Addleton proposing higher gas rates in revised budget
Cairo city officials are now considering an increase in the cost of city gas service in addition to increases in water and sewer rates in the proposed 2016-2017 operating budget.
City leaders continue to tweak the budget and on Monday night Cairo City Manager Chris Addleton shared his recommended rate hikes in the gas department.
Addleton is proposing the base rate for gas for residential customers increase from $6.65 per month to $10 per month and for commercial customers from $6.65 per month to $12.50 per month.
“We haven’t had an increase in the base rate in many, many years. With these proposed rates we are trying to get close to covering 50 percent of our fixed costs, which include a lot of regulatory requirements,” Addleton said.
The increased revenue from the base rate hike is projected to be $69,000 annually.
“We’ve been low for too long. We can do it gradually over a few years, but we need to cover our fixed costs and go after more gas customers,” Addleton said.
Currently, the city only has 1,306 residential gas customers and 237 commercial customers for a total of 1,543.
“Basically, we need a big gas user,” Councilman Ernest Cloud commented.
Addleton agreed and said that one that uses gas 24 hours per day and seven days per week.
At the council meeting two weeks ago, Councilman James H. (Jimmy) Douglas said the city either needs to get into the gas business by attracting more customers and doing more marketing of gas or get out of the gas business. Douglas was not present Monday night for the discussions of the proposed increase in gas rates.
However, Councilman Jerry Cox had plenty of questions for the city manager regarding proposed investments in new automated meters and increased rates for water and sewer.
Addleton is proposing spending $1,189,645 for new water meters; $500,000 on new gas meters; and $500,000 on new electric meters, which can be read automatically and remotely thus ending the need for an estimated 2.5 full-time meter reader positions.
The city manager is planning to pay for the water meters with a $713,787 loan from the Georgia Environmental Finance Authority and a $475,858 GEFA grant.
On top of the investment in new meters, the city is investing in a new water plant at the Cairo Municipal Airport and that is being funded in part by a GEFA loan. The city manager has bumped up water and sewer rates over the last three years to generate approximately $300,000 in new revenue to service the debt on the new water plant.
Councilman Cox asked if the investment in the new meters was not made would that free up sufficient revenue to cover the water plant debt and not require increasing water and sewer rates.
In addition to a third straight year of increasing the base rate, the city manager is also proposing an increase in the cost per thousand gallons of water, which is a 6 to 7 percent increase over current rates.
Addleton said that even with the proposed increases the city’s rates are about average when compared to neighboring communities and like-sized cities.
“That’s a good guide, but not a reason to increase the rates,” Cox said.
Addleton agreed, but noted that his reasoning for increasing the rates was to cover the debt service on the new water plant, which has arsenic treatment capabilities.
Cox also asked the city manager to justify the investment in the new meters. In addition to saving approximately $100,000 in operating costs annually, the city manager said that the new meters would allow the utilities department to operate more efficiently and could improve customer service issues with the enhanced technology.
Addleton said the increased rates had nothing to do with the investment in the new meters. “I think we would be missing a big opportunity if we don’t invest in the new meters,” he said.
“My only concern is that we make sure we can afford our wants and this is a want not a need,” Cox said of the new meters. “We have no choice but to build the water plant.”
The District 5 councilman also questioned what was the life of the new meters before they would have to be upgraded.
“That’s a good question to be addressed at a later date,” the city manager said. Addleton committed to having lots of information justifying the investment in meters before asking the council for final approval of the budget.
A public hearing on the proposed budget was held Monday night, but no citizens attended to voice concerns or ask questions concerning the budget.
A final vote on the budget is set for June 23. The city manager is asking for the council to make its final revisions by June 10.