By Moses Leos III
A “major” rate increase proposed by a natural gas company could drastically affect the average monthly bill for nearly 1,500 Hays County residents.
The rate increase request, made by Texas Gas Services (TGS), has prompted several area cities to pass resolutions to suspend rate increases for the time being.
The cities of Dripping Springs and Kyle joined Austin, Westlake and other local municipalities in enacting rate suspension resolutions as a response to TGS.
In June, TGS made an official filing with the Texas Railroad Commission to increase rates for all customers in the Central Texas Service Area, according to an emailed response from Christina Penders, TGS communications manager. The TGS rate case is the company’s first since 2009.
The CTSA includes approximately 430 households in Buda and Kyle, and roughly 1,000 homes in Dripping Springs.
TGS requested a $4.49 increase for residential customers who live in city limits where TGS provides service. Residential customers in Central Texas outside city limits could see a nearly $11 increase in their monthly bill.
Customers in Buda and Kyle could see a 23 percent jump in their monthly bills, while Dripping Springs customers would see their bills rise by 33 percent.
Commercial customers in Central Texas would see their monthly bills go down by $3 per month.
One of the main reasons for TGS’s proposed increase is not enough revenue is collected from customers for infrastructure improvements, according to Penders.
TGS has filed for yearly incremental gas rate increases through the Gas Reliability Infrastructure Program (GRIP), which allows the company to recover funds to replace pipeline and related infrastructure over a five-year period.
Funds do not go to operation and maintenance for the pipeline or cost of the gas, which is passed to customers, according to Penders.
After five years, TGS must file a rate case, which provides them a way to “make comprehensive changes to all customers.” That includes residential, commercial, industrial, transport and public authorities.
“As the company has replaced pipe and made safety-related investments, the revenues collected from customers have not been enough to cover the costs related to those important and necessary investments. This is a major factor in the company’s increase of rates,” according to Penders.
She added in the email that commercial customer costs were not rising because of a determination and cost causation study, which found “commercial customers are already paying their share of costs.”
Cities are now reviewing the rate request. Penders said in her email that TGS is “working with them to reach an appropriate resolution which balances the needs of our customers and shareholders.”
Jerry Hendrix, Kyle chief of staff, said cities are able to review the rate case request for any possible discrepancies on how it’s calculated, which TGS could adjust.
He said Kyle joins other area cities in working with a law firm that “handles that review for us,” as it’s a complicated process.
But Hendrix said cities are unable to dictate what the rate increase will be. If cities deny the increase, it would place them in a rate case against the entity.
“The bad thing about that is if we challenge their rate, we have to pay our own legal expenses to do that, which is expensive,” Hendrix said. He added gas utility companies can pass litigation costs to defend their rate case to rate payers.
“There’s nothing a city can do can do with GRIP rate increase, or the rate case itself,” Hendrix said, who later added, “State law supports gas companies on these things. Our hands are tied.”
