Pontotoc Gas System plans to lower rates – once again

By Emily Le Coz/NEMS Daily Journal

TUPELO – Effective immediately, Pontotoc Gas System will waive its standard $11 minimum monthly fee and instead charge customers on usage alone.
Northern District Public Service Commissioner Brandon Presley told the Daily Journal on Friday that his office ordered the change upon learning of the minimum monthly fee.
“There is nothing on file, even back to 1977, authorizing that charge,” he said. “So all customers will see a reduction immediately and will be billed for their usage only until interim rates can be approved.”
Pontotoc Mayor Jeff Stafford confirmed the situation, and said the utility’s minimum bill now will be $7.14. That’s the most recent recorded price per MMBTU on file with the Public Service Commission.
“It can’t be less than that,” Stafford said, “because you can’t pay for half of one (MMBTU). It’s either one or none.”
If customers use no gas, they will be charged nothing.
It’s the second such rate change this week. On Monday, the city-owned utility agreed to lower its fee per MMBTU from $9.56 to $7.14 after Presley’s office found the rate had been set higher than the actual cost of operating.
Presley’s office had received a tip the utility was overcharging customers. Upon review, he found the gas system set its rates higher than its actual cost of business, which it’s not supposed to do, Presley said.
“By law, they can only charge what they have evidenced is their cost,” Presley told the Daily Journal on Wednesday.
Until that cost can be determined, the city and the PSC agreed to set the rate at the most recent figure on file at the PSC, which is $7.14 per MMBTU. The utility must submit a new rate plan before that amount will change.
Stafford said the utility didn’t intentionally overcharge; it set its rates annually based on market fluctuations. He and his team are working on the new plan but that it could take several months to complete.
“We haven’t done one since 1977,” he said. “I’ve never even seen one before.”
In the meantime, the utility will earn less revenue than it had anticipated during the already lean summer months. Without a healthy cash flow, Stafford said, the city could struggle to afford gas when demand peaks again in the fall.
But that’s a worst-case scenario, he said. Pontotoc Gas System has $3.3 million in the bank and should be financially stable during the rate transition.
Although Presley has jurisdiction only on the utility’s customers outside the city limits, Stafford said all 6,000 gas users on the system will see the new rates.
“We don’t discriminate,” he said. “Inside, outside, we always charge the same.”

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