Residential customers would see a very slight increase
Fred Crabtree made a bold proposal at Monday’s Lake Apopka Natural Gas District board meeting. Crabtree, the Vice President of LANGD wants to change the method of allocating “Capacity Charges”.
So what are Capacity Charges?
To be certain enough gas is available to meet the maximum demand of its 19,000 customers LANGD has contracted with an interstate pipeline, Florida Gas Transmission Company, to reserve sufficient space or capacity.
The District pays nearly $1,400,000 to the pipeline for capacity regardless of how much it uses and has contracted with the Florida Gas Transmission (FGT) pipeline for capacity.
How does this affect customers?
All customers receive an allocation of the $1,400,000 based upon the last three years of gas. Residential customers whose bills average about $30.00 per month each receive a very small allocation. Commercial customers whose bills can be thousands of dollars per month receive much larger allocations.
What was Crabtree’s proposal?
Not all of LANGD’s customers purchase gas from the District. About 70 of the commercial customers buy their gas from other sources called, “Marketers”. But the Marketers need a way to deliver the gas and the only way to do that is to pay LANGD a transportation fee. Because LANGD only provides transportation services to these customers they are called, “Transportation Customers.”
If a Transportation Customer uses more gas than they purchased from their Marketers, the District is currently responsible for making sure they get all of the gas they need.
Crabtree is proposing that the District study the possibility of allowing certain transportation customers to purchase their excess capacity needs from their Marketers. If this were to happen the District would not be responsible for supplying gas in excess of what was purchased from the Marketer and would not allocate any of the $1,400,000 capacity charge to customers that chose this option.
The $1,400,000 would then be allocated to fewer customers. Crabtree estimated that if all of the eligible commercial customers chose this option the increased cost to residential customers would be less than one dollar per month ($0.94).
Why is this being considered?
For more than two years many nursery customers have been complaining about the cost of gas from LANGD. This was an issue during the Apopka City Council elections in 2014 and 2016.
On Monday Crabtree said this about the District’s current Capacity Charge allocation program, “It creates financial, public relations and political problems.”
Crabtree’s proposal prompted a lot of discussion at the meeting regarding the technical details of allocation programs including which Transportation Customers would be eligible for the proposed new program.
The Board agreed to have the staff study Crabtree’s proposal and present their findings at the October 24, 2016 Board Meeting.