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2.04.04 Utility boundary debate heats up A proposal to draw boundaries for gas utilities drew some heat Tuesday in a legislative committee. Under Legislative Bill 1053, boundaries would be drawn up based on existing service territories. As undeveloped areas become developed, the state's Public Service Commission would further define the lines. The state's investor-owned utilities told the Urban Affairs Committee on Tuesday that the bill would provide safer, more efficient service. But the state's publicly owned utilities disagreed, saying that it would limit local control and drive up rates. Testifying on behalf of Aquila Inc., one of the state's largest investor-owned utilities, Jon Empson told legislators that boundaries are a proven regulatory tool used in about 40 states. "Boundaries are a part of our life, for good reason," he said, "to maintain order, to provide for the common good and to avoid the waste, inefficiency and chaos that would otherwise occur." Representatives of Kinder Morgan Inc. and Northwestern Energy, the state's other investor-owned utilities, also testified in support of the bill. But Doug Clark of the Metropolitan Utilities District said existing laws provide all the guidance needed. The bill "is a solution to a problem that does not exist," Clark said. Last year, a similar proposal was deleted from natural gas legislation to keep it from being derailed. Empson said that boundaries would reduce duplication, which otherwise drives up costs and erodes safety margins. Empson cited an incident at 156th Street and Giles Road. A contractor damaged a natural gas line in an area where both Aquila and M.U.D. had lines. When M.U.D. crews arrived, they mistakenly concluded that it belonged to Aquila and left without fixing it. The line, it turned out, was M.U.D.'s. "This is the type of incident that could have turned into a gas utility manager's worst nightmare," Empson said. Jeff Kennedy, a city councilman and businessman from Gothenburg, NE, said the bill would end the need for utilities to race into an area to be first in line for service. That haste to be first, he said, leads to waste. Arguing against the bill was Gary Troutman, city administrator for Bellevue. He said LB 1053 would prevent the city from consolidating its gas service under one provider, something that it would like to do. Currently, the Metropolitan Utilities District serves about 75 percent of the city and Aquila the rest. Aquila charges more than MUD does to provide gas. Chris Dibbern of the Nebraska Municipal Power Pool also spoke against the bill, saying it takes away local control by eliminating the clout and flexibility that franchise agreements bring. Tom Wurtz, general manager for M.U.D., said this is the wrong time for the state to be considering boundaries. Last week, Aquila was fined $27 million by federal regulators for attempting to manipulate gas prices. "It's a little bit arrogant for them to come here and say they want more regulation," he said, "when basically what they've done is driven up the price of gas for everyone. . . . To give them a monopoly sends the wrong message." The gas trading division of Aquila that was fined is separate from the division that provides natural gas in Nebraska. Aquila closed the trading division in 2002. The committee will consider the bill - sponsored by State Sen. Mark Quandahl of Omaha - further next week. "It's not an easy issue," Quandahl told his colleagues, "but it's an issue we all need to address." Public Pulse: Aquila should pay us Aquila Inc. got off easy with a fine of $26.5 million from the Commodity Futures Trading Commission for manipulating natural gas price indexes for more than three years. Aquila's pricing scheme caused my gas bill to increase, since the cost that utility companies pay for gas is based on natural gas indexes. Aquila got off cheap. It should not only pay the fine but also should be forced to return to us the higher costs we had to pay. John E. Sidzyik, Bellevue, NE |
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