HomeMy WebLinkAboutIR 8197 INFORRAMIAL REPORT TO CITY COUNCIL MEMBERS No, 8197
FO June 15, 1999
To the Mayor and Members of the City Council
01 X
*
• Lone Star Gas Company's Application to Modify its
CX Subject:
Rate Schedule for City Gate Service
On Thursday, February 25, 1999, Lone Star Gas filed with the Railroad Commission of
Texas an application to modify its rate schedule for city gate service. In Docket 8935 Lone Star
Gas seeks approval of a Cycle Billing Adjustment clause designed to make corrections to the Gas
Cost Adjustment in order to more closely match the cost of gas billed with the actual cost of the gas
consumed.
Lone Star Gas has about 1.35 million residential and commercial customers to be billed each
month. The meters are read on twenty-one days of each month which results in twenty-one billing
cycles of approximately thirty days each. If a customer's meter is read on the fifteenth day of the
month, the bill will reflect fifteen days of consumption in the previous month. If the meter is read
on the third day, the bill would reflect three days of consumption in the current month and twenty-
seven days consumption in the previous month
The cost of gas fluctuates from month to month. The Lone Star rate schedule adjusts the
city gate rate to reflect the current cost of gas in a given month. Because of the billing cycle, the
gas consumption shown on a bill includes gas purchased and consumed in both the current month
and in the prior month when the city gate rate may have been different from the current month city
gate rate. The cost of the portion of gas used in the prior months could either be under-recovered or
over-recovered since it may not match the current monthly billing rate
The gas company has proposed to "true up" the city gate gas cost recovery by calculating the
difference between the gas cost recovered and the gas cost incurred during the twelve months
between July I of one year to June 30 of the following year. An over-recovery would be returned to
the customers and an under-recovery would be recouped through an adjustment applied over the
next twelve months beginning with bills sent out the following September.
Lone Star Gas Company's proposal will make the company whole, but, if there is a problem
matching the cost of gas with the volume of gas consumed from the customer's point of view, the
companies proposal increases the disparity. For example, a customer in the twenty-first billing
cycle may, in a given year, have paid exactly the right amount for the gas consumed, but the
company under recovered. The next year that customer would have to pay extra to make up the
Company's shortfall. Further, the Cycle Billing Adjustment is a company wide adjustment and does
not take into account the fact that lost and unaccounted for gas varies from one distribution system
to another. A third problem with this proposal is that it defers costs or bestows credits upon people
who are customers in one year when those costs or credits belong to people who were customers in
a different year. These customers may or may not be the same people.
To accurately match costs to the bills rendered it is necessary to have a different adjustment
factor for each billing cycle for each distribution system. The adjustment should be made to the bill
for the gas which was consumed during the given time period. Any proposal which does not meet
these criteria produces an estimate no better than the estimate generated by the current method.
ISSUED BY THE CITY MANAGER FORT WORTH,TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 8197
00-ST!!eb June 15, 1999
To the Mayor and Members of the City Council page 2
®rz
Lone Star Gas Company's Application to Modify its
Subject'
Rate Schedule for City Gate Service
Representatives of cities served by Lone Star Gas met on April 29th to discuss Lone Star
Gas Company's request before the Railroad Commissions. They agreed that cities should intervene
at the Railroad Commission, that testimony should be drafted to oppose Lone Star's proposal and
suggest alternatives to the current gas cost recovery process, and that council to the cities should
pursue possible compromise with the Company.
Docket 8935 is not a base rate case, and the Railroad Commission may not require
reimbursement of the cities' reasonable expenses. Even so, Lone Star Gas has verbally agreed to
reimburse expenses up to $20,000.
A resolution authorizing Fort Worth's intervention and participation with other cities will be
placed on the City Council agenda for June 15, 1999.
Bob Terrell
City Manager
ISSUED BY THE CITY MANAGER FORT WORTH,TEXAS