LTC 207-2008 Peoples Gas System Rate Increasem MIAMIBEACH
OFFICE OF THE CITY MANAGER
NO. LTC # 207-2008
LETTER TO COMMISSION
TO: Mayor Matti Herrera Bower and Members of the City Commission
FROM: Jorge M. Gonzalez, City Manager
DATE: August 14, 2008
SUBJECT: PEOPLES GAS SYSTEM RATE INCREASE
This is to inform you that Peoples Gas System have filed a petition with the Florida Public
Service Commission requesting an increase in its customer base rates and service charges.
Attached is their letter explaining the reasons for the increase and a Summary of Proposed
Increase for your review.
JM M1sam
F:\c ALL\BOB\LTC -TECORatelncrease.doc
Attachments
C"; rv
ca
~ _~
~ a ~
C ;~
r-- c~
~- ~' ~~`i
cr> -o ,C
sue.. `~
---; .. ;~
r7 ~
---• GD
PEOPLES GAS
August 11, 2008
Jorge Gonazalez
City Manager
1700 Convention Center Drive
Miami Beach, FL 33139
Dear Mr. Gonazalez,
Today, Peoples Gas System ("Peoples Gas" or "the company") formally filed a petition with the
Florida Public Service Commission (FPSC) requesting an increase in its customer base rates and
service charges. These rates and charges have remained fixed since the company's last request
for a change in 2002. This letter and the enclosed copy of the company's petitions are provided
to you as required by Rule 25-22.0406 Florida Administrative Code, Notice and Public
Information on General Rate Increase Requests.
Base rates and service charges cover the investments made to build, maintain and operate the
company's natural gas distribution system. Under Florida regulation, a utility is allowed the
opportunity to recover its costs, including a fair return on those investments. The ability of a
utility to earn this fair return is what provides the continuing access to capital markets required to
finance the continuing growth and safe operation of the distribution system. Because the utility's
cost of doing business changes over time, the base rates and service charges need to be
periodically adjusted to reflect the current cost of doing business.
Since our last base rate increase in 2002, Peoples Gas has added approximately 100,000 new
customers. To serve those new customers and to address new federally mandated requirements,
the company has installed or replaced more than 1,500 miles of gas main in the more than 200
communities it serves throughout Florida. The costs of goods and services measured by the
Consumer Price Index have risen more than l 7 percent over this time period, while the price of
steel pipe of the diameters generally used by Peoples for the construction of our distribution
system have more than doubled and corresponding costs of plastic pipe have increased more than
45 percent.
Continuing to expand the Peoples Gas distribution system and increase the end use of natural gas
by consumers is something that benefits all Floridians. Because 99 percent of the natural gas
used in the United States is produced in North America, use of natural gas by consumers in
Florida reduces our country's dependence on foreign oil. Natural gas is the cleanest burning
PEO PLE9 GAS
702 NORTH FRANKLIN STREET
P.O. SOX 2562
TAMPA, FL 33601-2562
AN E4UAL OPPORTUNITY COMPANY
WWW.PEOPLESGAS.COM
fossil fuel and when used in place of electricity reduces Florida's carbon footprint. Typical
Florida homeowners replacing four less-efficient electric appliances with today's highly-efficient
natural gas appliances can reduce their home's carbon footprint by as much as 4,000 pounds of
carbon annually.
While none of us at Peoples Gas wants to see even a minimal increase in the cost of the natural
gas service we provide for our customers, especially during these challenging economic times,
we must seek rates that address the investments we've made and continue to make to serve our
growing customer base. Team members across the company have worked hard to control costs
while not compromising the safety or reliability of the service that we provide. These efforts
have delayed our need for new base rates as a long as is possible. A change in price is essential
for us to continue to bring the economic and environmental benefits of natural gas to the
communities that we serve, with the level of high quality service that our customers expect and
deserve.
Sincerely,
William N. Cantrell
President
Peoples Gas System
Docket No. 080318-GU
EXHIBIT B
PEOPLES GAS SYSTEM
Summary of Proposed Increase
Annual Customer Cost (1) Increase
Present Proposed
Rates Rates Amount Percent
Customer Class
Residential $ 132,550,431 $ 148,459,065 $ 15,908,634 12.0%
Residential Generator 153,109 171,840 18,731 12.2%
Small General Service 14,317,892 15,376,931 1,059,040 7.4%
Commercial Generator 262,976 332,640 69,664 26.5%
General Service - 1 93,592,943 97,222,906 3,629,962 3.9%
General Service - 2 170,351,699 173,261,580 2,909,881 1.7%
General Service - 3 98,651,834 100,630,979 1,979,145 2.0%
General Service - 4 56,176,080 55,357,783 (818,297) -1.5%
General Service - 5 79,069,731 80,188,529 1,118,797 1.4%
Commercial Street Lightning 1,122,784 1,185,342 62,558 5.6%
Natural Gas Vehicles 545,237 567,812 22,576 4.1
Wholesale 1,982,739 2,020,884 38,145 1.9%
Small Interruptible Service 58,003,126 58,048,127 45,002 0.1%
Interruptible Service 154,983,987 154,812,149 (171,838) -0.1
Large Interruptible Service 171,333,119 171,107,876 (225,244) -0.1%
Special Contracts 341,874,636 341,814,455 (60,180) 0.0%
Sub-Total 1,374,972,323 1,400,558,899 25,586,576 1.9%
Miscellaneous Service Revenue 6,844,700 7,746,215 901,516 13.2%
Total $ 1,381,817,023 $ 1,408,305,114 $ 26,488,091 1.9%
(1) Includes Purchased Gas Adjustment for sales customers
and estimated cost of gas for transportation customers.