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1.6.05 M.U.D. sees savings in contract The Metropolitan Utilities District will save more than $45 million on a 10-year contract for natural gas transportation due to more- competitive bidding. On Wednesday, the utility's board approved a pipeline contract with Northern Natural Gas Co. for about $150 million. The contract translates into 23 percent less, per year, than what Northern currently charges M.U.D. It's too early to say precisely what that means for the pocketbooks of M.U.D. customers. The contract doesn't go into effect until November 2006, with 2007 being the first year that substantial savings will be made. "We have to wait and see what the world is like in 2006," said board member Tom Dowd. "The savings could be used to effectuate a rate reduction, or to stave off a rate increase." The annual savings to the utility will be about $4.5 million, a fraction of this year's $293 million natural gas budget. In comments to the M.U.D. board, Mark Hewett, president of Northern, nodded to the competitive nature of the bidding and said the company was "thrilled" to continue transporting gas into Omaha. Northern is the nation's largest interstate pipeline company and has piped gas into Omaha for more than 60 years. M.U.D. is one of Northern's largest customers. The other bidder was Natural Gas Pipeline Co. of America, a subsidiary of Kinder Morgan Inc. Kinder Morgan provides natural gas to much of central and western Nebraska and has a pipeline that reaches into Sarpy County. Kinder Morgan and Northern have competed before for M.U.D.'s service, but this time the competition was more intense. Deregulation, growth in the metro area, changes in the way M.U.D. packaged the contract and a better position for Kinder Morgan in the metro area made the bid process more competitive. The Kinder Morgan bid would have built more redundancy into the system by connecting M.U.D. to a second interstate pipeline. That redundancy would be important in the event of a catastrophe such as a terrorist attack on pipelines. M.U.D. would not release the bid amounts for Kinder Morgan, nor the precise amounts related to Northern. Those figures, according to the utility, are proprietary. |
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