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Consultant recommends sizable gas-rate increase; average residential bill could rise about $20 monthly
Summary
A cost-of-service study presented by Magnolia River Services found Elizabethtown's base gas rates have not kept pace with rising non-gas operating and capital costs and recommended a multi-scenario rate change; the consultant favored a middle scenario that would raise a typical residential customer's bill by roughly $19'$23 per month (about $20).
Elizabethtown'A consultant told council on Sept. 22 that the city'owned gas utility is not recovering its full costs under current base rates and recommended increasing facility charges and base rates to restore positive cash flow.
Scott Heath of Magnolia River Services, who described his firm's long relationship with the city, presented the findings of a cost-of-service study and three rate scenarios. Heath said base rates had not materially changed since 2012 while non-gas operating costs and recent capital spending increased the utility's operating budget from roughly $2.5 million (2009 equivalent) to about $4.2 million in fiscal 2024. He told council the system ran cash-flow deficits ranging from roughly $927,000 to over $3 million in recent years and that the fund balance had been drawn down.
Heath described how the study allocated operating expenses across customer classes and used a rate model to test scenarios. He said the consulting team recommended raising monthly facility charges (for example, general/heat-rate customers from $6 to $10) and increasing base-rate dollars per MCF. "Even with the higher recommended rates, they're still gonna be in a lower...portion of rates around the state," Heath said, adding that the recommended Scenario 2 would restore cash flow and begin rebuilding reserves.
Heath summarized customer impacts for a typical general-rate (residential and small commercial) customer: scenario 1 would raise the typical bill by about $19.80 per month; scenario 2 by about $21.50; and scenario 3 by about $23.16. He said the typical residential impact across the mid-range scenario would be "about $20 a month."
Council members asked whether the city could grow its customer base to absorb costs and reduce per-customer increases. Heath said he was surprised the gas customer base had not grown with the community and suggested the city could explore targeted outreach to developers or industrial recruitment but cautioned such efforts may be limited by market dynamics.
What comes next: the presentation was informational; council did not take an immediate vote on rate changes. Staff will use the consultant's scenarios to prepare formal rate ordinances or utility-rate resolutions and public notice for any proposed changes.
