Clarksville’s estimated 26,000 natural gas customers may incur a rate increase soon.
Thursday night, the Clarksville City Council will consider, and possibly vote on an ordinance to restructure how Clarksville Gas & Water natural gas charges are calculated.
The proposed changes would result in an estimated $4 monthly increase on the average residential gas bill, but city officials emphasize that it also would result in potential gas-rate savings for customers who are consistent, heavy users of natural gas.
Overall, the proposed rate restructuring would increase gas revenues by 2.8 percent per year, and would affect all of the system’s 26,000 metered ratepayers.
While Clarksville grows, the city’s gas utility has not changed its rates for 12 years, and officials say this change is needed to cover the increasing actual fixed costs of operating the system and to lessen the impact of weather variations on the current rate structure.
Clarksville Gas & Water Department Director Pat Hickey said he and his staff have been frugal everywhere possible.
“In the 10 years that I’ve been here, we’ve not added more staff in the Gas & Water Department, while meter-reading technology has changed.
“We’re trying to work smarter in this department, not harder,” Hickey said..
“Despite the base rate increase that’s being proposed, this rate restructuring will actually help temper some of those extremely high seasonal gas bills,” he said.
In City Council executive session late last week, the measure was introduced on the council floor, and Councilman Tim Chandler came armed with plenty of questions for Hickey about the proposed rate restructuring.
Hickey said he is striving to meet with Chandler and other council members prior to Thursday’s 7 p.m. regular session, to try and demystify the complex rate overhaul.
City officials say the new rate structure would consist of a fixed monthly meter charge, a fixed usage charge and a commodity charge that could vary based on the actual cost of gas the city pays its supplier. The current rate structure has a rate that varies according to usage thresholds.
“With our current rates, we’re totally at the mercy of the weather,” Hickey said. “We make most of our gas revenue in the three coldest months of the year. If we have a warm winter, we distribute less gas, and our rate structure doesn’t yield adequate revenues. The new rate structure will allow us to consistently recover our fixed costs.”
Officials say the changes are the result of a comprehensive analysis of Clarksville Gas & Water’s cost of service and gas rates by Raftelis Financial Consultants. The new rates reflect industry best practices for natural gas utilities, the ordinance says.
A new rate chart provided by Gas & Water shows that a residential gas customer inside the Clarksville city limits with average usage (21,500 cubic feet of natural gas a year) would pay a basic bill of $12.92 during July, but would pay $33.82 in a peak-use winter month of March, with an annual total of $238.21.
In contrast, under the current rates, that same customer pays $7.12 in July, but $36.46 in March, for an annual total of $189.55.
As with the current rate structure, customers outside the city limits would pay higher rates for natural gas. The new rate chart shows that a residential gas customer outside the city limits with average usage would pay a basic bill of $18.97 during July, and would pay $44.59 in a peak-use winter month of March, with an annual total of $331.95.
In contrast, under the current rate, that same customer pays $7.72 in July, but $58.15 in March, for an annual total of $278.70.
The new structure also applies to commercial and industrial natural gas customers, but has less variability in those rate classifications, which are less prone to weather-related usage variations, officials said.
Reach Business Editor Jimmy Settle at 931-245-0247 and on Twitter @settle_leaf.
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