SUBJECT/RECOMMENDATION:
Title
Adopt Ordinance 8591-14 on second reading, amending Chapter 32, Article VIII, Clearwater Code of Ordinances relating to gas services,, providing for the use of subcontractors in the fulfillment of Gas services, providing for delivery of gas at varying pressures, and providing for discretion by Clearwater Gas System in providing certain optional services; amending Appendix A, Code of Ordinances to revise rates for Clearwater Gas System customers.
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SUMMARY:
Black and Veatch have completed a Cost of Service and Rate Study for the Clearwater Gas System (CGS). This study is an update of their last study issued September 2010.
The Study includes a projection of CGS' financial position for the period 2014 - 2019 and a cost of service analysis to evaluate the cost responsibility for each of the various classes of customers served.
Based on the results of the Study, CGS' rates are adequate for the period, and we are actually recommending an overall $1.2 million annual decrease in base rates. Key recommendations in the Study and Ordinance are:
· Roll the non-weather portion of Usage & Inflation Adjustment (UIA) rate into the eligible base distribution charges and reset the normal use per customer and Consumer Price Index (CPI-U) to current levels as specified in the Study and Ordinance.
· Decrease the Commercial class revenues by approximately $1.2 million by reducing distribution rates to the levels as specified in the Study and Ordinance.
· Increase the Residential Single-Family monthly customer charge by $2.00 and offset this with a reduction in the usage charge. The net effect of these changes to the residential rate revenue overall is negligible as the increase in customer charge is offset by the decrease in distribution charge revenues. This is revenue neutral for our typical single-family residential customer.
· Make certain changes in the propane (LP) rates, based on a competitive analysis of local LP suppliers, as specified in the Ordinance.
· Adopt a new pricing structure for service charge rates that establishes a per trip charge, which includes up to 1 hour of labor plus quarter hour rates for additional time on site beyond 1 hour.
· Make certain wording clarifications in our Ordinances to better reflect operating policies and responsibilities.
Table 1-2 on Page 7 of the Rate Study shows the projected effect of these recommended rate adjustments and will become CGS' basis for strategic goal setting.
APPROPRIATION CODE AND AMOUNT:
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USE OF RESERVE FUNDS:
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