ONAWAY - A local gas company and the City of Onaway agreed Monday to settle any rate disputes using the Michigan Public Service Commission.
City commissioners unanimously approved an amendment to Onaway's franchise agreement with Aurora Gas Company. It clarifies the procedure the city and company would use if they can't reach an agreement on existing natural gas rates.
"It kind of streamlines the process with the idea of saving everyone money in the end if we ever can't come to an agreement on rates," Mayor Gary Wregglesworth said.
Commissioner Bernie Schmeltzer told the audience the agreement would eliminate the step of having to go to circuit court in the case of a rate dispute. Instead, the matter will be handled by the MPSC, the state's regulatory body for utility providers.
Aurora President John Tierney said the extra step would have led to additional costs if the city and company ever sought a dispute resolution. It won't have an effect on rates, except in the event the MPSC allows Aurora to recoop regulatory costs resulting from a rate determination.
"All we're interested in is getting a procedure into the franchise because we have never had one," he said. "It's important to be there. Hopefully we'll never have to use this."
The amendment also states it will ensure the costs of any dispute resolution will be spread equally among all Aurora customers in every municipality it serves. Tierney told the commission about a situation with another utility, where the cost of a regulatory rate hearing was only being applied to two townships. This resulted in a $3-per-month surcharge for customers in those townships.
If either the city or Aurora seek MPSC intervention in a dispute, it'll constitute a joint request, according to the amendment. The rest of the franchise agreement stands as before.
Aurora's franchise agreement with Onaway and other municipalities gives local governments a say in what the company charges its local customers. Tierney said in the past this is known as "home rule," where the local governments are acting as the utility's regulatory body. In this case, it's Onaway city commissioners, and using local governments saves the utility the massive cost of taking a rate case before the MPSC.
Natural gas customers can expect to pay less for it over the next few years, Tierney said. Costs should fall into mid-2017, and possibly even past that. This downward trend is due to a big discovery of natural gas-bearing shale, although he cautioned the trend won't last forever.
"But it is impressive," he said. "Prices have been falling for the past five years, and it looks like they will fall for the next two or three years."
In other business:
* the city will hold a public hearing on rezoning a former hospital to allow it to be redeveloped into apartments. City Manager Joe Hefele said the Onaway Planning Commission recommended rezoning the 132-foot-by-132-foot lot as medium density residential. Mike Vogler, city attorney, told the planning commission zoning the hospital as multi-family residential wouldn't fit requirements for that zoning type, and other lots so zoned are much larger parcels. The public hearing will be held at city commissioner's Dec. 2 meeting.
* commissioners approved paying $7,401.45 for monitoring well sampling at the city's wastewater treatment plant. Hefele said the charges are part of a cleanup of a ferric chloride spill at the property. The invoices are being sent to the United States Department of Agriculture, which awarded the city a grant to help pay for the cleanup.