Coookeville City Council will consider a new rate structure for the Gas Department when they meet Thursday.
Gas Department Director Jeff Mills unveiled the proposal during Monday’s work session. He said the change will help collect a larger percentage for fixed costs.
“The purpose of it is to get a more stable recovery of our rates,” Mills said. “Right now, our rates are pretty well based on weather. 75-percent of our income comes from November through March, so if we have a warm winter we don’t recover near what we need to recover.”
Mills said the new rate structure will increase the customer charge, but lower the base rates to compensate for that.
“The amount we increase the customer rate, it will lower the other, so it’s a net zero for the customer,” Mills said.
Under the proposal, the residential customer charge will go from $5 to $7, while the commercial charge increases from $6 to $15. The industrial charge will jump to $50 and the interruptible charge will go from $0 to $120. Mills said rate volumes will be lowered to offset the customer increases.
“It’s by no means a way to increase our revenue, but a way to spread out their (customer) revenue throughout the whole year so they’re not paying a big spike during the winter time,” Mills said. “And to recover some of our costs for billing and infrastructure that occurs each year, regardless of what we pull in off the winter months.”
The proposed structure would slightly increase the average residential summer bill, but lower the average winter bill $3.32 to $52.35.
If approved by city council, the change will take effect May 14. The city hasn’t restructured gas department rates since 2002.