January 7, 2008
THE NEW MLGW GAS RATE SCHEDULE AND A $12.6 MILLION CHANGE IN THEIR FINANCIAL STATEMENTS
I have been questioning for some time the MLGW as to how they managed to lose money in the gas division in 2004, 2006 and 2007 when they have the ability to add the gas costs to your bill regardless of what they pay for the gas. I got no satisfactory answer to this question but it is no coincidence that these years were before an election and the gas rate increase request came after the election. Also I have been asking them for a further explanation of the recent gas rate increase that is going into effect. I just met with them and got the following answers.
The new gas rate for residential customers is made up in the following way. Block 1 is a customer charge that you pay each month regardless of whether you use any gas at all. Block 2 is a MLGW charge per ccf (hundred cubic feet) of gas used to cover their salaries, overhead, maintenance, depreciation, payment to the City in lieu of taxes and a small profit. Block 3 is a charge per ccf of gas used and is a guess as to the average cost of gas for the year that the division believes they can maintain with good purchasing habits and taking into account the expected national market for natural gas. Block 4 is the PGA (purchased gas adjustment) that can be a positive or a negative figure depending on what they actually pay for the gas used.
Before the recent gas rate increase these residential figures were as shown below.
Block 1 $7.00/month regardless of how much gas you use
Block 2 .1728/ccf The MLGW margin block
Block 3 .5464/ccf The MLGW estimate of what they will pay per ccf for gas
Block 4 PGA/ccf the amount over or below block 3 that they actually paid for the gas
The new rate is as follows
Block 1 $10.00/month regardless of how much gas you use
Block 2 .222/ccf for the first 100 ccf used
Block 2 .132/ccf for all gas used over 100ccf
Block 3 .859/ccf The MLGW estimate of what they will pay per ccf for gas
Block 4 PGA/ccf the amount over or below block 3 that they actually paid for the gas
The MLGW has estimated that this increase will bring in $29 million dollars extra in 2008 of which $17 million will be from residential customers.
The MLGW admitted that they have made a mistake in the financial reports for 2005 and 2006 and that they will be adjusting the 2005 net income down from $7.779 million to $3.713 million and will be adjusting the 2006 net income up from a loss of $12.599 million to a loss of $8.533 million. This is a $12.246 million dollar swing between the two years. The reason, they state, is that they incorrectly handled the accrued billings between December and January.
THE NEW MLGW GAS RATE SCHEDULE AND A $12.6 MILLION CHANGE IN THEIR FINANCIAL STATEMENTS
I have been questioning for some time the MLGW as to how they managed to lose money in the gas division in 2004, 2006 and 2007 when they have the ability to add the gas costs to your bill regardless of what they pay for the gas. I got no satisfactory answer to this question but it is no coincidence that these years were before an election and the gas rate increase request came after the election. Also I have been asking them for a further explanation of the recent gas rate increase that is going into effect. I just met with them and got the following answers.
The new gas rate for residential customers is made up in the following way. Block 1 is a customer charge that you pay each month regardless of whether you use any gas at all. Block 2 is a MLGW charge per ccf (hundred cubic feet) of gas used to cover their salaries, overhead, maintenance, depreciation, payment to the City in lieu of taxes and a small profit. Block 3 is a charge per ccf of gas used and is a guess as to the average cost of gas for the year that the division believes they can maintain with good purchasing habits and taking into account the expected national market for natural gas. Block 4 is the PGA (purchased gas adjustment) that can be a positive or a negative figure depending on what they actually pay for the gas used.
Before the recent gas rate increase these residential figures were as shown below.
Block 1 $7.00/month regardless of how much gas you use
Block 2 .1728/ccf The MLGW margin block
Block 3 .5464/ccf The MLGW estimate of what they will pay per ccf for gas
Block 4 PGA/ccf the amount over or below block 3 that they actually paid for the gas
The new rate is as follows
Block 1 $10.00/month regardless of how much gas you use
Block 2 .222/ccf for the first 100 ccf used
Block 2 .132/ccf for all gas used over 100ccf
Block 3 .859/ccf The MLGW estimate of what they will pay per ccf for gas
Block 4 PGA/ccf the amount over or below block 3 that they actually paid for the gas
The MLGW has estimated that this increase will bring in $29 million dollars extra in 2008 of which $17 million will be from residential customers.
The MLGW admitted that they have made a mistake in the financial reports for 2005 and 2006 and that they will be adjusting the 2005 net income down from $7.779 million to $3.713 million and will be adjusting the 2006 net income up from a loss of $12.599 million to a loss of $8.533 million. This is a $12.246 million dollar swing between the two years. The reason, they state, is that they incorrectly handled the accrued billings between December and January.
posted by watchdog at
7:56 AM
1 Comments:
Very good info. I have ben looking into this gas rate increase as well and I have been ver confused on how they are calling an increase from $0.7192 per ccf to $1.081 per ccf a 6.8% increase. Of course this does not even take into account the PGA rider. Is MLGW lying to the public? Would that not be a 50% increas per ccf? Please tell me if I am missing something here.
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Anonymous, at 8:10 PM
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