City forming plan to recoup high gas costs

City forming plan to

recoup high gas costs

Ray Scherer

Hermann city officials began steps Monday night to institute a way for recovering funds that were spent in absorbing the high natural gas costs from mid-February.

The Hermann Board of Aldermen voted unanimously to have an ordinance drawn up to recover the monies in a special emergency fund that was intended for use in addressing natural gas line repairs. Instead, officials opted to absorb the gas spike associated with the polar vortex that invaded Hermann and much of the Midwest almost 3 1/2 months ago.

"Our gas prices went through the roof," Mayor Bruce Cox said in presenting the issue to the board. "It wasn't just us."

All told, more than $550,000 from the fund was used to prevent costs from being immediately passed on to Hermann residents. In the meantime, efforts have begun at all levels of government to investigate allegations of price gouging by natural gas traders. Yet no action or follow-up reports have yet surfaced that would give heart to cities hopeful of recovering their financial reserves during the crisis.

"That's not happened," said Cox. "We hope to build that fund back up."

While waiting on those developments, for which a legal timeline is currently very uncertain, the mayor said the city must move forward in addressing the spent funding. He told the board a three-year plan could be implemented for recouping the costs, resulting in slight increases for residential gas customers. Once the funds are recovered, the increases would cease, he added.

Cox said the range of impact to consumers would fall from $17 to $35 more per bill, based on households' sizes. He urged the board to take quick action, since the typical period of budget billing for utility costs is due to begin in July. He said the action would need to be written in the form of an ordinance.

"We have to bite the bullet. We have to rebuild that fund," he told the BOA.

City Administrator Trish Heaney said the city of Hermann's electric department did do better at absorbing its higher costs linked to the polar vortex, due in part to a more consistent load of energy being expended. But she said the electric department did have its share of extra expense from that most severe part of winter, incurring a total expense of $338,000 because of the vortex and its consequences. In essence, she said the electric department had the wherewithal to save some money for residents on energy costs traced to such a situation as the cold outbreak.

Heaney told the board that any legal victories on cities' behalf against the gas traders would enable the municipalities to return funds to customers, perhaps in the form of rate reductions. Inquiries by such entities as the Federal Energy Regulatory Commission are ongoing into the allegations, she told members, yet noting that it could be autumn before any developments occur in the matter.

Aldermen Jim Schirmer and Susan Lenger both advised the city could look into the prospects of energy assistance and grants to aid gas customers with their utility costs. Alderman David Faerber moved the city write the ordinance to recover the costs of spending from the emergency gas line fund, with Lenger seconding.

City Attorney David Politte will now work up language for the ordinance, which will be presented to the BOA for consideration at a future meeting.