I do not understand why Gallatin is doing a project to benefit another city knowing that Gallatin will lose money.
Throughout the years, I have regularly attended the City Council Meetings, where we were told that our Public Utility Department was profiting from gas revenues. However, everything changed on May 14, 2024.
On May 14, Jackson Thornton, a Certified Public Accountants & Consulting firm, presented us with the results of their study. An analysis of our Gallatin Gas system over the past 12 months indicated an under-recovery of $2,603,000. Yes, you heard correctly... A shortfall of $2,603,000.
(You can watch the presentation starting at the 1 hour 20-minute mark by clicking on the image on the left).
Due to this deficit, the 18,346 customers will experience a rise in rates.
In 2024, the Gas division of the Gallatin Public Utility Department has a budget for 28 employees. Currently, 6 positions, which make up 21% of the total budgeted positions, remain unfilled.
In this context of our gas department losing money, being short staffed and raising rates, let's look at the details of the Westmoreland Gas Extension.
The extension consists of around 35,000 linear feet of pipe with a total price of 5.33 million dollars.
In order to finance that expense (along with other initiatives), the City authorized a 20-year bond worth $9 million, resulting in a total debt obligation (comprising both principal and interest) of approximately $12.8 million ($12,812,131.11).
Based on this bond, the debt service for this project will amount to slightly more than 7.5 million dollars ($7,559,162.00).
Per the City of Westmoreland, the potential Customers to be added to the books for the next 20 years will be:
Five residential customers per month from new development projects
Five residential customers per year from existing homeowners
One commercial customer per year from new construction
Five commercial customers per year from existing businesses for years 1-5 and one commercial customer per year for years 6-20
One industrial customer per year for years 1-5
for a total of 1,365 new accounts - 1300 Residential, 60 Commercials and 5 Industrials.
Next, we will examine the figures.
Utilizing the most optimistic scenario outlined by the Superintendent of Gallatin Public Utilities, with a meter charge starting at $5.00 per month in the first year, escalating to $10 per month in the second year, and further rising to $15 per month in the third year, in addition to a special assessed charge of $10 per month per meter, along with tap fees, connection fees, and gas charges, the revenue generated would exceed $6.3 million ($6,366,470.00). When compared to the debt service, we would incur a loss of approximately $1.2 million ($1,192,692.00) over the 20-year period.
While some may not consider this situation ideal, others argue that it is simply part of the business process and a strategic investment for the future, as was mentioned in the Council meeting.
Another concern I have with these numbers is that one factor was overlooked. The GPU provides complimentary gas line installation for connecting to the main line for all current residential and commercial properties (refer to the image on the left). The installation begins at 100 linear feet and may increase based on the quantity of gas-powered appliances you possess.
On the GPU website, the price per linear foot is $20.00. Calculate the total cost...
Westmoreland remains predominantly rural, with long access drives, so providing 150 feet of "complimentary" connection sounds realistic and would amount to a cost of $3,000 per household. Conversely, for commercial establishments, offering 100 feet of "complimentary" connection would result in a charge of $2,000 per business.
The total amount accumulates rapidly. Even without considering inflation over the 20-year period, based on the provided estimate, this small complimentary item will result in an extra expense of $380,000.00 for Gallatin.
By adding that sum to the previously lost 1.2 million dollars, the total amount reaches 1.5 million dollars ($1,572,692.00).
That is scenario #3 that has been presented to us, which comes with the highest fees. Opting for scenario #1 would result in a loss of 2.4 million dollars ($2,443,892.00), while choosing scenario #2 would lead to a loss of 2.2 million dollars ($2,210,792.00).
In scenario #1 and 2, we are not generating sufficient annual revenue to cover the debt payments until year 17. This timeframe is reduced to 14 years in scenario #3.
Consider this: If everything goes as intended, we will need to recover between 1.5 and 2.4 million dollars. Can you guess who will be responsible for covering these costs? Recall the first paragraph? Despite being three years behind, GPU is eager to embark on a project that will result in financial loss.
This does not make sense to me and raises a few questions:
Why doesn't Westmoreland cover the cost of installing the gas line if they are so keen on getting natural gas? In Gallatin, developers are required to pay for both the extension and connection if they want gas. Why the special treatment for Westmoreland? Initially, we were informed that a developer was the one who requested this extension.
Why is it that Gallatin has to cover all the expenses, suffer financial losses for 20 years, while Westmoreland reaps all the rewards? It's important to remember that based on their own calculations, Westmoreland stands to collect nearly 6 million dollars in property taxes over the same 20-year period that we, the citizens of Gallatin, will be repaying the debt.
Before expanding, we should focus on adequately managing our current product lines since we lack the necessary workforce to support further growth. It's important to prioritize existing responsibilities before taking on more.
These figures depict the optimal outcome. What if things don't go according to plan? How much will we stand to lose? How soon until we start making a profit?
A world where this does make sense is from the perspective of the GNRC.
This is the vision for Nashville presented by Paige Brown, a member of the Board of Directors of the GNRC (Greater Nashville Regional Council). As stated on their website at https://www.gnrc.org/, the Greater Nashville Regional Council is dedicated to supporting local communities and state agencies in creating plans and programs that direct growth and development in the most efficient and cost-effective way, while also ensuring the region's long-term livability. The primary focus is on facilitating growth and advancing Nashville's development, regardless of the cost.
You cannot have it both ways. I do not understand how Paige Brown can talk about being fiscally responsible when I ask for a $1-an-hour raise for our city employees to help with retention and day-to-day life and have no problem with losing at least 1.5 million dollars on an unnecessary project.
If Westmoreland desires to use our gas, they should be prepared to pay for it. Let's not continue to impose financial strain on the residents of Gallatin so another city can profit from us.