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WJBD - Local News - Salem City Council Looks At Change In Gas Rate Structure

Salem City Council Looks At Change In Gas Rate Structure

By Bruce Kropp, WJBD News

The Salem City Council is considering changes in the structure of its natural gas rates to help at least one industry in the city be more competitive.  City Manager Bill Gruen outlined a plan for a gas rate that provided a discount to the city's largest gas customer at a special meeting Monday night.  Right now the city has only one gas rate, regardless of the amount of gas used.  

Gruen began working on the plan to answer the concerns of Americana Power Finishing.  The company's Jeff Purcell noted the problems in staying competitive when Ameren and other utilities are providing natural gas at a much lower rate.  He noted even with the proposed sliding gas rate presented by Gruen, they would still be paying delivery charges equal to what Ameren charges residential customers and three times more than what they charge their large industrial customers.  

Gruen agreed to do some more work to try and bring the rate down more.  The Salem City Council was receptive to implementing a sliding scale rate as long as it didn't raise residential rates.  Gruen says his plan could also result in small reductions for residential and small business customers.  

"We've collected enough in revenues the last several fiscal years we've built up an adequate fund balance that will protect us from rainy days.  If we had some big project that we need to pay for right away we have a reserve fund to take care of that.  That reserve fund has been growing quite steadily.  What I propose to do is to have it go flat now," said Gruen.  

Gruen will now look at changing the amount of overhead costs to the level of the water and sewer department, which would take on the higher cost level currently assigned to the gas department.  He feels the move can be made without raising water and sewer rates.  

Purcell also suggested charging a higher meter fee to allow the cost of the gas to come down or allowing large customers to purchase their own gas on the open market and just use the city to deliver the product.   He notes if Ameren was the city's gas supplier, they would already have that ability under regulations set up by the Illinois Commerce Commission. Municipal utilities are not regulated.   

Purcell feels the current rate structure hurts the competitiveness of the city to attract industry when the same industry can setup in other nearby communities and pay much lower rates, in some cases almost half.   Americana Powder Finishing has become the 2nd largest user of natural gas behind Radiac.  

Purcell praised Gruen for doing an outstanding job in trying to find the best way to structure city gas rates.  He says Americana looks forward to seeing how the feedback from the meeting is reflected in rate change proposals.    

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