HomeMy WebLinkAboutOrdinance 0436
ORDINANCE NO. 436
AR ORDmANCE FIXnm AND DE'!'ERMINnm THE GENERAL SERVICE RATE
TO BE CHARGED FOR SALES OF NATURAL GAS TO RFßIDJmTIAL AND
COMMERCIAL CONSUMERS WITHm THE CITY LIMITS OF
NORTH RICHIAND HILIB, TARRANT COUNTY,
TEXAS, AND PROVIDmG FOR THE MANNER m WHICm: SUCH RATE MA.Y BE
CHANGED, AnJUSTED.AND AMl!M)ED.
BE IT ORD\INED BY THE CITY COONCIL OF THE CITY OF NORTH RICHIJ\.ND HILIB:
SECTICfi 1. Effective with the first gas bills rendered from
and after thirty (30) days from the date of final passage of this ordi-
nance, the maximum generBJ. service rate for sales of natural gas ren-
dered to residential and commercial consumers within the city limits of
North Richland Hills by Lone Star Gas COJJI.P8IlY, a Texas corporation,
its successors and assigns, is hereby fixed and determined as follows:
First 1,000 cu. ft. or fraction thereof $1.778 Gross; $1.60 Net
Next 3,000 cu. ft. @ $1.156 per Mcf Gross; $1.04 per Mcf Net
Next 6,000 cu. ft. @ 1.089 per Mcf Gross; .98 per Mef Net
Next 15,000 cu. ft. @ 1.044 per Mcf Gross; .94 per Mcf Net
Next 25,000 cu. ft. @ 1.000 per Mcf Gross; " .90 per Mcf Net
Next 50,000 cu. ft. @ .944 per Mef Gross; .85 per Mcf Net
All Over 100,000 cu. ft. @ .922 per Mcf Gross; .83 per Mcf Net
No gas bill will be rendered to any residential or commercial consumer
served under the above rate not consuming any gas during any monthly bill-
ing period.
AnJUSTMENTS
The amount of each net monthly bill computed at the above-stated
rates shall be subject to the following adjustments: Plus or minus the
amount of any increase or decrease, respectively, above or below the 42.5
cents per Mcf level in the intracompany city gate charge as authorized by
the Railrœd Commission of the state of Texas or other regulatory body hav-
ing jurisdiction for gas delivered to Lone Star Gas Company's distribution
system for sale to residential and commerciaJ,. cOnsumers where such changes
are caused by increases or decreases in the COGt of gas purchased by the
Company; plus an amount equivalent to the proportionate part of any new tax,
or increased tax, or any other governmental imposition, rental, fee or charge
(except state, county, city and special distriçt ad valorem taxes and taxes
on net income) levied, assessed or imposed subl,equent to April 1, 1972, upon
or allocable to the Company's distribution operations, by any new or amended
law, ordinance or contract. Each gross monthly bill shall be adjusted pro-
portionately. Company, at its option, may forego the application of any
adjustment if such adjustment would result in an increase in the monthly
bill; however, failure of Company to apply any adjustment shall not con-
stitute a waiver of Company's right from time to time, or at any time, to
make any adjustment, in whole or in part, in any subsequent current monthly
bill that may be applicable to such bill.
Net rate shall apply to all bills paid wi thin ten days from
monthly billing date; gross rate shall be applicable thereafter.
The above rate is applicable to each residential and commercial
consumer per meter per month or for any part of a month for which gas is
used at the same location.
In addition to the aforesaid rates, Company shall have the right
to collect such reasonable charges as are necessary to conduct its business
and to carry out its reasonable rules and regulations in effect.
SECTION 2. The rate set forth in Section 1 may be changed and
amended by either the City or Company furnishing gas in the manner pro-
vided by law. Service hereunder is subject to the orders of regulatory
bodies having jurisdiction, and to the Company's Rules and Regulations
currently on file in the Company's office.
SECTION 3. It is hereby found and determined that the meeting
at which this ordinance is passed is open to the public, as required by
Texas law, and that advance public notice of the time, place and purpose
of said meeting was given, and that this rate ordinance is in compliance
with the applicable general criteria issued by the Price Commission under
the Economic Stabilization Act of 1970, as amended.
PASSED AND APPROVED on this the Cjfl- day of ()iZ~A'~
A.D. 19~.
ATTEST:
,
J)~tre~ )
76A~~~Nb-
Mayor r
City of North Richla.nd Hills, Texas \)
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§
§
COUNTY OF TARRANT, §
I, t)~ P~L
North Richland Hills, Tarrant County,
Texas, hereby certify that the above and foregoing is a true and correct
copy of an ordinance passed and approved by the City Council
of the City of North Richland Hi~s at a ~~~ session
held on the ~day of ()æL,,~ -¿;r;-i9.2i.., as it
appears of record in the Minutes of said . City Council
in Book j , page
STATE OF TEXAS
, Secretary of the City of
~SS MY HAND AND SEAL OF SAID 'CITY, this the 9:ft...; day of
(()!~h ) , A.D. 19Zi::...
"
jO~) P~7
Secretary
Ci ty of North Richland Hillfj Texas
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_._____________.~__,__.___~__,__________'___,.,~M__~__.__~"_'_____"_._"'\____~.._...______.._._._.'"___'__.___._...______.
,
LONE STAR GAS COMPANY
APPLICATION TO THE CITY OF NORTH RICHIAND HILIS, TEXAS
FOR APPROVAL OF COMPANY'S PROPOSED
RESIDENTIAL AND COMMERCIAL RATE SCHEDULE
FOR NATURAL GAS SERVICE
\
\
Lone Star Gas Company
TO THE HONORABLE MAYOR AND CITY COUNCIL
CITY OF NORTH RICHIAND HILlS
Gentlemen:
Lone Star Gas Company, throughout its long period of service
to the people of Texas, has had as a matter of first concern the neces-
sity of providing dependable gas service at reasonable prices to all of
our customers. In order to secure the large amount of capital which is
required to meet the ever-growing demand for natural gas service, at the
lowest cost to the consumer, we must earn a fair return upon the fair
value of our property.
Since 1969, when the Company last requested rate relief, vir-
tua11y all of our costs have increased. To cite just a few examples,
a half-ton service truck that cost $2,835 in 1968 costs $3,205 today,
an increase of 13.1%; a loader tractor with side boom that cost $36,050
in 1968 costs $41,457 today, a 15% rise; a truck/trailer that cost $21,500
in 1968 now costs $28,038, a substantial 30.4% increase. The price of
4-inch distribution line pipe has increased since 1968 by 21.5%.
In order to retain and attract qualified employees, it has
been necessary to give wage increases totaling 11.3% in the last two
yea rs .
The cost of borrowed money reached a high of 9 3/4% in 1970,
and the Company's latest borrowing was at the rate of 7.5% in 1971.
The Company's weighted average interest cost on all borrowed money in-
creased 17% in this three-year period.
The most substantial increase, of course, is in the cost of
purchased gas. Because of the advantages of gas as a clean-burning
source of energy, the demand for natural gas is gr~at. Due to Lone Star's
careful advance planning, there is an adequate supply of gas for Lone
Star customers (unlike the situation in some parts of the nation where
a gas shortage exists). Lone Star Gas Company, like most other gas
utility companies, buys a large part of its gas from independent pro-
ducers. Lone Star must be able to meet the prices offered to producers
by other pipeline companies, including interstate pipelines, in order
to continue to maintain its present adequate supply of gas for the people
and industries of Texas. The cost of this gas has increased. While
Lone Star is still purchasing gas under some contraçts that were made
in the 50's at a price of approximately l5¢ per 1,000 cubic feet, we
must purchase new gas at today's prices, which sometimes exceed 30¢
per 1,000 cubic feet. This is part of our cost of preparing for the
future. To continue to protect our consumers, we must pay the competi-
tive price.
The cost of purchased gas is reflected as an expense of the
Company in the city gate rate or intracompany charge by the Transmission
Division to the Distribution Division, which is fixed by the Railroad
Commission.
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On March 3, 1972, the Texas Railroad Co~ission granted adop-
tion of the Gas Cost Adjustment Rule that was requested by Lone Star
Gas Company after full hearings participated in by representatives of
many of the cities which we serve. This order authorized the intracom-
pany "city gate" charge for gas sold to residential and commercial cus-
tomers to be adjusted for changes in the cost of gaB purchased by Lone
Star. When the cost of gas is increased or decreased, the cost of gas
at the city gate will be increased or decreased by 65% of the change
in the purchase price. This calculation is made every six months, and
Lone Star must file a certified statement covering such costs with the
Texas Railroad Commission and furni.sh a copy to each incorporated city
or town which it serves. Unless this gas cost data is contested within
thirty days, it will go into effect as part of the authorized intracompany
charge.
It should be realized that an i.ncrease in the amount of the
authorized intracompany city gate charge does not result in any revenue
to the Company until it is put in effect in the distribution rates for
the cities and towns served. Therefore, this rate application also
carries an adjustment to cover any increase or decrease in gas purchase
expense. Lone Star filed its applications for gas cost adjustments
at the Railroad Commission and now with the citi~s Y¡'e serve, because
of the accelerating price that Lone Star must pay for gas and the regulatory
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lag that has restricted capital necessary to find new gas supplies for
its customers. In the findings in the above-mentioned Railroad Commis-
sion proceedings, the Commission stated, "the adoption of gas cost ad-
justment rules requested by Lone Star Gas Company is a proper regulatory
practice. The Commission further finds that due to the rapidly spiral-
ing cost of gas and the effect of regulatory lag, such relief will bene-
fit botb Lone Star and the cities, towns, and villages it serves." The
gas-cost-adjustment clause will permit the Company to compete for gas,
and it will save money for the cities in legal costs in connection with
frequent gate rate hearings before the Texas Railroad Commission and
city governing bodies. It should be noted that gas cost adjustments
are not new, and their advantages have been recognized in some thirty-
four other states. Existing rates for gas sold by Lone Star to all cus-
tomers in Oklahoma and to industrial customers in Texas have for many
years contained gas-cost-adjustment clauses. There are seventy-two
towns in Lone Star's gas distribution system in Texas which currently
have gas cost adjustments. Most electric utility companies that operate
in Texas have fuel cost adjustments in their rates. Lone Star's gas
purchase cost, when related to total operating expenses, is twice as
high as the percentage relationship between fuel cost and total operating
expenses in the case of an electric utility.
As a result of the recent proceedings and the subsequent
filing of our certified cost of gas, the Railroad Commission has
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authorized Lone Star to increase its intracompany charge by l.l¢, from
41.4C to 42.5¢ per Mcf. This increase is reflected in the data presented
to you in the attached schedules. The Price Commission has expressly
endorsed the allowance of gas cost adjustments, since they are totally
cost-oriented and do not contribute to inflationary expectations.
In view of our increased expenses, we must request this in-
crease in rates which is needed immediately to maintain our standards
of service, to obtain sufficient capital to permit necessary facility
expansion, and to meet the ever-growing demand for gas. With this in-
crease, natural gas will still be the most economical source of energy
for home or business.
In view of the national policy to combat inflation, we are
limiting our request for increased rates to a maximum of ten percent
of the present average rate in those towns and ci~ies which have a
greater deficiency.
In making this request, the Company has considered the gen-
eral criteria which are app¡icaþle to municipalities as regulatory bodies
under the provisions of Price Commission Regulations, Section 300.16a.
(1) The increase is cost~justified and does not reflect
future inflationary expectations.
(2) The increase is the minimum required to assure con-
tinued, adequate and safe service or to provide for
necessary expansion to meet future requirements.
(3) The increase will achieve the minimum rate of return
needed to attract capital at reasonable costs and not
to impair the credit of the public Qtility.
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(4) The increase does not reflect labor costs in excess
of those allowed by Price Commission policies.
(5) The increase takes into account expected and obtain-
able productivity gains, as determined under Price
Commission policies.
(6) The procedures of the regulatory, agency provide for
reasonable opportunity for partic~pat~on by all
interested persons, or their representatives, in
its proceedings.
These cost-oriented increases fully comply with the above criteria. While
we have increased productivity on a per employee basis, this is reflected
in the data for the base year 1971.
In requesting as prompt action as possible by your honorable
body, we submit herewith the following seven exhi bi ts.
Exhibit 1: Original Cost Less Accumulated Provision for
Depreciation.
Exhibi t 2: Reproduction Cost New Less Adjustment for
Age and Condition.
Exhibit 3: Fair Value Rate Base.
Exhibit 4: Revenue, Expenses and Net Operating Income
Adjusted for Known Changes.
Exhibit 5: Detail of Adjustments of Revenue and Expenses.
Exhibit 6: Revenue Deficiency.
Exhibit 7: Proposed Residential and Commercial Rate
Ordinance.
Although Exhibit 6 indicates a revenue deficiency of 11.7% and we would
normally have requested 8I . increase of lO.a;" the rate submitted is the
same rate passed by the City of Fort Worth, Texas, on August 28, 1972,
which produced an increase of 5.4%.
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We respectfully present this epplicetion end request that you
place it on the agenda of your next open meeting for consideration and
passage of the proposed rate ordinance.
Date Presented
Sincerely yours,
LONE STAR GAS COMP~
By
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/
LONE STAR GAS COMPANY
FORT WORTH, TEXAS DISTRIBUTION SYSTEM
ORIGINAL COST LESS ACCU}IDLATED PROVISION FOR DEPRECIATION
AT DECEMBER 31, 1971
Line
No.
Distribution Plant
1 Land Rights
2 Structures and Improvements
3 Mains
4 Meas. & Reg. Sta. Equipment
5 Services
6 Meters
7 Meter Installations
8 House Regulators
9 House Regulator Installations
10 Total Distribution Plant
11 General Plant Allocated
12 Total
EXHIBIT 1
Original
Cost
Accumulated
Provision For
Depreciation
Original
Cost Less
Depreciation
$ 25 309 46 $ 9 803 01 $ 15 506 45
103 185 18 39 966 29 63 218 89
24 076 054 00 9 301 377 79 \. 14 774 676 21
199 832 05 76 345 61 .. 123 486 44
5 950 382 64 2 280 180 32 3 670 202 32
4 390 640 09 1 694 447 98 2 696 192 11
410 376 76 155 908 06 254 468 70
643 765 56 246 244 01 397 521 55
274 331 85 106 255 83 168 076 02
36 073 877 59 13 910 528 90 22 163 348 69
3 526 006 56 1 470 931 43 2 055 075 13
$39 599 884 15 $15 381 460 33 $24 218 423 82
LONE STAR GAS COMPANY
FORT WORTH, TEXAS DISTRIBUTION
FAIR VALUE RATE BASE
AT DECEMBER 31, 1971
Original Cost
Line Less Accum.
No. Provo For Depr.
Distribution Plant:
1 Land Rights
2 Structures and Improvements
3 Mains
4 Meas. & Reg. Sta. Equipment
5 Services
6 Meters
7 Meter Installations
8 House Regulators
9 House Regulator Installations
10 General Plant Allocated
11 Total Plant
12 Construction Work in Progress
13 Retirement Work in Progress
14 Contributions in Aid of Constr.
15 Working Capital
16 Total
$ 15 506 45
63 218 89
14 774 676 21
123 486 44
3 670 202 32
2 696 192 11
254 468 70
397 521 55
168 076 02
2 055 075 13
24 218 423 82
564 907 55
41 060 34
(663 462 68)
1 086 049 74
$25 246 978 77
EXHIBIT 3
SYSTEM
Reproduction
Cost New Less
Adjustment
Fair Value
$ 15 506 45 $ 15 506 45
63 218 89 63 218. 89
24 892 429 40 \, 18 821 777 49
268 609 57 .. 181 535 69
7 423 225 08 5 171 411 42
4 621 116 30 3 466 161 79
572 332 40 381 614 18
481 815 10 431 238 97
161 636 00 165 500 01
2 055 075 13 2 055 075 13
40 554 964 32 30 753 040 02
564 907 55 564 907 55
41 060 34 41 060 34
(398 077 61)
1 086 049 74 1 086 049 74
$42 246 981 95 $32 046 980 04
Line
No.
LONE STAR GAS COMPANY EXHIBIT 4
FORT WORTH, TEXAS DISTRIBUTION SYSTEM REV1sED
REVENUES, EXPENSES, NET INCOME AND ADJUSTMENTS FOR KNOWN CHANGES
TWELVE MONTHS ENDED DECEMBER 31, 1971
Per Books
Adjusted
Revenues
1 Residential Gas Sales
2 Commercial Gas Sales
3 Industrial Gas Sales
$ 12 696 923 48
1 815 218 77
7 618 153 23
$ 13 353 373 98
1 914 607 49
7 928 230 51
4 Total Gas Sales
5 Other Gas Revenues
22 130 295 48
355 650 31
23 196 211 98
355 650 31
6 Total Revenues
22 485 945 79
23 551 862 29
Expenses
Gas Purchased
7 Residential
8 Co~nercial
9 Industrial
10 Company Used
11 Unaccounted For
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
\ 5 547 932 37
· 866 367 21
6 134 986 99
21 038 36
1 055 239 99
5 116 293 78
798 682 42
5 979 948 35
20 940 81
1 027 927 90
Total Gas Purchased
Distribution Operations - Labor
Distribution Operations - S & E
Distribution Maintenance - Labor
Distribution Maintenance - S & E
Customer Accounts - Labor
Customer Accounts - S & E
Sales Expense - Labor
Sales Expense - S & E
Admin. and General - Labor
Admin. and General - S & E
Uncollectible Accounts
Taxes Other Than Federal Income
Merchandise Revenue - Net Gain
, Provision for Depreciation
12 943 793 26
585 384 44
267 539 10
534 344 17
313 450 99
737 412 94
396 850 80
270 821 08
215 329 30
429 304 52
627 900 11
122 583 46
1 984 232 66
26 239 42
974 406 13
13 625 564 92
603 976 25
267 539 10
551 314 94
313 450 99
760 833 17
410 891 93
279 422 36
215 329 30
437 916 37
629 929 97
122 583 46
2 035 857 55
26 239 42
974 406 13
Total Expenses(Excluding Federal Income Tax) 20 377 113 54
21 202 777 02
28 Net Income Before Federal Income Tax
2 108 832 25
2 349 085 27
537 819 13
653 140 59
29 Provision For Federal Income Tax
$ 1 571 013 12
$ 1 695 944 68
5.29%
30 Net Operating Income
31 Return on Rate Base of $ 32 046 980 04
4.90%
LONE STAR GAS COMPANY
FORT WORTH, TEXAS DISTRIBUTION SYSTEM
DETAIL OF ADJUSTMENTS TO REVENUES AND EXPENSES
EXHIB IT 5
REVISED
Adjustment No. 1 - Annualization of 6-1/2% General Wage Increase
Effective July 16, 1971
Distribution Operations - Labor
Distribution Maintenance - Labor
Customer Accounts - Labor
Sales Expense - Labor
Administrative & General - Labor
Administrative & General - Supplies and Expenses
Total Expenses
Provision for Federal Income Tax
Adjuitment to Net Income
Adjustment No. 2 - City Gate Gas Cost Adjustment
Residential Gas Purchased
Commercial Gas Purchased
Company Used Gas
Unaccounted For
Total Purchases
Provision for Federal Income Tax
Adjustment to Net Income
Adjustment No. 3 - Normalize Weather
Residential Gas Sales
Commercial Gas Sales
Total Gas Sales
Residential Gas Purchased
Commercial Gas Purchased
Taxes Other Than Federal Income
Provision for Federal Income Tax
Total Expenses and Federal Income Tax
Adjustment to Net Income
Adjustment No. 4 - Annualize Increase
May 16, 1971
Customer Accounts - Supplies and
Provision for Federal Income Tax
Adjustment to Net Income
in Postal Rate, Effective
Expenses
Adjustm~nt No.5 - Giving Effect to FICA Tax Base Increase
Effective January I, 1972
Taxes Other Than Federal Income
Provision for Federal Income Tax
Adjustment to Net Income
Adjustment No. 6 - HX Industrial Rate Increase
Industrial Gas Sales
Industrial Gas Purchased
Taxes Other Than Federal Income
Provision for Federal Income Tax
Total Expenses and Federal Income Tax
Adjustment to Net Income
$ 18 591 81
16 970 77
23 420 23
8 601 28
8 611 85
2 029 86
$ 78 225 80
( 37 548 38)
$( 40 677 42)
$ 143 593 54
22 423 62
97 55
27 31Ž 09
,.
$ 193 426 80
92 844 86
$( 100 581 94)
$ 656 450 50
99 388 72
$ 755 839 22
$ 288 045 05
45 261 17
44 428 23
181 490 29
$ 559 224 74
$ 196 614 48
$
(
$(
14 041 13
6 739 74)
7 301 39)
$
(
$(
2 983 61
1 432 13)
1 551 48)
$ 310 077 28
155 038 64
4 213 05
72 396 28
"$ 231 647 97
$ 78 429 31
LONE STAR GAS COHPANY
FORT WORTH, TEXAS DISTRIBUTION SYSTEH
REVENUE DEFICIENCY
Line
No.
1 Rate Base at December 31, 1971
2 Rate of Return
3 Net Operating Income Required (Line 1 X Line 2)
4 Adjusted Net Operating Income
5 Net Operating Income Deficiency (Line 3 Less Line 4)
6 Ratio Incremental Net Income to Incremental Revenue ~/
7 Increase in Revenue Required (Line 5 + Line 6)
8 Increase in Revenue Required as Per Cent of Residential and
Commercial Actual Revenue Excluding Air Conditioning Sales
9 Approximate Increase In Revenue Resulting From Proposed Rate
10
Increase in Revenue Resulting From Proposed Rate as Per Cent
of Residential and Commercial Revenue Excluding Air
Conditioning Sales
~/ Incremental Revenue
Incremental Occupation Tax
Incremental Street and Alley Rental
1.00000
.01878
.04000
Incremental Taxable Income
Incremental Federal Income Tax at 48%
.9lf¡22
.45179
Incremental Net Operating Income
.48943
EXHIBIT 6
REVISED
$ 32 046 980 04
X 8%
$ \2 563 758 40
1 695' 944 68
$ 867 813 72
.48943
$ 1 773 111 01
11. 70%
$ 1 515 600 87
10.00%