Oct. 5, 2012
To the editor:
I seldom find cause to disagree with Dermot Cole, but on the topic of a borough municipal gas utility, I would offer my thoughts that cause me to be less enthusiastic on this approach.
Let’s take a look at the three existing primary utilities: Golden Valley Electric Association, a co-op, and Golden Heart Utilities, a privately owned company, are both regulated by the Regulatory Commission of Alaska. All rate increases must withstand the scrutiny of the commission staff and be approved by the commission as justified. Both of these utilities have raised their rates numerous times in the last four years.
Fairbanks Natural Gas, whose rates are not regulated by the state, has not raised its rates in more than four years. At the current price of heating oil, the cost of a million btus produced by Fairbanks Natural Gas is considerably less.
If the borough gas utility is created, it should not be at the detriment of Fairbanks Natural Gas, whose expansion has been confined by the limited availability of Cook Inlet gas.
Other questions that come to mind are: Would all residents in the municipal gas utility’s service area be required to buy their gas from the utility, or could a private company offer delivery service? Will there be a “postage stamp” rate structure, where the more densely populated subdivisions subsidize the sparsely populated areas? Do you think that this proposed new utility would be staffed by a multitude of $150,000- to $400,000-per-year bureaucrats? If a municipally owned utility is such a great concept, why did the city of Fairbanks get out of the business?
If the purpose of this borough municipal gas utility is restricted to being a conduit for obtaining federal and state grants and low-interest, tax-exempt financing to build and then lease out the facilities to an experienced, operating gas utility, then great.