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In heated special meeting the West Wendover City Council overrode Mayor Donny Anderson’s veto and voted to go ahead with the feasibility study on the purchase of the Wendover Gas Company.
Anderson vetoed going forward with the purchase of Wendover Gas a day after city council voted to go ahead with the controversial buy out of the troubled company in last Tuesday’s meeting on a 4-1 vote.
CLICK LINK BELOW FOR MEETING
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“As much as I feel sorry for Nancy (Wendover Gas owner Nancy Green), I can’t justify the city spending $2.4 million and get into the propane business, especially not when we have other suppliers coming to town.” Anderson said last week. “I know there is talk about hooking up to the (natural gas) pipeline but shouldn’t that also be a private business venture instead of the city?”
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In that meeting the council voted to accept the appraisal numbers for the gas company and spend up to $18,000 for a feasibility study on whether the City of West Wendover could operate the financially distressed company for a profit.
According to Anderson the ‘high’ valuation for Wendover Gas was estimated to be $2.4 million.
An emergency meeting to override the veto was called for and while the vote remained the same the barb’s thrown especially between Anderson and councilwoman Emily carter were new.
At one point Anderson implied that Carter’s was being hypocritical by supporting the study and perhaps ultimately buying the company with public money when she herself was using one of Green’s competitors for propane.
Carter countered that who she personally bought propane from was irrelevant to the discussion and that the council was only authorizing a feasibility study on whether the city should buy the company and not the purchase itself.
In the past Anderson has been openly disdainful of such studies and has suggested that they are only done to provide political cover for councilmen that they did their due diligence.
“The bottom line is that more often than not the (studies) will tell you exactly what you want them to say,” Anderson said.
At least for Wendover there is some truth in Anderson’s assessment similar studies done for the golf course, the Wendover Utah Airport and the new City Hall all gave glowing assessment that those projects could easily be afforded and built with very little if any undue strain on the local tax base.
In reality not a single one came in anywhere near the estimated cost and the Airport and golf course almost bankrupted the two governments Wendover, Utah and the West Wendover Recreation District that funded them. Wendover Utah was forced to give the airport to Tooele County control while the Recreation District had to supplement its budget with a massive standby and service charge to the local casinos.
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.
If the city purchased the company it would be in direct competition with other privately owned and operated propane suppliers in West Wendover such as Amerigas.
However the city may not be interested in selling propane but rather natural gas. A plan reflected in correspondence between Paul Kvam and the High Desert Advocate this March.
“As a financial analyst, I audited and worked on Wendover Gas before I retired from the PUC in June 2009. To this day, I do not know why Nancy Green built the system. It was doomed to failure from the beginning.” Kvam wrote. “Reading Staff’s original report and pre-filed testimony on Green’s application for a license, I concluded it was full of hopeful assumptions as to system load (sales of propane) and unrealistic profit potential. I once asked Nancy during an audit why she built it in the first place and she said that another party had made preliminary plans to build it and she didn’t want this party to destroy her business.
Well, she ended up building it, and destroying her business! I do believe that a system in Wendover could be successful. First, I would have to be connected to the Ruby pipeline in the north and sell natural gas. Second, everyone (West Wendover & Wendover, UT) would have to connect to it. Natural gas is real cheap these days and its savings, in compared to propane, would pay for the line. Natural gas would diversify the Wendover economy by bringing in new business and saving existing businesses big money in the long run. I’ve talked to Chris Melville about the need to get natural gas into Wendover and others, so I hope I made an impression. The disadvantage natural gas has in Wendover is that Wells Rural sells BPA power real cheap there. But, as sooner you folks go to natural gas, the faster the savings will occur and the better off the community of Wendover will be.”
“I am very uncomfortable about the city buying the gas company and then possibility over building a pipeline and getting into the natural gas business,” Anderson said. “If a private company decided it made sense then it would have my full support but to commit our tax payer dollars to that project, I just don’t know.”
According to very preliminary estimates a pipeline to the Ruby line could run into the tens of millions of dollars.
The meeting is now being webcast on www.coyote-tv.com.
So, let’s look at this from an intelligent perspective: One monopoly (city) is proposing that they buy a failed monopoly. If nancy couldn’t make the business work, she should be forced into bankruptcy and have her assets sold off to a company that can provide this service.
Once again, the people that run West Wendover, should stay out of providing services. They’re not good at providing great service BECAUSE THEY ARE A MONOPOLY.
Nancy should be forced in to bankruptcy and have the assets sold to the highest bidder not the city. This is what happens to a company that can’t compete in the free market. The only think that the city will offer the residents is a higher tax base, poor service and higher prices. They did this with the garbage service and they’ll do it with the gas company. This is what happens in a free market.
I also believe that the government shouldn’t be buying up private businesses that are failing or otherwise. The only problem that I can see if the possibility of having people go cold due to lack of propane while the private propane company is out of business. The City should step in, manage the business and turn it over to a new buyer as soon as possible. Thoughts?
Government should NOT be involved with any private enterprise.
I am in total agreement with Mayor Andersen. I don’t like the fact that even though I do not use propane in my home I am going to be forced to pay for it because I am a tax payer in this city. If the city would stay out of the situation Nancy would have to try to sell her company or go bankrupt. Then IF no other PRIVATE company buys the company I can understand why the city would need to take over. The city could then continue to try and find a private company to buy it in the future. The City of West Wendover needs to stop overspending and should start encouraging business in this town instead of trying to take over everything. In November the voters need to keep this in mind.