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The price for propane or natural gas will increase 50 to 60 percent for Wendover homes and businesses following a hearing that approved the rate hike in Elko district Court Wednesday.
The hike was sought by local business Wendover Gas owned by Nancy Green at least in part to help offset a franchise fee debt, Green has bee collecting from her customers but not paying to the city of West Wendover.
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.
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“They are behind two quarters,” Melville said two weeks ago. “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.
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.
Tuesday over the reservations of Melville the West Wendover City Council extended the deadline for Green to become current on her owed franchise fees by April 1, 2012.
But even with the deadline extension and the hefty rate increase doubts remain about the continued viability of one of Wendover’s oldest family owned businesses.
A major supplier of propane in Wendover for almost half a century, Green created Wendover Gas in 1997 and began piping propane to some residences and businesses.
In order to secure funding and right of way to lay the pipes Green and the city agreed on a franchise ordinance that gave Wendover Gas a monopoly on all piped gas. Where the ordinance falls short Green complained to the council is that the monopoly applies only to piped gas. There is nothing in the ordinance that prevents a business or a home from buying propane from another supplier and filling a tank on a regular basis.
Also by installing gas lines, Green’s pricing came under the jurisdiction of the Public Utilities Commission which had to approve each and every price adjustment Green wanted to make, while any potential competitor could slash the price of propane they were charging at a moment’s notice.
And that is exactly what happened Green told the council Tuesday. Where she once had all of the five major Wendover casinos as her customers Green said now she had none.
While Green lost most of her major commercial accounts she has been able to retain most of her residential customers. That could end when the rate hike goes into effect.
“It’s the middle of winter and all of a sudden you are hit with a 50 percent rate hike,” said one consumer. “You are either going to cut down or look for alternatives, probably both.”
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. In 2009 Green was just days away of losing her company to the city when at the almost the last minute she was able to secure a new source of propane after her original supplier refused to deliver more until he had been paid at least half of a $140,000 bill.
The rate hike was approved only as a six month temporary messure with a mandated review at the end of the period.
