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What will gas cost?

There’s no simple answer, say officials

Posted: November 1, 2012 - 10:25am

On Monday, more than 60 local residents attended the last of three neighborhood meetings the city of Homer held to discuss plans for distributing natural gas to the area. City Manager Walt Wrede described details of the proposed project and associated costs. 

Also answering questions were John Sims, manager of Enstar Natural Gas’ corporate communications and customer service, and Charlie Pierce, Enstar’s southern region manager.

“The city council is putting a big idea on the table,” said Wrede of the proposed Natural Gas Homer Special Assessment District that would, if approved, make natural gas accessible to almost the entire city. 

As currently being considered, the district’s boundaries match the city limits, with the exclusion of about 10 percent of the city lots due to access or land-use restrictions. Providing the city with natural gas would require an estimated 73 miles of two- to four-inch pipe through the city. It would be built over two construction seasons, with the downtown, or core, area beginning in the spring of 2013. 

The amount to be financed by the city is $12,657,147. That includes Enstar’s cost to build the distribution system throughout the city, not to exceed $12,160,632; a $316,515 administration fee consistent with the city’s fee schedule; and $180,000 for associated project costs such as seasonal inspectors, locating utility, project management and equipment.

The per-lot assessment is estimated to be $3,283.30, plus interest with a 10-year payout and annual payments of $405. The first payment would not be due until the project was completed.

“This is the biggest special assessment district the city has ever anticipated,” said Wrede.

“People are concerned about what’s the total cost. A bigger unknown is what it costs to convert a house,” said Wrede, referring to individual hook-ups to natural gas.

The service line cost per hook-up is $1,290 for the first 100 feet, with $2 for every additional foot, said Sims. He invited individuals to contact him or other Enstar representatives after the meeting to address specific situations.

Sims also was asked about an anticipated natural gas shortage for Southcentral Alaska, as recently reported by Petrotechnical Resources of Alaska.   

“For the past couple of years, southcentral utilities have been trying to figure out the activity in Cook Inlet needed to meet the forecasted demand,” said Sims. 

According to the forecasted demand, 13.6 wells needed to be completed per year to supply the demand. However, only 15 wells were completed in the past three years.  The anticipated result is a gradual decline in available natural gas with a shortage beginning in 2014-2015.

“That means gas has to come from somewhere other than Cook Inlet if the local activity cannot meet the demand,” said Sims.

Where the gas will come form is unknown at this time.

If the shortage was anticipated, why does Alaska export liquid natural gas, Sims was asked.

“That’s been a tough one for Enstar, but it’s a supply-and-demand issue,” said Sims, adding that the export subsidized at-home costs. “It’s a chicken-and-egg scenario.”

Will the cost of utilities go up if natural gas has to be imported to Southcentral Alaska? Yes, said Sims, but how much that will be depends on the volume being purchased.

Enstar, Homer Electric Association, Chugach Electric Association, Matanuska Electric Association, Municipal Light and Power and other utilities made presentations about the effects of the anticipated shortage to the Regulatory Commission of Alaska on Oct. 24. 

Other questions for Enstar related to placement of the trunk line, the line that will bring natural gas through town and how soon natural gas will flow once the line is in. Pierce said it would be available at each hook-up as soon as the hook-up is installed.

Property owners within the proposed SAD who object to its formation may file a written objection with the city clerk by Jan. 25. If more than 50 percent object, the city council may not proceed with the SAD. 

Public hearings are scheduled for Jan. 14 and 28, at which time the council will vote on a resolution to determine whether to proceed. 

If more than 50 percent of the property owners object, Enstar will still build the trunk line, but property owners would then deal directly with Enstar and, as a result, pay a higher hook-up price, said Wrede. Approval of the SAD makes it possible for the entire city to be able to access natural gas at a lower cost. 

“If we don’t do it like this, it could end up with some people getting it and other people never getting it,” said Wrede.

• More information about the Homer natural gas assessment district can be found online at cityofhomer-ak.gov/

• Information on converting to natural gas can be found online at enstarnaturalgas.com/ResidentialServices.aspx, click on “Converting Your Homer to Natural Gas.”

• For specific questions, call the city’s natural gas hotline at 435-3198, email naturalgas@ci.homer.ak.us or call Enstar at (855) 889-7575.

McKibben Jackinsky can be reached at mckibben.jackinsky@homernews.com.

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