Pipeline slide hikes city gas costs|[4/26/06]
Published 12:00 am Wednesday, April 26, 2006
Along with spending more for natural gas, the City of Vicksburg is spending thousands extra each month because one of two pipelines into the system isn’t accessible.
“We actually have gas purchased (for delivery through) the pipeline on the south side of town, but we can’t get to that because of the slide by the railroad,” said Paul Rogers, the city’s strategic planner.
Kansas City Southern cut into an embankment near Pearl Street in a track-widening project believed to have caused erosion over the last four months.
Rogers said KCS is working to repair the slide, which has made the south pipeline unusable, but the city is paying about $14,000 extra to reroute the gas to the city’s network from the north pipeline, which enters from Waltersville.
He also said the city is continuing to pay $32,000 a month to reserve the south line, even while it is capped. Both pipelines may be operating again by the end of May, he said.
Calls to KCS were not returned this morning, but Mayor Laurence Leyens said he was told KCS would be working on the problem this week. He also said the railroad is aware of the extra expense the city is taking on because of the problem.
“We’ll be filing a claim against them for the additional costs we’ve incurred,” Leyens said.
The extra payments are particularly burdensome this year due to rate increases the city-owned utility has been passing through to customers almost monthly since August.
On Tuesday, officials approved depositing $2.5 million into the gas fund. Rogers said the money will come from customer payments between October 2005 and October 2006 and will go toward the purchase of more gas and to repay the city for what it has already spent.
In April 2005, city residents were paying $8.15 per thousand cubic feet for natural gas. That rate is now $19.20.
Each rate increase has been amortized over 12 months as a fuel price adjustment, reflecting the city’s cost.
Rogers said in the 2005-2006 budget, the city allotted $5.7 million for the purchase of gas. Already this year the city has spent $6.7 million on gas purchases, Rogers said, and there are still more than four months left in the fiscal year.
“We estimate gas in September,” Rogers said. “We had no idea gas prices would go this wild.”
Leyens said during the board meeting that the purchase of gas can bankrupt a city.
“I want people to understand we do not make any money on gas,” Leyens said.
The mayor has said he is against subsidizing natural gas purchases from the general fund because the subsidy comes from property taxes and he is not in favor of charging property owners for the natural gas that renters use. But, he said, a subsidy will remain in effect this year.
Rogers said it will be a smaller subsidy than last year, however. In the 2004-2005 fiscal year, the city subsidized the cost of natural gas with $1.8 million. Rogers said he expects this year’s subsidy to be between $800,000 and $1 million.