HARLINGEN, Texas (ValleyCentral) — The Texas Gas Service is notifying 34 Rio Grande Valley cities of its plan to raise rates.
The City of Harlingen voted Wednesday to delay the rate increase until they have had time to review the proposal, and other cities are looking to do the same.
Gabriel Gonzalez, Harlingen City Manager, said the city tries to vote for a delay when it can, to make sure it is a fair deal. He said, “Generally when they have an increase, we like to intervene. Just to make sure that what they’re asking for is fair. And that’s all. We just [want] to make sure they’re not taking advantage of our residents.”
“This particular one is about a $9.81 million increase to the Rio Grande Valley cities and it’s about a 26% percent increase,” Gonzalez said in reference to the latest proposal, which the city received around July 30.
Gonzalez said proposals to increase rates are not uncommon. He said this increase was on top of all the other previous increases they have had as well. However, after the Railroad Commission makes a ruling, the proposed rate is almost always adjusted downward, Gonzalez said.
The increased rate excludes the cost of gas. Company officials said they purchase natural gas at market value with no markup. The TGS statement went on to say,
Harlingen and Brownsville both obtained legal and consulting services to take a look at the proposal. Those services are paid for by Texas Gas Service, and not the cities.
Cities and towns across the RGV have until August 23 to inform the Railroad Commission they plan to intervene. Passing the resolution gave Harlingen 120 days to review the proposal. Outside consultants for the city said the Railroad Commission could grant the city even more time. All parties said any rate increase will not take effect for a few months while the review process takes place.
Full statement from Texas Gas Service:
Typically, Texas Gas Service files a full rate case every five to six years, to allow us to maintain a safe and reliable natural gas system. In this rate filing, TGS proposed a new rate design for residential and commercial customers as part of the rate case filing. This rate case filing will undergo a full regulatory review of the Company’s rate base and is different from a Cost of Service Adjustment (COSA) filing, which is an annual filing to recover certain costs incurred between rate cases.
Since the last full rate case filed by Texas Gas Service in 2018, for the RGV Service Area (RGVSA), Texas Gas Service has invested more than $75 million in its natural gas distribution system to keep it safe and to deliver reliable natural gas service. This rate filing seeks only to recover the reasonable and necessary expenses associated with safely operating and delivering reliable natural gas service. Our regulators (the Cities and the Railroad Commission of Texas) are reviewing the filing now, per the standard process, and will determine final rates near the end of the year or the beginning of next year.
The new proposed rate design allows customers to choose a rate plan (small or large) that aligns with their usage patterns and needs. Based on this proposal, the average residential bill for a Texas Gas Service customer in the Rio Grande Valley service area will increase by approximately $9.68 per month for small residential customers and $18.14 per month for large residential customers. If approved, the rates will go into effect as early as December 2023 billing statements or as late as February 2024 billing statements, depending on the length of the review process.
As a reminder, Texas Gas Service does not set the cost of natural gas. Instead, the Company purchases natural gas supplies on behalf of the customers at market cost, with no markup. That’s why rate filings do not impact the cost of gas itself. Recently, after experiencing higher-than-normal natural gas prices this winter, we’ve seen a decrease in natural gas prices – the lowest since May 2021. Customers should soon notice this reduction on their bills as the cost of natural gas has dropped 63% since this February ($7.5961 per Mcf in February to 2.8350 per Mcf in August).
Texas Gas Service will work with customers on available options and financial resources for paying their natural gas bill. Several financial assistance agencies manage available funds for eligible customers who need help paying their utility bills. Our web page TexasGasService.com/CARES is updated regularly with payment resources and information on those agencies.
