Residents will decide if city sells gas service

By Breyana Segura - Chief Staff Writer | October 16, 2024

Referendum next year in Pearsall

Pearsall city councilors will hold a special election on May 3 next year to propose a sale of the natural gas utility distribution system.
The decision comes as City Hall acknowledges rising expenses in the system, an ongoing need for replacement of antiquated infrastructure and rate increases.
“The selling of the city gas system has been a point of discussion for several months,” City Manager Federico Reyes said. “With a shrinking customer base, growing demands and regulations from the Texas Railroad Commission and aging gas infrastructure, the city is seriously considering the sale of the gas system.
“Under the current rate structure, the gas system does not generate the capital necessary to make significant improvements,’ Reyes added. “The gas system and its customers currently rely on the water/wastewater system to offset any financial losses.”
Reyes reiterated the financial stress the utility system has placed on the city for years.
“We are subsidizing gas,” he said during a Tuesday, October 8, meeting. “The gas system does not pay for any debt.”
According to records filed at City Hall, an imbalance continues between revenues and expenditures in the utility department. In 2022-23, the city recorded a $445,000 deficit; in 2023-24, it was $385,000.
According to Mayor Ben Briscoe, the financial loss is evident in the utility department’s records.
“You can see our reflective losses in there annually,” the mayor said. “Other utilities are making that payment. There is plenty of proof that we need to move on this.”
Reyes said there were 1,554 customer accounts in 2007-08 but the number had decreased by nearly half over a 16-year period to only 776 2023-24.
“We are losing customers; we have been for years now,” the city manager said. “Not to mention there are twenty-six miles of pipe that need replacing.”
In December, councilors discussed a possible rate increase in the utility system after West Texas Gas (WTG), the natural gas supplier for the city, imposed a 19-percent increase.

Representatives from Clarence Capital Partners, a Florida-based investment company, gave a presentation on the possible purchase of the utility system.
Briscoe said further talks regarding the sale of the utility system would be halted until after budget season.
Councilor James Leal, who voted against the special election, urged the city administration to upgrade the system instead of selling it.
“We have talked about running the city like a business, I would like to see that happen,” Reyes said. “There are three thousand other customers, water and wastewater utility customers that are subsidizing seven hundred others. My recommendation to council is give it two or three months to let the public know what the potential implications are.”
Reyes noted that a contract signed in 2014 with Johnson Controls was to replace components of meters and it did not replace the entire meter.
“You will have to spend hundreds of thousands of dollars to replace meters that we are already in the red,” Reyes said to Leal’s request to invest monies into repairing the antiquated infrastructure. “You would have to make a capital investment on meters alone, with the goal to recover [monies], then setting rates. I can give you the playbook but it is a playbook you may not want to see.”
Should the voters decide to sell the system; the final contract will be approved by councilors.

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