City Council To Purchase Wendover Gas Company?

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Three years after a hostile takeover of Wendover Gas by the City of West Wendover was narrowly averted, the city and the financially troubled utility are in talks for a friendlier takeover deal

Late last month West Wendover city officials, Wendover Gas owner Nancy Green, and lawyers representing the five Wendover casinos began talks about the possible purchase of the company by West Wendover confirmed Wendover gas trustee Steve Shute who also attended the meeting.

“It was an interesting meeting,” Shute said. “All the principals were there. Of course the details will still have to be discussed and finalized.”

The biggest detail of course will be the price. According to Shute that will be largely up to an independent appraisal of just how much the gas company is worth.

Right now that answer could be– not much. Once the principal supplier of propane to the Nevada/Utah border town, Wendover Gas has been shedding customers and struggling with supply.

A major supplier of propane in Wendover for almost half a century, Green created Wendover Gas in 1997 and began piping propane to some residences and businesses.

In order to secure funding and right of way to lay the pipes Green and the city agreed on a franchise ordinance that gave Wendover Gas a monopoly on all piped gas. Where the ordinance falls short Green complained to the council is that the monopoly applies only to piped gas. There is nothing  in the ordinance that prevents a business or a home from buying propane from another supplier and filling a tank on a regular basis.

Also by installing gas lines, Green’s pricing came under the jurisdiction of the Public Utilities Commission which had to approve each and every price adjustment Green wanted to make, while any potential competitor could slash the price of propane they were charging at a moment’s notice.

And that is exactly what happened. Where she once had all of the five major Wendover casinos as her customers Green said now she had none.

While Green lost most of her major commercial accounts she has been able to retain most of her residential customers. PUC investigators made frequent mention of supply problems in 2005 and in 2007. In 2009 Green was just days away of losing her company to the city when at the almost the last minute she was able to secure a new source of propane after her original supplier refused to deliver more until he had been paid at least half of a $140,000 bill.

In December the city council was informed that Wendover Gas was some six months behind on its franchise fee payments by City Manager Chris Melville.

“They are behind two quarters,” Melville said at the time. “And those were light quarters during the spring and summer when the demand is light. For the year the franchise fee is about $60,000.”

West Wendover also charges a franchise fee to a variety of companies providing utilities to the public such as the telephone company, the electric company, cable television and cel phone providers.

In addition to being the smallest company assessed a franchise fee, Wendover Gas is also unique from the rest because it must by a physical product, gas, from a wholesaler and store it on site.

Over the reservations of Melville the West Wendover City Council extended the deadline for Green to become current on her owed franchise fees by April 1, 2012. That extension coupled with a temporary 10 to 15 percent rate hike has allowed the gas company to get caught up in its arrears to the city, Shute added.

That rate hike may expire by the end of the first quarter. If it does Wendover Gas could find itself back in the same predicament perhaps in worse shape.

Since the rate increase went into effect the company lost some of its last few large commercial customers and even some of its residential customers. The exodus was not helped by misinformation that the rate increase would be of 50 percent rather than the 10 to 15 percent it actually was.

But while Wendover Gas is struggling it did not have to, Shute said.

According to the trustee Wendover Gas would be doing just fine if the Wendover gaming industry had not gone out of its way to boycott Nancy Green and her company.

“Frankly it is astounding to me,” Shute said in an interview Tuesday. “If the Peppermill had approved of LNG system they would have saved $200,000 this winter alone.”

“My number one goal is to bring natural gas to Wendover to replace propane altogether,” he said earlier. “I did put together a deal this summer that would have linked with the pipeline and would have put Wendover gas almost completely out of the picture. It would have also saved the West Wendover, Nevada and Wendover, Utah a combined $400,000 a year in energy costs. But to work we needed the support of Wendover casino industry. We didn’t get it.”

Shute acknowledge the one of the reasons for the projects failure is the animosity between Nancy Green and some of the other principle players in town.

“There are certainly personalities involved,” Shute added. “One would think that they wouldn’t be a concern in business decisions.”

But in Wendover it is. And while the boycott of Green and her company may be devastating on personal level , it also may alleviate fears that the gas company would not be able to pay for itself after she is forced out of the picture.

“This was a raw power play,” said a participant at the meeting. “It really left a bad taste in my mouth that they could do something like this to a woman and a business that has been around so long. On the other hand it probably wouldn’t be too much of a risk for the city to take it over.”

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