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Gas Utility Board Hears Concerns, Cautious Support In Lead-up to Tuesday's Key Vote

Tim Ellis/KUAC

About 60 people showed up Thursday night to tell the Interior Gas Utility’s board of directors what they think about the IGU’s proposed $331 million deal to launch and operate a public natural-gas utility. Those who spoke expressed a range of opinions that gave board members a lot to think about as they prepare for a critical vote on the deal Tuesday.

It’s been nearly four years since the state authorized the IGUto build a system to bring natural gas to the Fairbanks area. And on Tuesday, IGU board members will consider taking a huge step toward that goal, when they vote on a $331 million deal to buy and build the facilities needed to bring natural gas here, then store it and distribute it to homes and businesses throughout the area.

Board Chair Mike Meeks says utility officials have held two public outreach meetings over the past 10 days and other sessions to help explain the complex deal.

“We’ve been spending the last few weeks hitting North Pole, hitting Fairbanks, and providing the public with information,” he said. “And we’ve had about five-and-a-half hours of questions and answers and information going to the public.”

Meeks said Thursday’s work session was dedicated to giving the people their turn to talk: “Tonight, we listen to the public.”

The public included local clean-air advocate Jimmy Fox, who sat in on both of the most recent meetings.

“I came into those meetings skeptical,” Fox told board members, “and I have to say after many, many hours of following up with what I heard, having further conversations, I’m feeling much, much more confident about the proposal before you.”

The proposalcalls for using the $331 million package of grants, low-interest loans and bonding authority offered by the state to create what IGU officials call a unified utility owned by the borough. Fifty-nine-point-five million dollars would go to the Alaska Industrial Development and Export Authority to buy Fairbanks Natural Gas and the Titan LNG plant in Southcentral, along with a fleet of trucks to bring it to Fairbanks. The rest of the package would pay for building another storage facility in the Fairbanks area and buildout of the local distribution system. The deal also includes a three-year natural gas-supply contract with Hilcorp Energy.

'Who's going to spend ten thousand dollars to convert,' she said, 'and then pay more for gas after they’ve already converted?'
– Sarah Obed,
Doyon Ltd.

But Sarah Obed says the IGU’s estimates on the number of people who’ll convert their home-heating systems to natural gas are too optimistic, because the utility won’t be able to keep the price of gas low enough to compete with fuel oil or wood. And that in turn won’t convince people to spend money to convert to gas heat.

“Who’s going to spend ten thousand dollars to convert,” she said, “and then pay more for gas after they’ve already converted?”

Obed is vice president for external affairs for Doyon, and she says buying FNG and Titan’s assets would be a costly mistake. She says the IGU should instead invest in a local gas supply that comes in a pipe instead of a tanker, like what Doyon is trying to develop with exploratory drilling in the Nenana basin.

“They basically will be investing in all this LNG infrastructure, which you wouldn’t need if you piped gas to Fairbanks,” she said.

Others, like Clark Milne, urged the board to approve the deal, because it’s an essential part of the borough’s plan to improve air quality by reducing use of heating systems that burn wood or coal.

'... We can get people to convert (to heating with natural gas), instead of burning wood. And that can make all the difference.'
– Clark Milne

“Natural gas can make a lot less PM2.5,” Milne said. “Therefore, we can get people to convert (to heating with natural gas), instead of burning wood. And that can make all the difference.”

Liz Greig told the board that if the IGU succeeds in convincing many or most Fairbanks-area property owners to convert to natural gas, it will increase the cost of housing for those who rent. She says that will make it even more difficult for people who live at or below the poverty level.

“Property owners are going to have to pass along these costs to the renters,” she said.

Meeks, the board chair, says members of the public will get one more chance to comment on the proposal next Tuesday – just before the board votes. That meeting also will be held in the Assembly chambers, beginning at 6 p.m.

Tim has worked in the news business for over three decades, mainly as a newspaper reporter and editor in southern Arizona. Tim first came to Alaska with his family in 1967, and grew up in Delta Junction before emigrating to the Lower 48 in 1977 to get a college education and see the world.