BY COUNCILOR STOVER:
RESOLVED, effective with the natural gas readings after November 1, 2006, all customers of the natural gas utility of the public works and utilities department of the city of Duluth, whose natural gas supply is measured by meter, shall be charged for such natural gas in accordance with the schedule of rates established by this resolution as follows:
RESOLVED FURTHER, that effective November 1, 2006, the fixed monthly charge and variable rate for interruptible sales service for commercial/industrial small volume customers shall be $175 per month and $1.035 per CCF respectively for gas customers currently billed in that customer classification. This rate shall be effective until July 1, 2008, whereupon that date all customers in this classification shall be reclassified to the firm sales service for commercial/industrial small volume customer classification rates in effect at that time.
RESOLVED FURTHER, that effective immediately upon approval of this resolution the interruptible sales service for commercial/industrial small volume customer rate classification shall not be available to any new gas utility customers.
RESOLVED FURTHER, that effective immediately upon approval of this resolution the interruptible transport service rate classification for both large volume and small volume commercial/industrial customers shall be eliminated from the rate schedule and not offered to gas customers.
RESOLVED FURTHER, that any prior rate resolutions inconsistent or conflicting with this resolution are hereby rescinded.
STATEMENT OF PURPOSE: This resolution will increase the natural gas utility fund revenues approximately $2.3 million to fund increased operating costs and the retiree health care accrued actuarial liability annual contribution. Variable rates and customer (fixed) charges are based on recommendations from the August 2006 Gas Cost of Service and Unbundled Rate Study conducted by R.W. Beck, St. Paul, Minnesota. The rates will realize a 5.7% increase in gas utility revenues, revise the purchase gas adjustment base to minimize PGA surcharges, and adjust individual customer class rates to more fairly allocate the recovery of utility costs to each customer class.
Increased revenues will in part be directed to the $920,000 annual contribution to the accrued actuarial liability for retiree health care.
The last rate increase for operating expenses occurred in 1996. Since then, two small rate increases totaling $.025 per CCF were approved in 2003 and 2005 to offset the Payment in Lieu of Tax (PILOT) transfer to the General Fund for purchased gas adjustment revenues which were at that time escalating dramatically.
This resolution will also eliminate three interruptible rate categories which are no longer needed. Since the connection to the Great Lakes Gas Transmission pipeline via a city-owned interstate transmission pipeline and the completion of the internal gas distribution system upgrades, gas supply capacity has increased and become more reliable to the point where the interruptible service classes for the small volume customer and both small and large volume transport customers can be eliminated. Existing small volume interruptible customers will be kept in the interruptible class until July 1, 2008 to give them time to adjust to the higher rate in the firm service classification. The only customer currently in the transport interruptible classification came into that classification three weeks ago and will be given notice that they will be placed into the firm transport classification upon approval of the new gas rates.