COVINGTON - City of Covington utility and solid waste customers could see increases in gas and water rates and garbage collection fees soon.
The City Council approved a first reading of ordinances to increase rates for all those services Monday night.
The proposed gas rate increase is the first since 2004, according to Utilities Director Bill Meecham.
In an April 27 memo to the mayor and council, Meecham stated business costs have increased as materials, labor and contract services have risen in price.
"The city needs to restore its income from natural gas sales to a level that provides a reasonable margin," he said.
The proposed rate change would be from $6.55 per MCF to $7.05 per MCF. An MCF is a thousand cubic feet of gas. Gas meters typically read in cubic feet or a multiple of cubic feet.
The residential base rate would increase from $9.50 to $11.95. The small commercial base rate would increase from $11 to $13.50, the medium commercial base rate from $25 to $27.50 and the large commercial base rate from $50 to $55.
Meecham said a transfer is typically made from the gas fund to the city's general fund "consisting of the revenue collected above the cost of the gas and the cost for operation of the department."
"In past years, a margin of $2 million or more wasn't uncommon. When there are a number of expensive projects, such as the relocation of gas mains due to highway projects, there is less margin and a transfer out could result in a deficit for that year. You can also have less of a margin if there are a large number of new customers for whom facilities must be provided. In that case, you might have a tight year when the gas lines are installed, but additional revenue in future years once the customers materialize," he said.
Mayor Kim Carter said that gas rates in the city, unlike electric rates, are some of the lowest in the state for natural gas providers.
"We are historically one of the lowest rates in the state, so we're trying to make this balance out," she said.
The first reading was passed unanimously.
The proposed water rate and solid waste fee increases stem from an increase in charges from the county, Carter said.
County officials notified the city they plan to increase the wholesale water rate from $1.51 per 1,000 gallons to $1.59 per 1,000 gallons.
As a result, Public Works Director Billy Bouchillon recommended the council increase the city's base rates as follows: the minimum charge for the first 3,000 gallons of usage would increase from $13.55 to $13.80; for 3,001 gallons to 50,000 gallons the rate would increase from $4.50 to $4.58 per 1,000 gallons; and for usage of more than 50,000 gallons, the rate would increase from $4.50 to $4.58 per 1,000 gallons.
The county is also raising its tipping fees at the landfill from $33 per ton to $35 per ton.
The city council is considering raising its garbage collection fees by $1 per month, from $21 to $22, amounting to an increase of slightly less than 5 percent.
The senior citizen rate would also increase, from $14.70 to $15, and commercial and industrial rates would increase about 5 percent.
Carter said city officials were preparing to request a reduction in tipping fees, given that the city is the landfill's largest customer.
"We felt like over the years the citizens of Covington have helped build that landfill," she said.
But when city officials met with county representatives, they were told that not only was a reduction out of the question, but that they would be paying more, she said.
"We remain at odds on that," Carter said. "I can understand the county's position on that; they're running an enterprise fund, as we run an enterprise fund, but sometimes you have to do the right thing for your largest customer."
While the increase seems nominal, it could have a big impact on large customers such as General Mills, Carter added.
She added that while city officials don't want to hurt the county's economy, in the future it may be necessary for the city to construct its own landfill or look into privatization of the service.
Carter said the city is already losing between $250,000 to $300,000 per year on solid waste, and would lose more if rates do not keep up with increasing costs.
The first reading of the solid waste and water rate ordinances was approved by a vote of 4 to 2 with John Howard and Ocie Franklin opposing.
The final reading of all the ordinances will take place at the council's May 18 meeting at 6:30 p.m. at City Hall, located at 2194 Emory St.
Crystal Tatum can be reached at firstname.lastname@example.org.