Gas Works briefing: adopted 5.25% rate increase, plan to hire internal crews to accelerate pipe work

Richmond Gas Works staff told the Governmental Operations standing committee that adopted rate adjustments and federal grants will be central to rebuilding capital reserves and accelerating pipeline replacement and repairs.

Dan Reifenberg, who led the Gas Works presentation, said the utility serves roughly 28,000 customer meters, manages nearly 2,000 miles of main and about 1,000 miles of service pipe across city and county localities, and is projecting revenue growth under recently adopted rates. He described a financial plan covering 2026–2030 that assumes the rates council adopted (a 5.25% increase described in the presentation) and federal PHMSA grants. "With the adopted rates, we hope to get to the 1.52 [debt coverage] to cover the debt," Reifenberg said.

Staffing and capital plan: Reifenberg outlined a proposal to move some contracted construction work in-house. The finance model assumes starting two internal four-person crews per year and ramping to 18 crews over nine years; the presentation said internal crews become cost-effective by the second year because initial equipment purchase is the primary upfront expense. Presentation slides showed a one-time equipment cost in year one for internal crews and an ongoing lower annual cost thereafter when compared to contracting for equivalent work.

Grants and reserves: Reifenberg said Gas Works has won PHMSA grants covering roughly $65 million (presentation reference) and that the utility's financial policy targets include a $30 million operating reserve and a capital-reserve build-up. The presentation noted limited current liquidity and increased operating costs from renewed contracts.

Council concerns and clarification requests: Council members asked about distribution of rate increases and the utility's reserve priorities versus capital investment. One council member said the size of the proposed operating reserves felt "tone deaf" to ratepayers and asked why reserves were prioritized over capital investment. Reifenberg and staff responded that consolidated revenue bonds historically cover multiple utilities and that reserve targets support favorable bond ratings and long-term stability. Council Member Gibson asked whether the 5.25% adopted rate applies annually; Reifenberg confirmed the presentation reflected the adopted rate assumptions in the plan.

Operations and system priorities: Reifenberg described the remaining replacement backlog for cast and ductile iron and noted federal funding and staffing are limiting factors in accelerating replacements. He said there are not enough qualified contractor crews regionally, and the internal-crew plan is intended to increase in-house capacity over time. On pipeline pairing or abandonment, staff said they will not leave pipes that serve customers in place without maintenance; unused mains without customers can be abandoned.

Ending: Council members asked for additional details to review return-on-investment assumptions, the cost-of-service calculations that trigger customer contributions for extensions, and the utility's long-range master plan for gas given changing energy-use trends. Reifenberg said the utility will provide details on cost-of-service methodology and follow up on questions about bond structuring and reserve targets.