Worth for Lone Star Gas Company and directed that an
ordinance be prepared to place the new rate schedule into effect. The attached
ordinance has been drawn to effect the perceived intent of the Council to act
within legal bounds. To that end there are incorporated findings (page 2 of
proposed ordinance) that:
The Company's Fair Value Rate base is $33,145,546.
The Fair Rate of Return to which the Company is entitled is 7;1y.
The Gross Revenue authorized to achieve the fair rate of return
on the Fair Value Rate Base is $5,333,458.
Specific notation is made of the Council's action with respect to:
1. A two step rate (See p.4, Section 2A of proposed ordinance).
2. Geographical limit on allowable contributions (See p. 2,
paragraph 6a of proposed ordinance) .
3. Phase-out of air conditioning rates after 3 years (See p. 3,
paragraph 6b and pp. 4 and 5, Section 2B, subparagraph (2)
of proposed ordinance) .
4. Eliminating "Gross" and "Net" billing (See p. 3, para-
graph 6c and note page 5, Section 2C(3) .
5. The City Council's requirement of making the rates effective
June 1, 1976, the interim loss of revenue to be recovered
in 4 months. This measure was included by the Council to
compensate for any regulatory lag incurred following the
statutory 60 day period for acting on a rate request (approxi-
mately 62 days elapsed between filing of the rate application
and June 1, 1976) . The proposed ordinance provides for
recovery of this loss in gross revenues through a surcharge
which will be accomplished by the Company's keeping track of
the surcharge billings to recoupe the deficit (more than
$60Q,000) on a daily basis, and when the exact amount of
the deficit resulting from the difference between the old
rate and the new rate, (for the period between June 1 and the
new rate effective date, August 16, 1976) has been collected,
such surcharge will cease. This is a two-and-one-half month
period, and will be billed to customers over a four month
period in the September, October, November, and December
billings (See p. 3, paragraph 6d and pp. 6 and 7, Section
2C(5) (b).
DATE REFERENCE SUBJECT: Proposed Lone Star Gas Rate PAGE
NUMBER Ordinance 2 2
8/9/76 G-3133 of
6. Limited and conditional rate adjustment authorization for
fluctuating gas cost. The Council's action in this regard
seemed to recognize a disputed figure and establish a new base
in a matter concerning which the Council has no jurisdiction
i.e. setting a gate rate.
To recognize the Company's reported gas cost figure of $1.0301 for June as
accurate invades the province of the Railroad Commission in a matter concern-
ing which we have filed a protest and there may be litigation. Further, to
establish this disputed figure as a base for future calculations gives the
Company a 100% pass through of gas costs from the base of 72.29 cents
established in GUD 588, whereas the Railroad Commission has only authorized
the Company a pass through of 85% of this difference. Thus, even accepting
the disputed figure of 1.0301 as the Company's weighted average cost of gas
for June, 1975, under the Railroad Commission's PGA Rule, our Gate Rate effec-
tive July 20, 1976, is $1.3010. However, if a 100% gas cost is allowed by
setting a new base at $1.0301, the citizens of Fort Worth would be paying a
gate rate of $1.3471 ($1.0301 gas cost increment + .3170 cost of service
increment). It is assumed the Council did not intend this result and the
Ordinance, therefore, authorizes the flow through of adjustments in terms
of specific orders and the PGA rule of the Railroad Commission utilizing only
current gas costs and subject to Council approval. (See pp. 2, 3 and 4, para-
graphs 1, 2, 7-9 and p. 6, Section 2C(5) (a) of proposed ordinance).
7. The effective date for adjustments is set at the 1st of the
month based upon the City Council's requirement that adjustments
be effective at the end of 30 days (See p. 8, Section 2C(5) (d)
of the proposed ordinance) . As written, there is a 30 day inter-
val from the end of the month for which the weighted average cost
of gas is calculated until it becomes effective; administrative
convenience is served; regulatory lag is cut in half; and it still
affords time to exercise all the safeguards (notification to and
action by the Council, if appropriate).
Recommendation
It is recommended that the ordinance be approved as proposed.
SGJ:ms
Attachment
SUBMITTED BY: DISPOSITION�$Y COUNCIL: PROCESSED BY
APPROVED [J OTHER (DESCRIBE)
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�/�[ � �l i a n_�r.�„i (Q,. ,� ,,� � �-�� CITY SECRETARY
U DATE
CITY MANAGER g-Z1 -76