The City of Magnolia is contesting a proposed rate increase made by Hughes Natural Gas Inc. that could end up costing some residents more than $30 per month in additional fees.
The proposal is for an $8.80 increase per 1,000 cubic feet of natural gas used (MCF). A 2010 report from the Texas Railroad Commission found the average annual natural gas consumption in Houston was 39 MCF. An $8.80 MCF increase would result in an additional cost of $343.20 over the course of the year.
"Hughes Natural Gas has a monopoly for this area that was authorized by the state because no other gas company has lines that come through here," said Leonard Schneider, Magnolia's city attorney. "To keep them from charging too much, the state gives us the chance to contest any rate increase."
Hughes initially proposed to raise the base rate from $14.25 to more than $25, but the proposal was denied by the state, Schneider said. However, the company recently filed another proposal, which they justify as a relocation fee for having to relocate gas lines during the process of widening FM 1774. Although the city understands the rate increase, officials hope to negotiate it down to $1–2 instead of $8.80.
The city hired The Lawton Law Firm to enter negotiations with Hughes to negotiate the increases and build a formula that protects the city from future unreasonable increases.