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Stockdale voters to decide gas company’s fate May 12
STOCKDALE -- The fate of the Stockdale Natural Gas System is in the hands of the voters as the city holds a special election Saturday, May 12. If attendance to the first of two public hearings is any indicator, a small turnout can be expected.
Eight people attended the April 30 public meeting, including former Stockdale City Manager Carl Lambeck, former Stockdale city Councilman L.H. West, Stockdale City Manager Banks Akin, and Simon Peña of SRP and Associates, gas consultants for the city.
Akin explained the reasons for the city council to place the possible sale of the gas system on the ballot.
In the past five years, the city has lost approximately $168,000 with the utility, with the costs of a May 26, 2011, gas line rupture on C.R. 305 west of Stockdale not reflected in total costs. Of the $22,500 initial cost for the repairs, 40 percent was absorbed by the natural gas customers; they were assessed an additional $15 per month for August and September.
Afterwards, Akin said, an additional expenditure of $114,837 for an alternate gas source was added. This expense was due to a mandated integrity test conducted by the state.
Akin explained that since 2003, the Texas Railroad Commission has mandated that gas lines must undergo an integrity test, which involves checking the supply lines 7 miles out from the city every seven years. This took 47 days during July and August 2011, during which time the city’s lines were disconnected to perform the test.
Akin estimated the gas system balance could exceed a deficit of $180,000 by the end of 2012.
Akin suggested to the council that the utility should be run as a business; as such, the only two options are to increase the base rate charged or sell the company.
The city’s 284 gas customers have seen the base rate they pay rise from $12 in 2009 to $18 in 2011.
“We are the only community to own its own gas system,” Akin said.
He explained that to be in compliance with the Texas Railroad Commission regulations, the city must place 5 percent to 10 percent of the gross proceeds from gas toward capital improvements.
As of April 30, Akin said five companies had expressed interest in purchasing the gas company.
West and Lambeck asked why the city was considering the sale, and why there are so few customers, considering that natural gas is more economical than electricity. Their other concern was whether the city will receive a fair market price, if the city should sell.
Another concern raised by West was the impact on pay for city employees, since 25 percent of funds dedicated to salaries in the city budget comes from the gas account.
One income source discussed briefly was the increase in sales-tax revenue. Akin mentioned this in response to a question from Lambeck. The increase is due, in part, to the Eagle Ford shale exploration in the area.
Akin said the city received approximately $8,000 per month in 2010. Stockdale has seen a steady increase since, realizing $11,000 per month in 2011. The April 2012 proceeds are more than $15,000, Akin said, versus the almost $12,000 received for April 2011.
A second public hearing is set for Thursday, May 3, at City Hall.
Early voting will continue until Tuesday, May 8, from 8 a.m. to 5 p.m. in City Hall. Extended early voting hours are set for Thursday, May 3, and Monday, May 7, from 7 a.m. until 7 p.m.
Hours for the May 12 special election are 7 a.m. to 7 p.m. in the Stockdale City Hall.
Verbiage on the May 12 ballot reads, “Shall the City of Stockdale sell its Natural Gas Utility System?”
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