watchdog

Tuesday, November 13, 2007

November 13, 2007

A GAS RATE INCREASE AT THE MLGW. GIVE ME A BREAK!!!

The MLGW is planning a rate increase in the gas division but do they need a rate increase? I have been studying the monthly financial reports for January 2007 through May 2007. It shows that the current assets less current liabilities in the gas division have increased by $29 million dollars. They claim that they need a rate increase because they have lost money for the last two out of three years (2004, 2005 and 2006). They did lose money in 2004 and 2006 but not in 2005.

With their rate structure, it is hard to see how they can lose money. The residential rate structure is as follows.

• There is a monthly customer charge of $7.00 per month that you pay regardless of the amount of gas that you use.
• There is a margin block, 17.28 cents per ccf, for the amount of gas that you use. This along with the $7.00 per month charge is to cover administrative and overhead costs.
• Then there is a base gas cost of 54.64 cents per ccf which is an arbitrary figure for gas purchase cost.
• Then finally there is a purchased gas adjustment (PGA) charge to be added to the above base gas cost to cover what the gas actually costs the MLGW.

It is difficult to see how this monopoly can lose money but they managed to do that the last two years out of three. The problem is in management and the lack of real world experience in management. They need outside professional help and a President who has real world utility experience. However they have chosen to continue on as before and pass through their mistakes to their customers.

Look at the figures. They do not need a rate increase. The three MLGW divisions are sitting on an excess of current assets over current liabilities that amounted to $306 million dollars as of December 32, 2006 and which has increased to date. They are supposed to operate as a non profit operation with minimum cash on hand. Instead they are a honeypot of money which politicians love to tap.

As an example of a place to cut costs, look at the attached file showing the Corporate Communications Department jobs and salary schedule. The annual salary cost for these 33 people is $1.82 million with another $820,000 in overhead costs. Leading this group is Gale Jones Carson at a salary of $126,000 per year. Remember her. She used to work for the Mayor but decided to take the cushy job at the MLGW to increase her pension prospects.

The heating season is just starting so be prepared for an assault on your wallet when your MLGW bill arrives.

Click here to see what you brochures and communications from the MLGW are costing you

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