Council approves agreement to purchase gas from nearby pipeline
Published 7:46 pm Sunday, October 1, 2017
On Tuesday, the LaGrange City Council approved an agreement to purchase gas capacity from a nearby pipeline that is currently undergoing an expansion.
The agreement commits the city to a 15-year term with Transcontinental Gas Pipeline Company, LLC to purchase natural gas capacity for city utilities. The agreement will not take effect until 2020 when a pipeline expansion in the Newnan area is complete, so the city will continue to purchase gas capacity at its current rate until that time.
According to City Utilities Director Patrick Bowie, the agreement will save the city about $150,000 per year on gas purchases by locking in capacity rates for a set amount instead of purchasing on an as needed basis.
“Right now, we have to go out into the market and buy on the short term basis the extra capacity that we need, so that we won’t be subject to penalties in the winter when we don’t have enough capacity,” Bowie said. “Through Intercon (Gas Inc.), who is our agent, we go out and buy short term capacity for a year or two, and the price of that has been in the $0.80 range for the last few years, whereas now, with this gas capacity, we would be contracting with Transco and it would be around $0.641.”
The city also plans to purchase based on low estimates in order to avoid over purchasing gas capacity that is not needed but would still need to be paid for. The remaining gas capacity will still be purchased on the short-term market at the higher rate. Since purchases made at the short-term rate will make up such a small portion of the gas purchased, the city will still see significant savings.
The LaGrange City Council is scheduled to meet again on Oct. 10 at 5:30 p.m. at 208 Ridley Ave.