Homer Alaska - News

Story last updated at 5:28 PM on Tuesday, November 22, 2011

Forum's message: Write Parnell about gas line



Photo by Michael Armstrong

Homer City Manager Walt Wrede, second from left, speaks at the Anchor Point-Homer Natural Gas Line Forum Nov. 17 at the Alaska Islands and Ocean Visitor Center. With him, from left to right, are Kachemak City Mayor Phil Morris, Wrede, Homer Chamber of Commerce Executive Director Monte Davis, Rep. Paul Seaton, R-Homer, and Kenai Peninsula Borough Assembly member Bill Smith.

At a citizens action forum held last Thursday to update Homer on a proposed Anchor Point to Kachemak City natural gas line, officials kept repeating the same message:

Write Gov. Sean Parnell. Oh, and by the way, please write Parnell.

The forum, presented by the Homer Chamber of Commerce with a grant from the Kachemak Bay Board of Realtors, brought together local and state officials to talk about the gas line. Chamber director Monte Davis moderated the meeting.

Last year, the Alaska Legislature approved a $10 million grant for extending a natural gas transmission line from Chapman School in Anchor Point to Homer, only to see Parnell veto it. The year before, Parnell kept in $525,000 of a $4.5 million grant to build the pipeline from the North Fork to Homer city limits. The $525,000 paid Enstar Gas to build a pressure reducing station and a short section of line along the Sterling Highway.

Now, lower Kenai Peninsula governments are trying another approach to get Parnell on their side.

"The strategy now is to get the governor to put it in his budget this year," said Homer City Manager Walt Wrede. "If it's in the governor's budget and he can see his way to do it, there's a really good chance it will pass."

The governor is now working on his budget, scheduled to be released about Dec. 15.

If built, an 8-inch diameter pipeline would continue from Chapman School and along the Old Sterling Highway until it meets the Sterling Highway. There it would go south to West Hill Road. The pipeline would go up West Hill to the Fairview Avenue right of way to East End Road. From there it would go into Kachemak City, ending at Waterman Road. Enstar would build the pipeline under a contract from the city of Homer, the grant recipient.

Wrede said Enstar chose the Fairview Avenue route because it's easier to build and comes closest to major civic users, such as three Homer public schools and South Peninsula Hospital. Kenai Peninsula Borough Assembly member Bill Smith calculated that if all city, borough, state and federal buildings in the affected area converted to natural gas, the annual savings would be $1.1 million a year — paying for the $10 million grant in less than 10 years.

The biggest user, South Peninsula Hospital, would save almost $400,000 a year.

That cost savings to the borough is why the assembly, former Mayor Dave Carey and Mayor Mike Navarre support the gas line, Smith said.

"We could save on the order of 50 to 60 percent of the cost of heating these buildings," he said.

"It's going to lower the cost of living," Wrede said. "Hopefully it will help businesses create new jobs and new opportunities."

"This is the biggest economic driving project," said Rep. Paul Seaton, R-Homer. "It would make more difference to the economy of Homer than anything we could possibly do."

Side lines would still have to be extended from the main line. Through local improvement districts or special service areas, neighborhoods could tax themselves to extend gas service.

Kachemak City Mayor Phil Morris noted that his community approved a 1-mill rate increase to build out service once the line is constructed. Anchor Point residents recently approved a borough unified service area district, or USAD, to pay for the cost of extending gas to areas off the Sterling Highway. Other areas in the borough, such as Diamond Ridge, also could form USADs to bring gas from the line.

Charlie Pierce, Enstar general manager for the Kenai Peninsula, said the cost per foot for an 8-inch distribution line is $17.64. New users pay $930 for a service line to their buildings for up to a 100-foot line, with a $2 a foot charge over that. The cost per mile for a distribution line is about $930,000.

Davis urged citizens to emphasize to Parnell and others the personal impact to homeowners and businesses would be with cheaper energy.

"They don't get enough letters from people saying 'My heating bill is $600 a month. If it was $300 a month I could — fill in the blank,'" he said. "It's important they hear your story."

Seaton suggested people email Parnell (see box, this page for addresses). Keep letters short and to the point, he said.

In vetoing the gas line last summer, Parnell said Homer area residents didn't have any "skin in the game," as Seaton put it — they weren't bringing money to the table. One way to convince Parnell citizens are serious is to put up some money, Seaton said. Under Enstar's tariff, it charges users the same rate in Anchor Point as it does in Anchorage.

However, Seaton said in talking to the Regulatory Commission of Alaska, he found an old tariff where a $1 per million cubic foot surcharge could be added. If enacted, it would be in place for 10 years, about a 12 percent increase of the $.91 per hundred cubic feet Enstar residential customers now pay.

"Is that approach where the governor wants to be and he'd support it?" Seaton asked. "He's thinking about it. We don't have a commitment yet, but it gets him in the direction he wants to go."

Another stumbling block has come from Sen. Tom Wagoner, R-Kenai. Now representing the central and upper peninsula, part of his new district will include the lower peninsula if reapportionment stands.

"He pretty much spelled out he doesn't see the point of having the state pay for that trunk line," Morris said of a conversation he had with Wagoner. "He's a problem."

Wagoner has suggested to Homer that it encourage gas companies to drill closer to town said his aide, Mary Jackson. Wagoner was on vacation and not able to comment.

"When a well is drilled and a discovery is made, the producers pay to take it to market," she said. "They put in the pipeline and they pay for it, not the public entity."

Jackson said Wagoner does support encouraging gas companies to explore and drill through exploration credits.

In response to a question from Homer City Council member Francie Roberts about what happens if Parnell doesn't put the gas line in his budget, Seaton said he didn't know. If the line isn't in the budget, it doesn't mean Parnell doesn't support it, he said.

"My hope is people who want the gas line will communicate with the governor about their personal situation," Seaton said. "Mostly it's going to be him hopefully realizing there's this huge economic disparity."

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