The cost of propane and liquefied natural gas will be going up in Wendover if the Nevada Public Utilities commission approves a rate increase in an emergency hearing December 21.
Requested by Wendover Propane and endorsed by the company’s court appointed receiver, PUC counsel, and the West Wendover City Council the undisclosed rate increase will be used to offset the city imposed franchise fee.
According to City Manager Chris Melville the financially troubled company is about $20,000 in arrears in paying the city its franchise fee and without the rate increase may go deeper in arrears.
“They are behind two quarters,” Melville said Wednesday. “And those were light quarters during the spring and summer when the demand is light. For the year the franchise fee is about $60,000.”
In addition to Wendover Gas, West Wendover charges a franchise fee to a variety of companies providing utilities to the public such as the telephone company, the electric company, cable television and cel phone providers.
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In addition to being the smallest company assessed a franchise fee, Wendover Gas is also unique from the rest because it must by a physical product, gas, from a wholesaler and store it on site.
Just two years ago company owner Nancy Green was just days away from seeing her livelihood taken over by the city of West Wendover after agents found her supply was dangerously low and that her then supplier had cut her off due to nonpayment of bills.
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According documents filed by PUC at the time Green’s Wendover Gas was in danger of running out of LPG (Liquefied Petroleum Gas) due to a dispute with her wholesale supplier. According to those documents Wendover Gas owed about of $130,000 to her supplier Turner Gas. Furthermore the document reports that Green herself informed the PUC that Turner Gas would supply until she paid $68,000.
PUC investigators further reported that Wendover Gas supply was running dangerously low with tank capacity of less than 10 percent.
In October of 2009 the West Wendover City Council convened an emergency meeting on Wendover Gas and on whether the city should actively pursue becoming the new owner of the company.
But at the 11th hour, Green was able to secure a new supplier of LPG.
“We understand that there is no immediate danger of the company running out of LPG,” said PUC Spokesman Sean Sever said.
According to documents Wendover Gas Company supplies LPG to some 400 retail customers including both the West Wendover High School and West Wendover Elementary School.
According to the PUC documents the potential danger of the schools losing their supply of LPG used to fuel the building boiler for heating is the major reason why investigators are asking the commission to remove Green from its ownership.
A month after the crisis, elko District Judge Mike Memeo appointed trustee Steve Shute to manage the company, and it was Shute who endorsed the recent call for emergency rate hike.
According to PUC documents, this is not the first time Wendover Gas had problems securing supply are remaining solvent. PUC investigators made frequent mention of supply problems in 2005 and in 2007.
A major supplier of propane in Wendover for almost half a century, Green created Wendover Gas in 1997 and began piping LPG to some residences and businesses.
At the time Green was lauded by then Mayor Walt Sanders as a true innovator in West Wendover.
Along with the entire West Wendover business community, Wendover Gas saw a significant decline in business with the State Line Casino bankruptcy in 2003 from which it never fully recovered.
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IN THE FOURTH JUDICIAL DISTRICT COURT
OF THE STATE OF NEVADA, IN AND FOR THE COUNTY OF ELKO
Case No. CV-C-08-849
Dept. No. 1
In the Matter of Wendover Gas Company
Date: December 7, 2011
Re: Motion for Expedited Approval of General Rate Increase
Order and Notice of Order Setting Hearing on Motion.
* * *
The Court is in receipt of Steven Shute’s (hereinafter “Receiver’s”) Motion for Expedited Approval of General Rate Increase, filed November 17, 2011.1 The Court is also in receipt of a letter from the State of Nevada Public Utilities Commission (hereinafter “PUC”) indicating the PUC’s non-opposition to Receiver’s Motion, a letter from the City Attorney for West Wendover requesting that any hearing on Receiver’s Motion take place after the City of Wendover has had an opportunity on December 6, 2011 to consider Receiver’s Motion, and the PUC’s Amicus Brief on the issues presented by Receiver’s Motion.2 It is clear to the Court that Receiver’s Motion may of some urgency to the Wendover Gas Company, the people of Wendover, the City of Wendover, and the PUC. The Court therefore finds good cause to have a hearing on Receiver’s Motion on shortened time.
The issues in this case can be viewed through two lenses.
The narrow view, from the perspective of the Receiver, would be to grant summary relief to give this Court-appointed official the chance to save a flagging company from almost certain bankruptcy in the event the rate increase is not granted.
The larger perspective compels the Court to ask the following three questions:
I. If already impoverished or fixed income ratepayers can’t pay the additional rate, will their supply of natural gas be subject to cut-off?
II. If the rate increase turns out to be an ineffectual “band-aid”, and the Utah distributor determines it can no longer supply Wendover Gas Company with natural gas, is there a chance of a wholesale disruption of service?
III. Why is there a disparity in the rates Wendover Gas Company charges commercial customers versus residential customers.
All of these questions take on frigid consequences in the dead of winter.
Obviously the larger perspective calls for input from affected stakeholders, not just the parties to this litigation. That list includes:
1. The Public Utilities Commission;
2. The Consumer Advocate, see, e.g., NRS 228.320, 228.320, and 228.370;
3. Duly elected or appointed officials from Wendover;
4. If they are not otherwise represented, spokespersons from consumer groups,
and/or consumers themselves who are most at risk.
The Court is mindful that it has little or no jurisdiction to compel attendance of non-parties. The Court is also mindful that the long term resolution of these issues probably lies with the other two branches of government. Conceivably a worst case scenario could implicate State or even Federal assistance.
And, of course, this whole thing could turn out to be a tempest in a teapot if contingency plans are already in place.
In any event, the Court is going to err, if at all, in favor of addressing the larger perspective at the outset of the Hearing. To that end representative agencies and persons are strongly urged to attend and participate in the upcoming hearing.
The Court directs the Wendover City Attorney to inform the Court, on or before the close of business December 8, 2011, as to whether the City of Wendover intends to oppose Receiver’s Motion.
It is clear that the Receiver requires a plain and speedy remedy here. As the PUC argues in its Amicus brief, this may well be a case to properly bypass the expensive and time consuming regulatory procedures generally employed by the PUC when considering a general rate adjustment.3 However, the Receiver, himself, acknowledges that the proposed rate increase may not suffice to keep Wendover Gas Company viable. For these reasons the Court wishes to streamline resolution of this issue while at the same time respect the interested parties’, including the citizens of West Wendover, right to be heard on the matter. To assist this process, the Court has directed that this Order, excluding attachments, be published as a legal notice in the High Desert Advocate newspaper in Wendover, Nevada. Therefore,
IT IS HEREBY ORDERED that any party who wishes to oppose or join Receiver’s Motion for Expedited Approval of General Rate increase have until December 14, 2011, in which to file and serve Amicus “friends of the Court” pleadings if they so choose.
IT IS FURTHER ORDERED that, without further briefing, two hours shall be set aside for hearing on Receiver’s Motion for Expedited Approval of General Rate Increase on December 21, 2011, at 10:00 a.m., in Department I of the above-entitled Court.
IT IS FURTHER ORDERED that Receiver shall serve upon the Consumer Advocate of the State of Nevada within three (3) days of entry of this Order a copy of this Order and a copy of Receiver’s Motion and Proposed Order.
IT IS FURTHER ORDERED that the parties appearing at the hearing shall be prepared to address, in addition to matters raised by Receiver’s Motion, the following issues:
a) Possible provisions in any Order of the Court granting the requested rate increase which would allow for exemption(s) to a rate increase with respect to impoverished or fixed income residents of West Wendover;
b) Alternatives to the remedies sought in Receiver’s Motion;
c) A contingency plan to deal with the possibility that the proposed rate increase will not solve the problems identified in Receiver’s Motion; and
d) The disparity between the rates Wendover Gas Company charges its commercial customers versus its residential customers.
District Judge – Dept. No. 1
1 Mr. Shute is the Court appointed Permanent Receiver of Wendover Gas Company.
2 Copies of the Amicus Brief and these two letters are attached hereto as Exhibits A through C.
3 In fact, the availability of a quick and efficient means for resolving Wendover Gas Company’s financial predicaments is at the heart of the parties’ stipulation incorporated as part of prior Court Order appointing Mr. Shute as Receiver.
