Rate hearing to be scheduled for January
Dan Bergmann, of Interstate Gas Services, Inc., told the council at its Wednesday, Dec. 13 meeting the hearing was necessary for a couple of reasons. One, the contract with Lassen Community College is to expire at the end of January. Second, the city of Susanville cannot afford to lose any commercial customers or it may be forced to raise residential rates.
Other local heating fuel companies are offering businesses on natural gas at an attractive lower rate.
Safeway is one of the larger commercial customers that is considering changing to another fuel source.
Local Safeway manager Kris Svendsen read a letter from the Safeway Corporation. In part it said, “Safeway has a long standing history of supporting the communities we serve. The city of Susanville is no exception and we will continue to support the city to the best of our ability.
“As most of you know the grocery industry operates on very small and tight margins. Cost control is critical element of our business. Every dollar reduction and expense goes straight to the bottom line. Energy is one of the largest operating expenses for Safeway … Currently our facility in the city of Susanville pays the highest price for natural gas corporate wide that includes over 1,700 facilities located in 21 states, the District of Columbia and Canada.
“The price we have been paying for natural gas to the city is two to three times higher than what we pay for depending on the time of the year.”
According to Bergmann losing the Safeway account would be equivalent to the city losing 55 residential customers.
The council directed City Administrator Luann Rainey to publish the public hearing with restructuring of the rates to include a second tier rate at $1.99 per therm, lower the residential rate to $2.19 per therm. Currently, customers pay $2.44 per therm for the first 450 therms and $2.26 for anything above 450 therms.
LCC has a $1.02 per therm in a contract that expires in a month. LCC will have no choice but to pay more for natural gas, said Bergman, but how much more is one of the questions.
Therefore, at the public hearing the council will also consider a variable negotiated rate plan so all customers, commercial or residential, will see competitive prices.
At the Nov. 15 meeting the council, with Mayor Pro Tem Rocky Joy absent, directed city staff not to pursue negotiated variable rate natural gas agreements with any natural gas customers, regardless of size and to proceed with a fair and equitable tiered rate plan which would benefit as many natural gas customers as possible.
In a Dec. 13 staff report, Rainey said, “Mayor (Lino) Callegari and the city councilmembers present at the Nov. 15 meeting were adamant in their desire to provide a lowered baseline rate such that all residential customers, particularly those on fixed incomes, benefit from any natural gas rate restructuring while also protecting the ability of the natural gas enterprise to retain its commercial customers.”
Even with the possible restructuring and savings to customers, the Natural Gas Enterprise Fund should make about $300,000 in revenue in the fiscal year 2006/2007.
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