By Karen Gleason
The 830 Times
A majority of Del Rio City Council members Jan. 10 approved an ordinance for a previously discussed 5 percent increase in the rate for natural gas services.
The ordinance passed on a 6-1 vote, with Councilman Jim DeReus giving the dissenting vote.
Information included in the council’s agenda packet by City Finance Director Alberta Barrett reminded the council that a discussion of a rate increase for natural gas services was held during a budget work session in July 2022 on the then-proposed city budget for Fiscal Year 2022-2023.
Barrett wrote finance staff members recommended a 10 percent increase in the natural gas rates. That 10 percent increase had been recommended by Willdan Financial Services, a consulting company hired by the city in 2020 to conduct a rate study.
During the budget workshop on the proposed rates, Barrett wrote, the council directed staff to raise the rates 5 percent for the 2022-2023 Fiscal Year, 5 percent for the 2023-2024 Fiscal Year, then drop the rate 2 percent for the 2024-2025 Fiscal Year, instead of the 10 percent increase recommended by the consultants.
“The 5 percent natural gas rate increase was included in the proposed budget, which was adopted on Sept. 13, 2022. However, the ordinance for the gas rate increase was not presented to the council for adoption,” Barrett wrote.
She wrote because of the delay in presenting the ordinance to the council, “the total revenue loss for the months of October and November was $31,600.”
“The ordinance to increase the natural gas rates will become effective on the first billing cycle in January 2023, which will include December 2022 consumption,” she wrote.
Mayor Pro-tem Steven Webb made the motion to approve the ordinance during the meeting, with Councilman J.P. Sanchez giving the second.
When Mayor Al Arreola asked if there were any questions, Councilwoman Alexandra Falcon Calderon asked, “Just to understand this. Is this because it was never brought at the time?”
“That’s correct. It was approved during the budget process, and we should have followed up with this ordinance at the end of September, first of October, and we failed to do so. That’s why we’re bringing it now,” Barrett replied.
“So, was there a loss?” Calderon asked.
“Yes, for the two months. It was right at $31,600. Of course, December consumption would be high as well, because December through February, probably, are your highest consumption months for gas,” Barrett replied.
Arreola asked if there were any more questions, and when there seemed to be none, he called for a vote, and six members of the council raised their hands or responded, “Aye.”
Then DeReus raised his hand and said, “I’m opposed.”
Immediately on the heels of DeReus’ comment, Calderon asked, “Can I take my vote back?”
When City Attorney Jack Stern seemed to indicate she could not, Calderon said, “Never mind, I’ll leave it like that.”
“I decided not to make the lengthy comments I was planning on, which would be a rehash of what I talked about in August and September of last year,” DeReus said after the vote.
“Well, with my questions, I was kind of bothered as well, but I made a mistake on my vote, but for the record, I was also kind of bothered by that,” Calderon added.
After the meeting, DeReus explained in more depth the reason he voted against the ordinance.
DeReus said the gas fund is an enterprise fund and, like other enterprise funds, one of its functions is to generate income for the city.
He said an enterprise fund like the gas fund should hold three months’ worth of operating expenses in reserve, but noted after the ransomware attack on city computers several years ago, the city boosted the reserves held in funds like the gas fund to four or five months’ worth of operating expenses.
“So we’re going to have four months of reserve (in the gas fund), which is over $1 million. We will also have an additional $1 million, over and above the $1 million that is the industry best practice (for reserves in this type of fund). We’re going to have over $2 million in reserves, and we’re still raising rates,” DeReus said.
He noted the 5 percent rate increase in the ordinance approved by the council amounts to about $185,000 in additional revenue for the city.
“If we had not increased that, we could still expect to have $830,000 above the four-month reserve,” DeReus said.
He noted the same holds true for other city enterprise funds, pointing out the water fund will carry five months in reserve operating expenses, about $3 million.
“That is why I have voted against all of the rate increases,” DeReus said.
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