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Fairbanks City Council supports creation of energy utility

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Posted: Tuesday, October 9, 2012 11:48 pm

FAIRBANKS — The city of Fairbanks agreed to support the creation of a borough-sponsored energy utility Monday night but with considerable reluctance and a handful of conditions.

A 5-1 vote by the Fairbanks City Council cleared the next-to-last hurdle for the creation of the Interior Alaska Natural Gas Utility. The mission of the utility is to help bring natural gas from the North Slope to Fairbanks to reduce heating costs in the Interior. The final obstacle to the creation of IANGU is a vote from the Fairbanks North Star Borough Assembly scheduled for Thursday night.

Before Monday night’s vote, the Fairbanks City Council added some amendments making the city’s support conditional on a half-dozen city priorities, among them a rule that would make it harder for the utility to compete with other utilities and a rule that would keep elected officials from working for the utility.

Councilman Lloyd Hilling cast the lone dissenting vote, though council members Vivian Stiver and John Eberhart said they had reservations and only voted in support of the utility reluctantly. Much of the discussion focused on their concerns that the utility would go beyond facilitating a natural gas trucking and distribution system and build one itself.

The Fairbanks council took a notably different approach than the North Pole council, which voted last week to support the utility without any restrictions.

Among the conditions the Fairbanks council tied to their support for the utility were:

• IANGU will not be allowed to compete with other utilities unless the City Council authorizes it. This restriction is in addition to the approval the utility would need from the Regulatory Commission of Alaska.

• IANGU board members cannot be paid more than borough assembly members.

• IANGU must make quarterly reports to the public.

• The borough cannot charge a fee of more than .25 percent for any grants it helps IANGU administer.

• Local elected officials cannot be employed by IANGU “directly or indirectly” until at least a year after they leave office.

• The city’s authorization of the borough to create IANGU is not effective until Nov. 15.

Borough Mayor Luke Hopkins spoke in support of the utility and against the amendments at Monday’s meeting. He said Tuesday he was disappointed in the conditions the city tied to its support, in particular the Nov. 15 start date for the new utility. But he said none of the conditions were “show stoppers.”

If the utility gets borough approval Thursday night, local governments could begin appointing members of the board of directors immediately, but the state’s open meeting law would keep the group from meeting together until Nov. 15, he said.

Under the borough’s proposed ordinance, IANGU’s initial board of directors would have seven members, three appointed by the borough mayor, one by the borough assembly’s presiding officer, two by the city of Fairbanks and one by the City of North Pole. After the initial terms, four of the board members would later be elected by borough residents while the remaining three would remain appointees.

Asked at the City Council meeting who he might appoint to the board, Hopkins mentioned Steve Haagenson, former Golden Valley Electric Association CEO and former state energy czar, and Andy Warwick, a member of Doyon Utilities’ management committee and a former state administration commissioner. Warwick testified at the meeting that a potential conflict of interest likely would keep him from serving on a public utility board.

Hopkins clarified after the meeting that he meant he would like to appoint someone with experience like Warwick’s.

Contact staff writer Sam Friedman at 459-7545.

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