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Plan to overturn Duluth natural-gas rate hike fails

An effort to overturn a planned hike in Duluth's natural-gas rates came up short Monday. Duluth City Councilor Jim Stauber sought to veto rate increases slated to take effect in October, but he failed to muster the six votes needed for the counci...

An effort to overturn a planned hike in Duluth's natural-gas rates came up short Monday.

Duluth City Councilor Jim Stauber sought to veto rate increases slated to take effect in October, but he failed to muster the six votes needed for the council to override the Duluth Public Utilities Commission, which approved the new rates in August.

He garnered votes from just two other councilors, Garry Krause and Jay Fosle.

Stauber said the proposed rate increases exceed what a consultant hired to review the city's rates last November had recommended. He also questioned the need for the rate increases when the gas department now expects it will finish the coming year with a $1.3 million surplus.

Councilor Sharla Gardner defended the need for a rate increase, however, saying: "The department clearly still needs money for capital improvements."

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She said the city could scarcely afford to neglect natural gas pipes, given the stakes involved in a failure.

Councilor Jennifer Julsrud called on her colleagues to support the increase approved by the Public Utilities Commission, saying: "It's a very small increase, but it will ensure the safety of the system."

The proposed natural gas increases would equate to about a 3.4 percent increase for a typical low-volume residential customer, a 3.7 percent increase for small-volume commercial/industrial customers and a 3 percent hike for large-volume commercial/industrial customers.

A typical residential customer now pays an average of $66.06 per month and would pay $68.31 under the proposed new rates, assuming spot market prices for natural gas remain unchanged.

The city's gas rates last were increased in 2006, said Jim Benning, director of the Duluth Public Works and Utilities Department. Since that time, the city's base rate has remained unchanged.

But as the nation's production of natural gas has climbed with the growing use of hydraulic fracturing extraction techniques, the cost of heating a Duluth home with natural gas has fallen steadily in recent years. A home that cost an average of $117.81 per month to heat in 2008 cost about 44 percent less in 2012, according to data from the city.

Residents' heating bills will continue to fluctuate with the fuel markets, but an increase in the base rate will fund capital improvements.

Peter Passi covers city government for the Duluth News Tribune. He joined the paper in April 2000, initially as a business reporter but has worked a number of beats through the years.
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