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With Assembly's Approval, Gas Utility is Created

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Fairbanks, AK - The Fairbanks North Star Borough passed an ordinance Thursday night that creates the Interior Alaska Natural Gas Distribution Utility.  Proponents hope it will bring natural gas to Fairbanks in a cheap and expedited manner, but approval didn’t come without a last minute curveball.  

The ordinance allows the borough to acquire, own and operate facilities and pipelines to provide natural gas to Fairbanks North Star Borough residents in what sponsor Nadine Winters says is the cheapest and most effective manner.  “There’s been a general lament both about energy costs and also about the lack of a unified voice in the community about what the solution to our energy cost is," she told the Assembly. "There’s some unity among the local government structures in the Borough that we have to do something, we have to do something quickly and that we have to acknowledge that this is a hybrid that the private sector that the private sector can’t take of this problem on its own.  If that was the case, we would have gas and we wouldn’t be in this position.”

The Assembly spent more than an hour picking through the ordinance, questioning everything from the selection process for the Utility’s seven member Board of directors to administrative fees for grant funding. Conditions put forth by both the Fairbanks and North Pole City Councils when they transferred their utility powers earlier this month have to be included in the legislation.  That’s part of the reason why Assemblyman Guy Sattley offered an amendment.

“IANGDU will function first as a facilitator, second as an implementing corporation that contracts partners or joint ventures with private companies and third as a provider slash competitor if services are not currently being provided or if the private entity is not willing to provide them or will not do so in a timely manner," read Sattley.

That language comes from a section in a City of Fairbanks ordinance.  It is not legally binding.  But Sattley opted to insert it into a section of the Borough ordinance that is legally binding. Borough Mayor Luke Hopkins argued that it would create too much confusion moving forward.  “By putting it in code also takes the intent of what the city has as it just views the gas utility first as this, second as this, not that its required to do that." he said.

Sattley’s amendment passed 5-3.  The ordinance passed 6-2 overall.  Assemblyman Matt Want was not present.

There is some question about what Sattley’s amendment means for the creation of the utility.  If Borough Attorney Renee Broker finds that it is problematic, the Assembly can introduce an amending ordinance before it goes into effect November 15th.

The assembly also passed a resolution authorizing startup funding for the new utility.  Borough Mayor Luke Hopkins says the funding is essential to get the utility up and operating. "This utility can’t even buy a stapler at this point," he joked.   Earlier this year, the state appropriated 3 million dollars for the development of a natural gas distribution system. 350-thousand dollars of that will go toward startup costs.