HomeMy WebLinkAboutIR 6952 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 6952
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DoE 40RT� To the Mayor and Members of the City Council
` $ July 10, 1984
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»reXNtl Subject: LONE STAR GAS - STATEMENT OF INTENT TO INCREASE
"MAIN EXTENSION" CHARGE
Lone Star Gas Company ' s current procedure for installing new
gas service main lines provides a 100-foot extension without a
direct charge to each new customer served by an extended main
line. The charge to extend service beyond this limit is cur-
rently $4. 50 per foot based upon an installation cost estab-
lished in 1976.
Lone Star desires to change the gas main extension rate beyond
the 100-foot free limit to a fee based on the lesser of:
(a) the system-wide average cost of construction, includ-
ing overhead, for the prior fiscal year; or
(b) the adjusted actual cost as determined by applying
the latest Handy-Whitman Index to the 1975 actual
base cost of $2. 94.
The current system weighted average cost is $5.80 per foot and
the Handy-Whitman Index calculation is $5.40 per foot. Under
the new procedure Lone Star would make an adjustment to the
main line extension rate in April each year and would provide
the results to the City for review. This system is similar to
the procedure followed by the City of Fort Worth which revises
its water and sanitary sewer construction costs semi-annually.
Lone Star ' s proposed charges for main line extensions do not
increase or decrease revenues for the Fort Worth Distribution
System. Payment by a customer for gas main distribution exten-
sions is accounted for as a contribution-in-aid of construction
which is a deduction from total investment for rate-making pur-
poses. This reduces the rate base and ultimately the required
rate. If the new procedure had been in effect in 1983 it would
have produced less than $100, 000 of additional contributions to
Lone Star system-wide and less than $2, 000 in Fort Worth.
On June 6, 1984, Lone Star filed its Statement of Intent to
change the main extension procedure (Attachment A) with the
Texas Railroad Commission and with Texas cities in which Lone
Star serves. Under the Public Utility Regulatory Act the
proposed change is not considered a "major change" in revenue
(one in excess of $100, 000) and will become effective 35 days
after the filing date (July 11, 1984) if the City Council has
taken no action.
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 6952 - p.2
Jul 10 1984
yoE FORJ� To the Mayor and Members of the City Council Y .
u ' Continued, Page 2
�TexPy. Subject: LONE STAR GAS - STATEMENT OF INTENT TO INCREASE
1071 "MAIN EXTENSION" CHARGE
The staff is of the opinion that the proposed procedure is
consistent with cost of service ratemaking because it removes
from ratepayers the cost of excessive construction to reach
outlying areas. Therefore, the staff recommends that the change
in procedure be allowed to become automatically effective on
July 11, 1984, and that the Council take no official action on
this matter.
If any additional information is required, it will be furnished
upon request. a44
Robert L. Herchert
City Manager
RLH: ly
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ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS