Hike in natural gas rates on Duluth Utilities Commission agenda

Duluth residents will get their chance to weigh in on a proposed natural gas rate increase Tuesday.

But if not for the actions of Duluth City Councilor Jim Stauber, who also serves on the Duluth Public Utilities Commission, Tuesday’s discussion could have been about a fait accompli.

Stauber said he was flabbergasted when the commission took up a resolution Dec. 18 to approve the 4.9 percent rate increase. That’s when Stauber said he intervened.

“You can’t have a public meeting on something that’s already a foregone conclusion,” he said. “Members of the public should at least have an opportunity to share their concerns before the commission makes a decision.”

Stauber succeeded in persuading his colleagues to table the resolution in December, but it will come before the commission again on Tuesday, following a 5 p.m. public meeting in City Council chambers scheduled to last just 15 minutes.

Pat Huston, president of the utilities commission, praised Stauber for flagging the resolution and delaying the vote.

“It was just an oversight on our part,” he said.

Huston said he hopes local residents will seize Tuesday as an opportunity to address the commission.

“This is a chance for us to hear what people have to say,” he said. If more time than the allotted 15 minutes is needed, Huston said the public hearing will be extended to afford everyone an opportunity to speak.

First increase since 2006

The proposed new rate would increase the cost of a typical household natural gas bill from the current $71.28 per month to $74.74, according to Eric Schlacks, gas and energy coordinator for the Duluth Public Utilities Department. The increase would add $41.52 to the annual cost of natural gas for a typical residential customer.

Commercial customers also would see rate increases of the same 4.9 percent magnitude as residential customers.

Schlacks said the additional revenues are needed to cover the growing costs of operating, maintaining and staffing the system. Rates last were adjusted in 2006.

He noted that customers should be cushioned in part by natural gas prices that are now near a 20-year low, thanks to production advances associated with hydraulic fracturing — or fracking, as it’s often called.

If approved, the new, higher rates would not take effect until April.

Stauber suspects recent declines in the price of natural gas have lulled many natural gas customers into a false sense of security, and he fears attendance at Tuesday’s hearing will be thin.

But he’s concerned about the effect the gas rate increase combined with recent water rate hikes will have on households that were barely scraping by.

“Those who can least afford to heat their homes will be hit by this increase the hardest,” he predicted.

General fund support

Huston said the rate increases are needed to address very real needs that the city can continue to neglect only at its own great peril.

“This is basic infrastructure that we take for granted every day, but just like the basement of your house, you need to maintain it or you’re going to have big problems,” he said.

Stauber suggested that instead of raising rates, Duluth should look to lessen its reliance on the gas utility to support the city’s own general fund spending. He said the utility currently pays a city sales tax, a $1.4 million transfer fee for city services it receives and more than $4 million per year in the form of payments in lieu of taxes to the city.

Stauber said he will not support the gas rate increase currently proposed, and if the commission passes it, he plans to ask the Duluth City Council to veto the hike.

In order to overturn the rate increase, Stauber’s motion to veto would need to win a super-majority — or at least six of nine council votes. Past efforts to veto the actions of the utilities commission have proven unsuccessful.

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