The Carroll County Industrial Development Authority (IDA) has sold the county’s natural gas system to Abingdon-based Appalachian Natural Gas in a deal that will also open up natural gas to the City of Galax and Grayson County.
The deal was finalized Wednesday during a special called meeting of the Carroll County IDA. A motion was made and passed unanimously to allow IDA Chairman Barry Hicks to execute and transfer the county’s natural gas system to Appalachian Natural Gas (ANG) and all documents, permits and transfers needed for the operation of the system, including sale of assets and contracts for purchases to supply natural gas. Hicks noted the transfer was reviewed and approved by the Virginia State Corporation Commission (SCC).
“With this transfer, Carroll County is allowing private enterprise to expand what we have started and the deal will take effect January 1, 2016,” Hicks said.
The IDA will receive a total of $400,000 for the assets of the operation, which will be spread over several years, Hicks said. ANG is under obligation to expand the line substantially, even toward other localities subject to ANG tariffs and the SCC. Also, Carroll County will receive a small percentage of the natural gas revenues for the next 40 years, excluding governmental use.
Also, ANG will be hiring two Carroll County employees as a result of the change and will have an operational center in Carroll County within two years.
“Negotiations continue as to placement of the ANG operational center,” Hicks said. “Plus, the line being owned by a regulated provider will also supply a tax base for the county.”
As part of the agreement, County Attorney Jim Cornwell said ANG will put more than $2 million into the ground to expand the natural gas system. Previously, Carroll could operate the natural gas line, but couldn’t own it, which is why it was owned by the IDA.
“I am pleased to announce the SCC recently approved and issued to Appalachian Natural Gas a certificate of public need and necessity to operate in Carroll County pursuant to the asset purchasing agreement the IDA signed with Appalachian Natural Gas,” Cornwell said. “Included in that transaction was granting not only a certificate of public need and convenience for Carroll County, but also for the City of Galax and the County of Grayson with the caveat that in the City of Galax and the County of Grayson that Appalachian Natural Gas will need to provide service to those areas within five years or ask for an extension of that time. So in a certain sense this is a purchase of the Carroll County Natural Gas system, but it is also a regional proposition where hopefully natural gas will be extended into Galax and Grayson for the common economic good. Also it will help out the course with our proposition at Wildwood…This would constitute a major investment in Carroll County by Appalachian Natural Gas to extend the system for the citizens and industries of Carroll County.”
Hicks said Carroll County has worked diligently for the last two years on the project. Carroll was the only county in Virginia to own and operate a natural gas system. During the time of ownership, more than 300 new jobs were created, the Carroll County Industrial Park was 100 percent filled for the first time, and 154 jobs were saved at the Mohawk facility in Hillsville.
“Plus, we have all saved energy dollars as a result of the change from other energy sources to plentiful natural gas. I can attest to that because the Carroll Wellness Center was the first customer other than Mohawk to hook onto that and we have realized savings,” Hicks said. “Mohawk paid for the system to be built and was repaid with the cost savings in switching fuels in approximately 15 months. In essence the goals of the IDA were met with the installation of natural gas to save the Mohawk jobs, however the project has kept giving to Carroll County for the past two years.”
Currently, Carroll has 27 natural gas customers, Hicks said, but there are many more residents, commercial entities and industries that can utilize natural gas for a sustainable and cheaper form of energy in the community.
ANG President/CEO John Ebert said the company is excited to invest in Carroll County. He said the county is well situated and equipped for considerable opportunity to grow the natural gas system.
“Our sense of what is going on in Carroll County is very positive. I can guarantee we are excited to be here,” Ebert said. “We’ll earn your trust and our business only grows and survives by continuing to invest in that business, and the opportunity to come to Carroll County is a good one for us. We really look forward to working with you folks.”
County Administrator Gary Larrowe said Wednesday was a day nearly 15 years in the making. It started in 2001 when Duke Energy agreed to bring a natural gas line through Carroll County. There were many trials and tribulations in the process, however, which eventually led to a 24-inch East Tennessee Natural Gas line being placed in the county.
“One of the problems was we really never got any economic benefit from that because there were no access points to that,” Larrowe said. “We had negotiated five access points along the way, which right now we have one open and we are looking to open a second one in Carroll County.”
Then in the spring of 2011, Larrowe said Mohawk came to Carroll County expressing the cost of operation was excessive due to the price of fuel oil versus natural gas. The company wanted to access the natural gas line already in place in the county.
“We ended up moving forward… we knew we could not lose this industry, 154 employees, plus the $10 million in capital investment for this community, especially when that time period right after the recession took place and we were still trying to dig out of that,” Larrowe said. “So what we ended up doing was telling Mohawk we would move ahead.”
The partner Carroll had at the time chose not to invest in the county, however, so the only option was for the IDA to build out the line and have the county operate the line. Because of the new natural gas option, Mohawk estimated it would save $80,000 per month. Estimates to expand the line were $1.5 million.
“But we were under the gun, the clock was ticking because Mohawk already had a place picked out to move to Alabama and so we had to get this line in the ground quickly. Whenever you operate quickly, it costs more money to do that,” Larrowe said. “The cost overrun was $200,000 and we went back to Mohawk and asked if they would help contribute to cover that loss and they said, ‘Absolutely. We have never seen a locality that would end up doing what you are doing for us.’ They came back and they wrote us a check for the additional $200,000, so the $1.7 million build-out it took on this line originally was paid for by Mohawk.”
When all was complete, Mohawk actually witnessed a savings of $110,000 per month instead of the estimated $80,000. With such substantial savings, the company recouped its investment in just 15 short months. Larrowe noted the tremendous savings other companies have witnessed as part of the natural gas line, including Barker Microfarads of Hillsville, which has realized $100,000 in annual savings. He said the Carroll County Governmental Complex has experienced tremendous savings, as has Carroll County High School. Larrowe added that 96 percent of the new jobs brought to the Carroll County Industrial Park in 2014 were directly related to the availability of natural gas.
“So I would not underestimate what this natural gas system can end up doing for Carroll County and the City of Galax and Grayson County and for this whole region. At one point we even met with the hospital and said their annualized savings if they were able to switch to natural gas would be approximately $200,000 a year, which is enormous for just one entity,” Larrowe said. “And you add all of that together in this community and changing the energy source could end up changing the direction of this community and end up being transformational. Also working to get the natural gas at Wildwood Commerce Park is vital and is something that is being worked on to make happen.”
Allen Worrell can be reached at (276) 779-4062 or on [email protected]