By Emily Le Coz/NEMS Daily Journal
TUPELO – At least a half dozen city-owned gas utilities are charging customers without the approval of the Mississippi Public Service Commission, according to an investigation by Brandon Presley, who represents the agency’s northern district.
Prompted by last week’s discovery that the Pontotoc Gas System hadn’t filed its rates with the PSC since 1977, Presley looked at all city-run natural gas systems under his jurisdiction and found many out of compliance. Utilities must seek PSC approval for rates charged to customers at least one mile outside the city limits, Presley said.
In Pontotoc’s case, Presley ordered the utility to cease charging its $9.56 per unit fee and revert back to the latest price update on file, submitted more than a decade ago: $7.14.
Other cities – including Walnut, Booneville and Batesville – had never filed rates with the commission and will be notified of their non-compliance, Presley said. They’ll have until June 15 to submit temporary rates, which the commission can vote on that month.
The commission also will send questionnaires to all city-owned gas utilities requesting a current customer count and rate schedule that will be compared to actual filings.
“Once we delved into this,” Presley said, “it was a little bit bigger than we had expected.”
Most customer gas rates fluctuate monthly and are set by city utilities according to a variety of factors, including commodity market rates, availability of stored gas, pipeline fees, supply management fees and other costs associated with operation and maintenance.
“At New Albany Light Gas amp& Water, we track the price of natural gas and adjust our end user rates as we realize changes in the markets,” said its general manager Bill Mattox. “The end user rate can go up or down during the year as a result of commodity price changes,” along with other factors.
A historical snapshot of gas rates from six Northeast Mississippi utilities revealed prices usually differed from each other by only a few dollars and had ebbed and flowed along the same general curve. They started out low in the early part of the previous decade, spiked after Hurricanes Katrina and Rita disrupted gas production, and eased with the increased use of hydraulic fracturing – fracking – to extract gas from previously untapped areas.
“A lot of people are just now getting out of that hurricane deal,” said Holly Springs Electric, Gas amp& Water Department General Manager Don Hollingsworth, adding that “natural gas will be cheap until the EPA makes a ruling on the fracking.”
Holly Springs’ current rate per MCF – the standard unit of gas – is $9.47. That’s nine cents cheaper than Pontotoc’s rate prior to the commission’s forced decrease, and it’s somewhere in the middle range what comparable systems charge – anywhere from $6.71 to $12.54, according to fees obtained by the Daily Journal.
Facing allegations that he inflated prices behind the commission’s back, Pontotoc Mayor Jeff Stafford last week claimed his city’s rates ranked lowest in the region. While that proved inaccurate, the city’s rates rarely ranked highest among comparable systems and often placed near the low end of the scale.
“For (Presley) to say thousands of people have been overcharged, that’s unfair,” Stafford said. “I can’t even get a free cup of coffee in Pontotoc. You’d think I was driving a Hummer with spinners on it.”
Stafford also said the commission shares some of the blame for the current state of affairs.
“The last time we did a rate case was the year Brandon Presley was born, so it’s not his fault, but it’s not all our fault either,” Stafford said. “We both inherited this mess. But we have never gotten an email or a memo or a letter saying, ‘Hey, where is your rate case?’”
With the letters going out this week, however, Presley said he intends to remedy that oversight.