County one step closer to providing natural gas

HILLSVILLE — With approval of an interconnectivity agreement with utility company East Tennessee Natural Gas, the Carroll County Industrial Development Authority came another step closer to bringing fuel through the pipeline and into the community.
IDA members in May, after working with Roanoke Gas Company, found a feasible plan to tap the Patriot natural gas pipeline in order to supply the fuel to the Mohawk plant in Hillsville for the estimated cost of $1.5 to $1.8 million.
Carroll County’s decision to pursue natural gas service on its own came after years of inaction by Atmos Energy, which had held the rights from the State Corporation Commission to supply gas to this area.
At Monday’s IDA meeting, County Administrator Gary Larrowe showed members a document that looked about an inch thick or more and encompassed the proposed agreement with East Tennessee Natural Gas.
“One of the things that we have to do, no matter what takes place, is we actually have to connect to the East Tennessee line,” he said.
Officials have been working on the agreement for about six weeks. The technical name of the document is the “reimbursement, construction ownership and operation agreement” for the interconnection between the pipeline and lines needed to serve this area.
“If you don’t approve it, then the project’s over with,” Larrowe said. “You need to declare that this is a sole source option for natural gas — there’s no one else that supplies natural gas in Carroll County.”
The IDA took Larrowe’s advice to approve a motion declaring East Tennessee and related company Spectra are the sole source suppliers here.
Then, Larrowe asked for the approval of the agreement.
The agreement includes a lot of legalese, but what it basically says is that East Tennessee will allow Carroll County to hook to its pipeline, he said. Carroll County IDA will own the local distribution system.
Included in the document is an operations agreement so that East Tennessee can comply with the Federal Energy Regulation Commission, Larrowe said.
There is an operations manual that spells out who owns what, how to build the necessary items and what manufacturers can supply the list of components that will make up the system.
Carroll will have to maintain all of its natural gas system — anything not a part of East Tennessee’s transmission line, Larrowe said in response to questions.
“Any distribution at all, we own,” he said.
East Tennessee will tap the pipeline. Larrowe said the $162,000 needed will pay for the material and equipment needed to do the tapping.
What are the arrangements for the supply of natural gas? IDA Chairman Richard Slate Sr. wanted to know.
Larrowe could think of three possibilities — a company like Mohawk can contract directly with East Tennessee for the amount of gas it needs. “So the only thing that we will be supplying is a route for that gas to go through.”
Carroll would not have to purchase gas and resell it to Mohawk, but there would be a “transport fee” to send it through the county’s distribution lines. Larrowe said the IDA still has to set that transport fee.
Other contracts for gas could be either “interruptible” or “non-interruptible” service, Larrowe continued.
Under the interruptible service, Carroll could buy gas, but not be guaranteed constant flow in the case of a big spike of usage by another customer.
Non-interruptible service is a guarantee that the gas will be available all the time.
The two levels of service come down to price, Larrowe said.
It takes time to tap the pipeline, so officials are trying to get these paperwork done as soon as possible to allow the construction to begin.
The hope is for the gas distribution system to go to bid by August for somewhere between 10 and 30 days and to start construction in September so the system is running by the end of December at the latest, Larrowe said.
IDA member Barry Hicks made a motion to approve the agreement with East Tennessee. It was approved unanimously after a second by Andy Jackson.