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West Wendover tax payers might end up subsidizing a city owned gas company without their knowing it warned Wendover Gas Trustee Steve Shute in a Tuesday interview.
“The Public Utilities Commission will still oversee the company in regards to safety,” Shute said. “But unlike private companies the PUC has no authority regarding what the city could charge for the gas.”
Shute made the comment in response to a letter from Peppermill President William Paganetti published on page two.
It was in part the PUC’s tight price controls that lead Wendover Gas owner Nancy Green to finally agree to the city’s possible purchase of her company. And according to Shute those price constraints would disappear if the city of West Wendover became the new owners.
“Normally the PUC allows for a 10 to 15 percent mark up over the price of wholesale propane or liquefied natural gas,” Shute explained. “But city owned gas companies can charge whatever they want. They can even charge at a loss.”
A major supplier of propane in Wendover for 50 years, 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.
Shortly after installing her gas lines, Green lost the Peppermill account and one by one the rest of major customers in Wendover.
In the past Green claimed she was a victim of a boycott a charged echoed by Shute, but disputed in the Paganetti letter.
While backing off of that accusation this week, Green affirmed in a letter that the only way anyone operating a gas company would succeed would be to have all the major users of gas on the system.
“I Nancy J Green President and Owner of Wendover Gas and Propane of Wendover, Inc., In Spring 2011 I was trying to bring cheaper fuel to Wendover area for all.
When the Casino’s declined to participate we had to decline on our proposal with an LNG facility.
I have signed a letter of Intent with the City of West Wendover for the Sale of both Wendover Gas and Propane of Wendover. And they have accepted the letter.
I still believe that whoever brings Natural Gas to The City limits, all Casinos, Current and Future users would need to participate.
Sincerely,
Nancy J Green”
She wrote.
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 of 2011 the city council was informed that Wendover Gas was some six months behind on its franchise fee payments by City Manager Chris Melville.
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.
There were however three notable dissents regarding the purchase in the debate. The first came from Councilman Izzy Gutierrez who voted against the plan, who said he against the city taking over yet another business. The councilman’s concerns were also echoed by Mayor Donnie Andersen.
The most cogent objections however came from Wendover, Utah Mayor Mike Crawford. In addition to raising objections to West Wendover possible ownership of real property owned by Wendover Gas in his town and questioning whether his constituents would be forced to become customers of the sister city.
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All three also questioned whether West Wendover could handle the company.
While potentially the system could be profitable in the private sector, it does require a certain level of expertise. Also if Wendover Gas becomes part of the city its workers could become members of the union whose pay scale and pension benefits dwarfs that of the private sector.