The Mountain Press - SCUD gas prices still lowest in years on Astini News
by The Mountain Press
The agency's Board of Commissioners met Wednesday morning for the first time since voting to put the deal with Jeff McCarter on hold after he was indicted for official misconduct in his job with the utility. Despite that action, the gas prices faced by both SCUD and its customers remain the lowest in years, President Matt Ballard told the board.
Ballard secured a contract recently for a buy at $3.99 MMBTU (equal to 10,000 million British thermal units), cheaper than the rate for most of the time from May through August, though slightly higher than the $3.93 that was the level at the end of last month. Year to year that has meant the utility continues to pay lower rates, though its bottom line gas costs are actually up.
"Our total paid is up because we are buying more gas, but the rates we're paying are actually staying below where they have been," Senior Vice President of Finance Linda Shults said.
Much of that increase in the amount of gas being procured comes from bringing a new Charles Blalock & Sons Construction facility, including an asphalt plant, onto the system. That has resulted in more use, but also lower rates for customers across the system because it allows SCUD to get better bulk rates, Ballard has said.
Adding to the good news, the local utility just got a notice from Chevron Corp. informing it prices haven't gone up as a result of Tropical Storm Lee or other such disturbances, though futures have increased some on the New York Mercantile Exchange. That's because any decrease in production caused by wells in the Gulf of Mexico coastal area shutting down for the storm was made up for by access to some other supplies, Ballard said.
"There are more reserves that have been opened up," he explained. "With all that's going on, the rates are actually the lowest I've seen them this time of year in at least 10 years."
Historically summer has been the time to get a bargain on natural gas because usage was done, with the supply more in demand for heating during the winter months. However, in recent years power suppliers have refitted some of their coal-fired plants with equipment allowing them to burn natural gas if it's cheaper than coal, Ballard said.
"That has meant our prices have leveled out because the demand is more level," board attorney Ron Sharp said. "That means you don't get the bargains in the summer you used to, but at least you're not paying huge rates in the winter."
The news wasn't all good Wednesday, though. The district has lost some of its smaller commercial clients through attrition, as businesses have shut their doors. Additionally, a potential major burner appears to have gone belly-up after paying part of the cost to have a line extended onto its property.
The Gateway Gatlinburg project, a major investment at the northern entry to the city that was to include hotels and retail, is teetering on the edge of foreclosure. Its principals struck a deal with SCUD to tie the development onto its system that included paying costs for an extension of SCUD's lines to the property and building out a portion of the project within a certain time period. With the effort in serious jeopardy, it looks like a majority of that agreement may never come to be.
"They did make one of the payments, but they did not make the second," Ballard said.
That has left SCUD scratching its head on how it will recoup that money. Sharp said legal action could be a possibility, but only if the entity behind the project doesn't declare bankruptcy.
"If they do that, there's typically not much left," he said. "You're just left picking at the bones."
n dhodges@themountainpress.com
