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Grand Island City Council Approves Direct Negotiations on Natural Gas Rate Increase

The Grand Island City Council has agreed to direct negotiations on raising natural gas prices on Tuesday, July 23. The council also approved entering into an interlocal cooperation agreement between Grand Island, Kearney, North Platte and Alda for the negotiations.

NorthWestern Energy Group, a utility based in Sioux Falls, South Dakota, has filed an application with the Nebraska Public Service Commission to increase natural gas rates for customers in the state.

In the rate request included with the agenda package, Northwestern proposed raising residential bills by 7.44% and business bills by 3.66%. The rate would be the same for all customers in Nebraska, and there were no plans to implement an interim rate when the request was filed.

According to the agenda package, no rate increase request has been filed since 2007. Grand Island would have the largest number of customers affected by the increase, at 47.4%. Other cities affected by the increase include Kearney with 26.4% of customers, North Platte with 25.5% and Alda with less than 1%.

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However, NorthWestern indicated that they wanted to negotiate the rate increase with the affected cities, in accordance with Nebraska Revised Statute §66-1838. In order for negotiations to occur, cities representing at least 50% of the affected customers had to agree to enter into negotiations with NorthWestern.

According to City Attorney Kari Fisk, the process includes evaluating the rate increase proposal, hearing from consultants and negotiating a rate that meets NorthWestern’s needs and the needs of the city.

“Not to oversimplify it, but it’s a pretty similar process to what you just went through with our rate studies and rate processes for water and electricity,” Fisk told the council. “Except in this case, it’s not an internal discussion, it’s with another entity.”

Grand Island was the last to decide to negotiate. During the meeting, Fisk said that Alda had agreed at the last village board meeting, North Platte had agreed a week earlier, and she believed Kearney had passed their resolution an hour and a half before Grand Island’s.

“Whether or not you authorized direct negotiations, we are in direct negotiations,” Fisk said. “It’s a matter of whether or not we have a voice in the process (now).”

In addition to approving direct negotiations, the council also had to agree to enter into an interlocal cooperation agreement, which gives city attorneys from the cities involved the authority to delegate and cooperate in negotiations.

Cities entering into this agreement will allow the use of one advisor for all and may jointly apply to the Nebraska Municipal Rate Negotiations Revolving Loan Fund.

Historically, the cities of Grand Island, Kearney and North Platte have entered into an agreement for interlocal cooperation, with their city attorneys seeking to continue the collaboration, the agenda package states.

The resolution to begin direct negotiations and enter into an interlocal cooperation agreement was approved by the council, each with an 8-0 vote. Council members Michelle Fitzke and Mark Stelk were absent from the meeting.

Before a settlement or negotiated rate is set, a public hearing is held. The council must approve the negotiated rate, and it is referred to the Public Service Commission for final approval.

According to the agenda package, if no one can negotiate a resolution to NorthWestern’s application, at least one of the city attorneys in the interlocal agreement will represent the interests of all affected clients before the Public Service Commission.

Pam Bonrud, director of government and regulatory affairs for NorthWestern, asked the council to treat the negotiations favorably. Bonrud said she was part of the rate negotiations in 2007 and the process went very well the last time.

“We appreciate the opportunity to have that direct dialogue with the four communities that we serve in Nebraska,” Bonrud said. “So that we can show you firsthand why we are asking for the rate review and why the rate increase was necessary at this time.”