City advised not to refinance natural gas fund
Fiscal year 2006-2007’s net revenue will be around $10,000 far short of the hoped for $133,000. Last year the enterprise fund netted $45,000.
Because the city has experienced two warm winters in a row, 2005-2006 and 2006-2007, and the fund is just breaking even. Dan Bergmann, of Interstate Gas Services, Inc. said, the city needs to hold off on refinancing the natural gas project. Instead, it needs to gain customers and reduce costs.
Councilman Kurt Bonham told Bergmann holding off on the refinancing was not good news. He reminded those in attendance the council approved a budget with the $1.4 million debt expense eliminated from the 2007-2008 budget because it had expected to refinance and not have a debt payment for a year or two.
Finance Director Robert Porfiri told the council that it could take another look at the budget anytime and make adjustments. He said he would get it on the Wednesday, Sept. 18 agenda.
Natural gas futures show the commodity is around $8 per decatherm, so the city is in a good position to buy winter 2009 gas at a low price. That does not better the outlook for natural gas revenue versus expense in the 2007-2008 fiscal year. According to Bergmann the Natural Gas Enterprise Fund will be negative $49,000 at the end of this fiscal year.
Bonham did commend city staff for making the decision to buy gas when it did.
“Purchases were correct at the time,” Bonham said.
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