Gas company feels the heat at hearing

The company has applied to the commission for an increase in its base rate and distribution charge, rates regulated by the commission.

"I don't think I'm entitled to anything," said Tom Kiplinger, a McCook citizen who attended the meeting at the Senior Heritage Center. "The increase is astronomical ... there's no real justification for any of this."

If approved, the increase would net SourceGas an additional $9.3 million and would boost rates for residential customers from $10 to $15, for small commercial users, from $12 to $17 and large commercial users, $22 to $110.

It would also apply to therm charge, which is assessed based on the customer's usage. Residential customers will be assessed a rate of 50 cents per therm up to 20 therms, which is an increase of 15 cents. After that, the rate per therm goes down from about $.1086 cents to .1084 cents.

The increases do not include the cost of natural gas, which makes up about 65 percent of the bill.

Those at the meeting included SourceGas executives, attorney Jack Shultz, the public advocate for rate users, concerned citizens and Public Service Commissioner Jerry Vap of McCook.

Dan Watson, SourceGas CEO, said that the company serves mainly rural customers, in three states and 183 communities. SourceGas is experiencing higher costs of infrastructure improvements because of inflation and higher taxes and at the same time, falling revenues due to declining rural population and less usage from customers.

The cost of doing business has gone up and SourceGas has determined that it must adjust its rates in order to keep pace with the affects of lower revenues and higher costs, he said.

SourceGas is also asking for five "adjustment mechanisms," one of which would adjust rates according to weather conditions and avoid the need for big increases.

Attorney Jack Shultz, Public Advocate for rate users, said although the rate increase does not affect actual gas used, which is two-thirds of the gas bill, customers would still end up paying more if gas goes up.

He also questioned if the three rate users being affected by the increase could be subsidizing by other costs or losses of the company, such as customer services calls regarding repairing or selling equipment. He pointed out that large agricultural companies and high volume, high transportation customers that contract directly with SourceGas will be seeing no increases.

He maintained that the costs should be born by stockholders and not rate payers and also questioned the "adjustment mechanisms" SourceGas is asking for, as revenue would never fall below an pre-determined level.

Citizens attending the meeting also spoke out against the increase and several complained about the company's billing system.

One woman complained that she has repeatedly called a customer service center with a problem to no avail.

A SourceGas official said the company was aware problems in the billing system and that it's being addressed.

Another complaint about the billing system came from a representative of Community Hospital of McCook.

He spoke of 18 billing issues on 15 accounts.

"A utility should not be the most complicated billing issue, but it is," he said.

Still another citizen spoke of the tough economic times, with no cost of living increases for those on Social Security and wondered about top 10 CEO salaries of SourceGas.

Watson answered that as SourseGas is a private company, salaries are not public but that salaries are comparable to the market workplace and among the lowest.

"We're not ashamed of any of the salaries," he said. The 2.5 percent increase in salaries was essential in attracting and keeping certain positions in the company, such as welders.

A hearing for the increase is scheduled to begin Dec. 14 and the Commission will decide if it is just and reasonable, Vap said, with a ruling expected around february or March. Both SourceGas and the Public Advocate can appeal that ruling in District Court, in which case the issue would take longer to resolve.

Beginning Oct. 1, SourceGas charged pro-rated higher rates for distribution charges. State law permits "interim rates" to be charged to customers while the commission evaluates a rate proposal. Depending on the outcome of the case, interim rates may be credited back to customers.

The last increase in the distribution rates was approved in 2006 and went into effect in 2007.