December 12, 2002

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Village considers helping residents buy natural gas

The Village may get into the natural gas business.

With the natural gas industry in this area deregulating, customers now have the option of choosing from whom they receive gas. Village Council is considering whether it wants the Village to join this game and serve as a supplier in Yellow Springs — if voters agree.

At Council’s meeting Dec. 2, Greg Sloan, the general manager of AMPO, Inc., a for-profit affiliate of American Municipal Power of Ohio (AMP-Ohio), the Village’s wholesale electricity supplier, gave a presentation on natural gas aggregation, under which a municipality would serve as a gas supplier and negotiate prices with a gas company like Vectren on behalf of its residents.

This approach is similar to the Village’s electric utility, which does not produce its own power, but instead works with AMP-Ohio and other area municipalities to purchase electricity from a number of power suppliers.

One way natural gas aggregation would differ from electricity is that the Village would not own the gas pipelines through which natural gas would be delivered to Yellow Springs customers. Instead, Vectren would continue to deliver natural gas to town.

The Village, on the other hand, owns and maintains its electric lines and a substation on Fairfield Pike.

Vectren is currently setting up its own “choice” program for area residents. Local residents should expect to receive solicitations from Vectren and other natural gas suppliers, Sloan said.

Customers in other Ohio communities that have become gas aggregators have typically saved about 5 to 10 percent on the gas bills, he said.

Sloan advised the Village to consider “opt-out aggregation,” in which all local residents would be enrolled by the Village unless they individually choose not to be included in the program.

Under this program, the Village must first win approval from local voters in an election. Sloan said the Village should get an issue on the May 7, 2003, ballot, because, if approved, it will take the Village 6 to 12 months to set up its aggregation system. The Village would be in a position to negotiate natural gas prices for the fall and winter seasons next year, Sloan said.

The deadline for getting an issue on the May 7 ballot is Feb. 20, a Greene County Board of Elections official said after the meeting.

If the plan wins approval, AMPO would work with the Village to write an operating plan and negotiate supply contracts, Sloan said. Vectren would still bill Yellow Springs customers for purchasing natural gas, he said.

Governmental aggregation programs have been popular through the state, Sloan said. During the November election, for instance, voters overwhelmingly approved all ballot initiatives for natural gas aggregation programs, he said.

AMPO, which works on municipal electric and natural gas aggregation programs, is currently trying to get Ohio municipalities to form natural gas aggregate buying groups, in which municipalities would work together to purchase gas for their residents. By working together, the communities would “get a favorable price” on natural gas, Sloan said.

After the meeting, Village Manager Rob Hillard said more Ohio municipalities are buying utilities as conglomerates, which he described as one of the Village’s strengths. “I do see that as something that can happen with natural gas,” he said.

Last week, Council members seemed to react positively to AMPO’s proposal. Council president Tony Arnett said that “on paper” the concept of forming a government aggregate seems a better way to purchase natural gas. “As a municipality, we have a better opportunity to renegotiate prices,” he said.

Council members asked Hillard to give them a recommendation on the Village’s options. Hillard said there seems to be “little downside” to governmental aggregation.

On Monday, Hillard said the Village would probably not earn revenue from purchasing natural gas, though he called it an opportunity to decrease local residents’ gas bills and “assist in the cost of living in Yellow Springs.”

—Robert Mihalek