Homer Alaska - News

Story last updated at 3:43 PM on Wednesday, May 30, 2012

What's next in getting gas here?

More questions than answers as process begins


As city of Homer officials consider how to build out a natural gas distribution system from the feeder main line being extended from Anchor Point to Homer, residents and their representatives outside the city limits have started their own process of bringing gas to neighborhoods along the route.

In Anchor Point, property owners last summer started the Kenai Peninsula Borough process for creating an assessment district. Under the borough's Utility Special Assessment District, or USAD, process, owners of 268 lots west of the Sterling Highway and north of the Anchor River became part of the Anchor Point USAD. Construction starts this summer on a distribution line — the line from the feeder line along the Sterling Highway that now ends at Chapman School — into those neighborhoods. Gas should start flowing as construction proceeds, but certainly by the start of the winter heating season, said John Sims, an Enstar Natural Gas spokesperson.

A big first step for Enstar, though, is getting Regulatory Commission of Alaska approval to build the next phase of the gas line, he said.

On the south end of the proposed feeder line, property owners in Kachemak City also have begun forming a local improvement district, or LID, to fund a distribution line in Homer's neighboring city. The Kachemak City Council votes in July on approving the LID. If more than 50 percent of the property owners object, the LID won't happen. So far, only about 15 percent have objected to the LID, said Kachemak City Mayor Phil Morris.

In the unincorporated areas on the lower Kenai Peninsula, property owners haven't talked to him yet about forming USADs, said borough assembly member Mako Haggerty.

"I think everybody's just waiting to see when it gets here," Haggerty said.

How Anchor Point and Kachemak City have proceeded can give other borough residents an idea of what's ahead. Here are some questions raised by forming assessment districts.

Question: What will Anchor Point USAD members pay per lot for natural gas?

Answer: According to a resolution passed by the assembly, the 268 parcel owners will share the $723,410 cost of laying 39,610 feet of line in the area, calculated for the 2012 construction season at $18.26 per foot of line. Landowners split the cost on a per-lot basis, or $2,699.30 a lot, no matter the size of the lot. That amount is assessed over a 10-year period.

Q: What will Kachemak City property owners pay?

A: Morris said initial estimates from Enstar put the cost at $1.7 million split among 330 lots, or about $5,100 a lot. That is about $32 a foot for about nine miles of line, Morris said. As in Anchor Point, the assessment is charged over 10 years.

Kachemak City originally had passed a 1-mill tax increase to pay for construction. Because a property tax could rise or fall based on property value, an assessment was thought to be fairer than a property tax mill rate increase.

Sims said the per-foot price difference between Anchor Point and Kachemak City is due to different construction times — this summer compared to 2013 — as well as differences in nonstandard costs such as right of way issues, building in wetlands and building in areas with paved streets. As an example of the difference between 2012 and 2013 costs, Sims cited a recently approved tariff for Enstar service lines that raises the rate.

Q: What is that service line rate?

A: Homeowners connecting to natural gas also pay a flat service fee for a line up to 100 feet. The 2012 rate is $930, with $2 a foot over 100 feet. If a business needs more gas and a larger pipe, there is a fee for more than 2-inch pipe. The meter installation charge is $271 for most homeowners. For 2013, the service line fee goes up to $1,290 and for the meter is $333.

Q: What if the feeder main line goes right by a lot? What does that property owner pay?

A: Properties next to a feeder main line are considered outside an assessment district or LID. They don't pay anything except for a service line fee if a USAD or LID is formed. The cost to tap into a feeder main line is different than tapping into a distribution line, Sims said. As Enstar does its engineering for the feeder line, it will contact property owners to coordinate service, he said.

Morris said there are about 60 lots like that in Kachemak City, most of them on East End Road. The feeder main line goes out to about Mile 5 East End Road near Waterman Road. Neighborhoods near the feeder line in unincorporated areas of the borough beyond Kachemak City could form USADs to connect.

Q: How does the USAD process work?

A: Landowners in an area wishing to form a USAD start by contacting the special assessment coordinator for the borough, Marie Payfer, at (907) 714-2250. Organizers of a USAD circulate a petition seeking agreement from property owners in the proposed USAD. To pass, 70 percent of the owners have to sign the petition within 30 days. USADs can be as small as a dozen lots, said borough tax assessor Tom Anderson. The borough assembly votes on the USAD.

"It's kind of a step-by-step process," Anderson said. "It has to go back to the assembly several times."

The process takes a minimum of three months, he said. There's no reason borough landowners couldn't start the process now, Anderson added. In Kachemak City, the council plans to have its LID approved this year so construction of the distribution line could be coordinated with construction of the feeder main line.

"We think we're organized," Morris said.

Kachemak City is at the mercy of Enstar and its contractors, though, and can't assess property owners until service actually starts, Morris said.

Q: How does a property owner know if forming a gas USAD is worth it?

A: Sims advised home or business owners thinking about forming a USAD to first look at their energy needs. Although predicted energy savings are 60 percent, a homeowner might not be able to afford converting from an oil furnace to a gas furnace.

Landowners thinking about a USAD can talk to Enstar and get some estimates for the cost of connecting to a neighborhood from a feeder line. As engineering and construction proceeds, Enstar will hold community meetings over the next year to keep citizens informed.

"It's confusing. It's complicated," Sims said. "Depending on where you're located, it could be expensive."

Michael Armstrong can be reached at michael.armstrong@homernews.com.