City of Clearwater - File #: ID#21-8771

• File #: ID#21-8771
• Version: 2
• Name: Gas Utility Rate Study
• Type: Action Item
• Status: Passed
• File created: 1/15/2021
• In control: Gas System
• On agenda: 2/4/2021
• Final action: 2/4/2021
• Title: Approve changes to the Clearwater Gas System utility rates to become effective for all gas bills and services rendered on or after March 1, 2021 and pass Ordinance 9433-21 on first reading.

Date	Ver.	Action By	Action	Result
2/4/2021	1	City Council
2/1/2021	1	Council Work Session

SUBJECT/RECOMMENDATION:

Title

Approve changes to the Clearwater Gas System utility rates to become effective for all gas bills and services rendered on or after March 1, 2021 and pass Ordinance 9433-21 on first reading.

Body

SUMMARY: 

Raftelis has completed a Natural Gas Rate Study for the Clearwater Gas System (CGS).  The Study includes a projection of CGS’ financial position through fiscal year 2025 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’ current revenues are adequate to fund the test year revenue requirements.  However, Raftelis has recommended a reduction in commercial rates and an increase to residential single-family customers to offset the commercial reduction.

Key recommendations in the Study and Ordinance are:

•                     Decrease the Commercial class distribution rate by $0.04 per therm.

•                     Increase the Residential Single-Family monthly customer charge by $4.00.

•                     The net effect of these changes to the residential and commercial rates is revenue neutral.

•                     Make changes to the propane (LP) annual customer charge rates, consistent with the increase with natural gas monthly customer charges.

•                     Make certain wording clarifications in our Ordinances to better reflect operating policies and responsibilities.

•                     Increase the main/service line extension construction payback period from 7 years to 10 years.

The Rate Study shows the projected effect of these recommended rate adjustments and will become CGS’ basis for strategic goal setting.

Based on Council’s direction at the February 1^st worksession, CGS has prepared three versions of Ordinance 9433-21 that modify the changes to Residential customer charges and Commercial Non-fuel rate charges:

•                     Ordinance 9433-21-A:  This version is the same as presented at the 2/1/21 council worksession as outlined in the above bullet point items.

•                     Ordinance 9433-21-B:  This version increases the Residential Customer Charge by $2 per month, effective 3/1/2021 and then increase by an additional $2 per month, effective 3/1/2022.  The Commercial Non-fuel energy charge will decrease by $0.02 per therm, effective 3/1/2021 and then decrease an additional $0.02 per them, effective 3/1/2022.  This option is not revenue neutral in the 1^st year and results in reduced reserve levels by approximately $308,000, however, is still projected to keep CGS above the minimum 180-day reserve requirement throughout the five-year forecast period.

•                     Ordinance 9433-21-C: This version increases the Residential Customer Charge by $2 per month, effective 3/1/2021 and then increase by an additional $2 per month, effective 3/1/2022.  The Commercial Non-fuel energy charge decreases by $0.04 per therm, effective 3/1/2021.  This option is not revenue neutral in the 1^st year and results in reduced reserve levels by approximately $559,000, however, is still projected to keep CGS above the minimum 180-day reserve requirement throughout the five-year forecast period.

APPROPRIATION CODE AND AMOUNT: N/A

USE OF RESERVE FUNDS:  N/A