Customers on Vicksburg’s gas system should see a 5 percent reduction on their rates beginning Nov. 1.

Mayor Paul Winfield announced the savings in a press release Tuesday afternoon, but later that day said the reduction would have to be approved by the Vicksburg Board of Mayor and Aldermen at its next meeting Oct. 10.

“My administration is happy to pass our natural gas cost savings on to our constituents,” Winfield said in the release. “We will continue to proactively manage our utility systems during these difficult economic times to benefit our customers.”

Vicksburg’s gas rates are set by ordinance. The ordinance has an adjustment clause that allows the city to automatically adjust rates to cover increases in the price of gas to the city.

Winfield said he did not know whether the board will amend the ordinance or adopt a new one.

“We’ll have to check with (city attorney) Lee (Thames),” he said.

He added the board could consider other rate reductions in the future depending on the weather and the future price of gas.

Winfield said the cut is the result of a study by Utility Management Group of Flowood, the city’s gas consultant, which reviewed the city’s gas system.

“They looked at our gas rates and gas usage, our cost of operation and the price of gas on the New York Mercantile Exchange,” he said.

Howard Randolph, Utility Management Group president, said the company was able to reduce the city’s cost of gas by 5 percent.

He said the city could realize a savings of about $250,000 per year from the reduction, depending on the weather and the cost of gas.

He said the company developed a program to purchase gas at a fixed market price for the five winter months — November through March — as a hedge against increased rates. “We still have two months left (to buy),” he said, adding the average price was $3.35 per thousand cubic feet.

Randolph said the city’s gas rates to customers are determined by its cost of gas, which includes the purchase price at the wellhead, transmission and storage fees, and the cost of operation. The city’s cost of gas, he said, is $7. He did not have a cost of operation.

“What we have done is reduce that cost of gas by 35 cents, to $6.65,” he said.

Vicksburg uses 700 million cubic feet, or mmcf, a year — about 500 mmcf is used in the winter.

The city’s current minimum rate for domestic use is $9.45 per month for the first 500 cubic feet of gas for customers inside the city limits and $11.81 per month for customers outside the city limits. The industrial rate is $12.06 per 1,000 cubic feet for the first 50,000 cubic feet.