City Utilities seeks gas rate increase

CU made its annual budgetary plea at the Sept. 6 Springfield City Council meeting, and its request included both expenditure and rate increases.

Larry Pennel, vice chairman of the City Utilities board, presented the proposed CU operating budget for fiscal year 2005-2006, which begins Oct. 1. The CU board approved the budget at an Aug. 25 meeting.

The major change was in expenditures – the budget calls for $373 million, up $30 million from this year’s budget. More than $15 million of the increase, according to Pennel, comes from increased fuel and energy purchase costs, while increases in coal and natural gas prices make up the rest.

The budget also contains more than $41 million in capital expenditures. Most of those expenditures will be used for the Joint Landfill Gas Energy Project and construction of the Natural Gas Peak Shaving Facility, which will use propane to supplement natural gas on peak usage days.

Capital expenditures are up $5 million from the 2004-2005 total.

Customer receipts, expected to reach $382 million, a 10 percent increase from this year, would help offset those expenses.

The revenue increase, however, is contingent on council passing a requested rate increase for natural gas users. The increase – an extra dollar in the usage fee for residential users and a 1.25-cent increase per therm for all users – would be the first scheduled natural gas rate increase since April 2000.

Residential customers, Ross said, would pay on average $1.84 more a month while businesses’ would pay on average $4.32 more a month.

Ray Ross, CU’s director of pricing, explained at the meeting that the price hike is necessary because natural gas suppliers have raised their rates.

He also said that without the increase, the natural gas system would operate at a loss. The increase, which would take effect in April, would bring in about $760,000 for the coming fiscal year and more than $2 million for a full year.

CU officials said the increase would allow the utility to operate smoothly yet keep rates competitive statewide. Customer rates in Springfield are about 25 percent lower than the Missouri average, Ross said.

Councilman Denny Whayne said the higher cost is worthwhile.

“Fees sometimes are a bad thing for people, but if you look at it and break it down, paying $1.84 more to stay warm, that’s not asking much,” he said.

Councilwoman Sheila Wright expressed concern over whether the effects of Hurricane Katrina would make natural gas more difficult to obtain.

Ross said that availability here would not be a problem, as Springfield gets its natural gas from fields in the west, though the reduced availability in the south is putting upward pressure on prices.