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Interior Alaska municipal natural gas utility board mulls options

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Posted: Wednesday, December 19, 2012 12:00 am

FAIRBANKS — Less than two weeks after Gov. Sean Parnell announced a $355 million financial package aimed at bringing natural gas to Fairbanks, the recently formed municipal natural gas utility busily explored its options under the new package.

The outlay of the funding, which mostly is in low-cost loans with a small amount of grant money, is a boon for taking care of the Interior’s energy woes, but it’s unclear how much of an impact state involvement will have on the price of delivered gas.

The governor’s package has room for the Interior Alaska Natural Gas Utility, which was formed by the borough, the city of Fairbanks and North Pole this fall, but doesn’t guarantee it a seat at the table.

The grant money or low-interest loans could go to the privately held Fairbanks Natural Gas or focus entirely on the construction of a treatment facility on the North Slope.

Speaking at the meeting, Borough Mayor Luke Hopkins, one of the chief supporters of the utility, reminded the board of the three primary goals set in its formation.

“It was my intent that it would be the lowest cost energy solution, that delivers gas to the most people and in the shortest time,” he said.

Hopkins has voiced appreciation for the governor’s attention but has said the benefit to the consumer can and should be maximized through greater state involvement.

Board member Bob Shefchik, the current acting board chairman, agreed and said the utility will need to make its goals clear to the legislature, which has the authority to increase — or decrease — the governor’s funding levels.

Primarily, he said the utility should set a target of delivering natural gas to consumers and businesses at $15 per thousand cubic feet of natural gas, which roughly would cut heating bills by half compared to heating with oil.

He warned against letting the projects, and their impact on utility prices, be constricted by the governor’s funding proposal. Instead, he argued the goal of delivering low-cost natural gas to the most consumers on the fastest timeline should define the project’s cost.

“For years, I’ve always told people that you get to define two things, either the definement of money or the statement of work, you don’t get both,” he said. “In our case, I think we need to describe the statement of work and what’s necessary to get gas and low-cost energy to the community and use that to determine the price and not the other way around.”

The board spent the bulk of its meeting in an overview of a draft of its bylaws, which are pulled together from different municipalities and utilities. The board could take action on such a set of bylaws at its next meeting, scheduled for Dec. 27.

Contact staff writer Matt Buxton at 459-7544 or follow him on Twitter: @FDNMpolitics.

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