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12.1.06 M.U.D. gas, water rate increase on agenda Metropolitan Utilities District is proposing a 5 percent increase in water rates and the equivalent of a 3.1 percent increase in residential natural gas bills. The board is scheduled to vote on the increases Wednesday following a public hearing. If approved, the new rates will go into effect in January. With these increases, the average residential customer would pay about $38 more a year on a gas and water bill of about $1,100. Ron Bucher, M.U.D. senior vice president, said the water increase is needed to pay for the water plant and wells that M.U.D. is building along the Douglas-Saunders County line. The gas rate increase is needed to offset losses from a string of warm winters and to fund improvements in the district's system, he said. The water increase applies to the rate that customers pay for water use. It will account for about $9 of the estimated $38 increase in the average residential customer's annual bill. This will be the third time in six years that M.U.D. has increased water rates. Additional increases are likely in future years as the utility pays off the new plant, Bucher said. Gas rates would increase in two areas under the proposal being considered. First, the utility would increase its $10 monthly service fee by $2, a 20 percent increase. This will be the fourth time in six years that this fee has increased. Second, M.U.D. is increasing by 4 percent the charge it attaches to the use of gas. This particular fee hasn't increased since 1992. Together, these two changes result in an anticipated actual increase in residential gas bills of only 3.1 percent. That's because these charges make up a small portion of the total gas bill. The wholesale price of natural gas makes up the largest portion of the bill, and it is something that M.U.D. doesn't control. High wholesale prices are the primary reason people have been paying so much on their winter heating bills. Like other utilities, M.U.D. is transferring more of its fixed costs into its monthly service fee. If the M.U.D. board approves this increase, residential customers will pay a monthly service fee of $12 -- double what it was in 2001. Aquila and Kinder Morgan, the state's other major gas utilities, have announced increases in their monthly fees. Kinder Morgan is proposing monthly service fees of $13.50 to $15.50. Aquila is proposing $16. Utilities are transferring more costs into this flat monthly fee because it is more reliable than the gas use fee as a source of revenue. One reason is that the past seven years have been warmer than normal, driving down gas use. Bucher estimates that the past seven mild winters have cost M.U.D. about $25 million in net revenue. Combined, the water and gas rate increases are projected to generate an extra $9.3 million toward what is projected to be a $753.9 million budget for 2007. Next year's budget is actually lower than the current $764.3 million budget, largely because the district will be spending less in 2007 on construction of the new plant and well field. The plant is scheduled to go on line in 2008. |
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