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A new approach: Public utility would offer a focal point

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Posted: Thursday, October 11, 2012 12:22 am | Updated: 4:16 pm, Fri Jan 25, 2013.

Fairbanks Daily News-Miner editorial

The Fairbanks North Star Borough Assembly should approve the creation of a public natural gas utility tonight.

The utility would create a much-needed focal point for efforts to bring cheaper natural gas to the Fairbanks area. It would offer a way to serve the most people in a relatively short period of time.

The utility could work with the existing private natural gas provider, which has so far been unable to expand.

Part of the problem has been the multitude of ideas under discussion. We need a single entity that can represent the community’s interest in lowering heating costs.

The municipal gas utility before the assembly tonight is the best bet. 

First, it would create an entity able to receive state grants, which could substantially reduce the cost of the project.

Opponents of the utility note that the state could use its own authority to build portions of a gas system, such as the expensive North Slope conditioning plant, without the creation of a new local agency.

However, the state has had this option for several years and has not exercised it, in part because of squabbles within our own community. Creating a utility representing the broader community’s interests will offer an entity with which the state can work.

Second, the public utility would be exempt from a variety of costs and obligations incurred by a private utility.

It wouldn’t pay taxes. It could issue tax-exempt bonds. It wouldn’t have shareholders who expect a profit. 

Opponents argue that all these advantages are likely to be canceled out by several factors.

The public utility would have higher operating costs caused by political interference, union contracts and bureaucracy, they say. The state’s regulatory commission would cap the profits earned by a private utility.

And the promise of low-cost revenue bonds is a chimera, they say. The bond market would charge a premium to provide the money to build the start-up public system.

Those arguments raise some legitimate issues. Nevertheless, the obstacles that have discouraged a solely private solution aren’t going away. It’s time for a different approach.

Heating costs are placing an oppressive economic weight on every household and business in Fairbanks.

We can’t wait any longer.

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