AGENDA MEMORANDUM

Meeting Date:           May 14, 2007

From:                          Bill Pfeilsticker, Finance Director

Subject:                      Ordinance amending Section 22-246 - Gas sService rRate sSchedule

Staff Recommendation:

Staff recommends approval of the Ordinance amending Section 22-246  - Gas sService rRate Sschedule to increase Customer Charge and Delivery Charge for all classes.

Analysis:

Based on recommendations received in the electric and gas rate study performed in 2004, the City implemented an automatic annual rate adjustment based on the Gross Domestic Products Implicit Price Deflator Index (GDP) provided by the Bureau of Economic Analysis. Cost increases for raw materials have caused prices to outpace this index for renewal and replacement items such as steel pipe, fittings, meters and petroleum based commodities. In addition, salaries and other operating costs have increased at rates higher than the inflation index to keep pace with inflated economy and competition. Management has begun research to determine if the GDP index is the appropriate index to be using for our needs.

Staff has determined that an immediate increase of 8% for all rate classes will provide correction to the rate compression suffered as a result of the deficiency between the GDP index and actual inflation. The 8% increase will only affect the customer charge and delivery charge. Therefore, the average customer will experience a net increase of 2.5% to 3.2%.

All utility rates will continue to be adjusted annually for inflation on October 1 of each year pursuant to Section 22-166.

There is no requirement to present this rate change to the Public Service Commission.

City staff will recommend by a later resolution that the City ccommission a new rate study for gas and electric rates to correct the deficiency between energy rates compared to wholesale cost for energy, distribution expenses, and renewal and replacement costs.

Options:

1.  Adopt the ordinance to amend Section 22-146 Gas rate schedule as presented; or,

2.  Such alternative action as the Commission may deem appropriate

Gas Rate Comparison
May 6, 2007
Prepared By: Finance Department
		Current Rates		Proposed Rates
		Rate	Cost	Rate	Cost	Change
Residential (Average 30 therms per month)
	City of Leesburg
	Customer Charge	6.28	6.28	6.78	6.78
	Delivery Charge	0.430000	12.90	0.464400	13.93
	Fuel Adjustment Charge	0.912667	27.38	0.912667	27.38
	Energy Conservation Adjustment	0.050000	1.50	0.050000	1.50
			48.06		49.59	3.2%
Commercial (Average 500 therms per month)
	City of Leesburg
	Customer Charge	9.42	9.42	10.17	10.17
	Delivery Charge	0.430000	215.00	0.464400	232.20
	Fuel Adjustment Charge	0.912667	456.33	0.912667	456.33
	Energy Conservation Adjustment	0.050000	25.00	0.050000	25.00
			705.75		723.70	2.5%
Residential Rate Comparison
	Florida Municipalities:
	City of Leesburg (including the increase)				$  49.46
	Energy Services of Pensacola				65.29
	City of Gainesville				41.65
	City of Tallahassee				50.94
	Regulated Natural Gas Companies:
	City Gas Company of Florida [2]				$  52.16
	Peoples Gas System, Inc. [3]				53.41
	St. Joe Natural Gas Company				38.83
Commercial Rate Comparison
	Florida Municipalities:
	City of Leesburg (including the increase)				$723.70
	Energy Services of Pensacola				993.25
	City of Gainesville				836.48
	City of Tallahassee				765.46
	Regulated Natural Gas Companies:
	City Gas Company of Florida				$ 713.66
	Peoples Gas System, Inc.				679.45
	St. Joe Natural Gas Company				450.11
[2]	City Gas Company of Fla > Brevard Co on central east coast and in Miami Dade an Broward Co.
[3]	Peoples Gas > Florida including Orlando, tampaTampa, Lakeland, Jacksonville, Kissimmee, and St Petersburg

Fiscal Impact: 

This rate change will result in an additional $265,915 in FY2008.

Submission Date and Time:    5/11/2007 1:48 PM5/9/2007 9:50 AM____

Department: ______________________ Prepared by:  ______________________                      Attachments:         Yes____   No ______ Advertised:   ____Not Required ______ Dates:   __________________________                      Attorney Review :       Yes___  No ____ _________________________________            Revised 6/10/04

Reviewed by: Dept. Head ________ Finance  Dept. __________________                                    Deputy C.M. ___________________                                          Submitted by: City Manager ___________________

Account No. _________________ Project No. ___________________ WF No. ______________________ Budget  ______________________ Available _____________________