Mono County Grand Jury 2017-18: Investigation #05

Verified nor audited AmeriGas’s financial records to determine the accuracy of the 2% franchise fee, nor has TOML maintained on an annual basis a record of the methods of calculation of the franchise fee.

Ensured that the access fee imposed for pipeline use, and adjusted every 3 years, is the same for all suppliers who access the pipeline and that the fee shall not exceed the cost AmeriGas attributes to its own use.

Reviewed and/or verified the Capital Recovery Analysis (CRA) to justify the continued charge of 32 cents per gallon. The CRA was levied to offset Rock Creek Energy’s initial costs of system construction and maintenance.

Ensured that AmeriGas submit an Emergency Response Plan on an annual basis. 10

Required AmeriGas to provide updated as-built plans for utility lines they acquired during their purchase of the infrastructure.

Required AmeriGas to annually submit changes to plans and/or reports of their inventory of facilities to the Town Engineer.

Considered whether the Agreement has unfairly had an impact on competition for propane services, or whether the Agreement has had a negative impact on consumer interests.

The Town audit AmeriGas to ensure the proper calculation of the 2% franchise fee.

The Town notice and hold the appropriate hearing(s) to determine whether to re-negotiate or modify the Franchise Agreement, on terms designed to protect the Town’s citizens from a disruption of adequate propane service including noticing of rate changes.

The Town take provisions to ensure the health and safety of the citizens of Mammoth Lakes, and the various properties within or adjacent to the Town’s jurisdictions and/or any other authorized remedies along with promoting competition.

The TOML shall monitor and enforce all terms of the Franchise Agreement as outlined in the findings above for better fiscal management.

The TOML Accounts Payable / Finance Department shall refine its record keeping system so as to better monitor invoices, bills and contracts to ensure that it acts in the best interest of the businesses, residents and property owners within the town of Mammoth Lakes. Mono County Grand Jury Final Report for the Year 2017 – 2018 Investigation #5 Town of Mammoth Lakes Propane Billings Final Report by Grand Jury Investigative Committee Analysis: Reference Numerous citizen complaints have arisen over the last several years that AmeriGas, one of the two propane providers to the community of Mammoth Lakes, is increasing propane rates, contrary to the terms and provisions of existing written agreements between AmeriGas and those citizens and/or HOA’s all while asserting its compliance with such agreements. The Grand Jury has examined billings from AmeriGas to the Town of Mammoth Lakes from several Town facilities to see what TOML was paying for its propane. Methodology: AmeriGas invoices to TOML for five Town owned facilities were requested. The invoice periods were not specified except to cover at least four seasons. TOML staff remitted to the Grand Jury invoice statements for the period of 7/2016 through 2/2018 but stated that they could not locate some invoices. Consequently, Grand Jury members directly contacted the local AmeriGas office to acquire the missing invoices, with limited success. Billing rates in cost per gallon paid by TOML to AmeriGas are included in the Table below. In addition, cost per gallon paid by TOML to Eastern Sierra Propane for the Lake Mary at Lakeview Road intersection is included for comparative purposes. Blank spaces represent missing invoices or times of the year when deliveries may not have occurred. Findings:

Discrepancies in the monthly rate charges were noted between various sites. For example, in 12/2017 TOML rates varied from $1.94 to $5.02 per gallon between the four sites.

The TOML has not maintained complete records of its monthly bills.

The TOML does not appear to have a negotiated contract for rates for its propane purchases.

The TOML has shown no evidence of its actions to internally review, dispute, audit or negotiate propane rates.

The TOML has not been acting in the best interests of its citizens due to its lack of fiscal oversight. TABLE – RATES CHARGED BY AMERIGAS AND EASTERN SIERRA PROPANE TO THE TOWN OF MAMMOTH LAKES* Eastern Sierra Propane Cost Per Gallon paid by for Lakeview Rd @ TOML to Amerigas Lake Mary Rd Airport Invoice Town Community Terminal Old Police Date Yard Center (Two Meters) Dept. 7/2016 $2.63 8/2016 $2.64 9/2016 $2.79 $1.80 $2.23 10/2016 $2.79 $1.87 $1.87 11/2016 $3.15 $1.94 $1.93 $2.33 12/2016 $3.33 $1.96* $1.99-$2.02 $2.00 $2.43 1/2017 $3.63 $2.10-$2.17 $2.17 $2.63 2/2017 $3.94 $2.25* $2.29-$2.25 $2.25 $2.63 3/2017 $3.94 $2.26 $2.13 $2.63 4/2017 $3.94 $2.15 $2.63 5/2017 $3.94 $2.13* $2.15 $2.13 6/2017 $3.94 $2.06 7/2017 $4.08 8/2017 $2.43 9/2017 $2.58 $2.08 10/2017 $4.54 $2.18 $2.19 11/2017 $4.64 $2.28 $2.27 $2.30 12/2017 $5.02 $2.33 $2.33 $1.94 1/2018 $2.99 $2.38 $2.40-$2.38 $2.33 2/2018 $3.10 $2.37 $2.38-$2.38 $2.37* * Invoice received directly from AmeriGas Note: Blank cells = information was not available

The TOML proceed to negotiate its propane rates with all available propane providers.

The TOML Accounts Payable Department shall refine its record keeping system so as to better monitor invoices, bills and contracts to ensure that it acts in the best interest of the businesses, residents and property owners within the town of Mammoth Lakes. 13