CLARKSVILLE, TN (CLARKSVILLE NOW) – In response to a $1 million deficit, the Clarksville Gas and Water Department is proposing raising – in many cases doubling – a number of customer rates, service fees and other charges.
CGW General Manager Mark Riggins told the City Council this week that volatile gas prices, inflation and system maintenance have hit the natural gas division’s budget hard.
$1 million deficit this fiscal year
As of this fiscal year, due to the combination of problems his department has run into, the gas division is operating at an approximately $1 million deficit, Riggins said at Thursday’s meeting. The deficit fluctuates in decline and regrowth over the course of the fiscal year, but CGW is not recovering at the level it should, according to Riggins.
The department is asking to increase service fees from $50 to $100 during business hours, then new service fees after hours from $100 to $200.
These fees have not been raised in over 15 years, and Riggins justified the increase by saying these fees would now cover the physical labor provided by his department, as well as the equipment used on a jobsite.
“I took an average service department employee that we have, about 15 years of service. They make $27 per hour, and if you add the 42% in benefits … you’re looking at $38.50 per hour. You multiply that by two and you’re at $77. Then, a truck … is $25 per hour. We’re already above $100 there, but we do take into account not all of these (jobs) take two hours.”
The new service fee is proposed to go from $100 to $200 for a couple of reasons. First, the employee is coming directly from their residence, and they receive standby pay and overtime pay, which is time and a half, according to Riggins.
The second is that the price increase will act as a deterrent.
Riggins told the council that his department hired the services of Jackson and Thorton to provide a rate study, which showed CGW is recovering only 90% of their expenses, but if they were to implement these price modifications, that percentage would rise to 97%.
State’s authority to raise rates
Councilperson Brian Zacharias pointed out that the city may not have much choice. “I think this is the most important part of what we were told today, and I don’t want anyone in the public to misunderstand: It says here that the Tennessee Board of Utilities and Regulations supports natural gas, water and wastewater public utility systems by ensuring they are financially self-supportive.”
Zacharias asked Riggins if he believes the natural gas division is financially self-supportive. Riggins said no.
Zacharias asked if there is a risk that the state could come in and impose even higher rates than requested.
Riggins said there’s a risk they could take away the city’s authority on the matter and raise the rates themselves.
Zacharius pointed out that the price hikes CGW is requesting are less than what was suggested by the consultants at Jackson and Thorton.
Timeline for price modifications
If approved by the City Council during the next meeting, on Thursday, Dec. 7, the majority of price modifications would go into effect July 1, 2024.
Riggins said his department decided on this timeline because they didn’t want to raise rates in the middle of wintertime when customers are using so much gas.
In addition to the new service fees being increased, other price modifications in the ordinance can be found in the full proposal here.
