The proposals were due into the county January 31 for the construction and operation of approximately 22,000 linear feet of 6-inch natural gas line to serve Mohawk Industries in Hillsville, with the possibility of expansion of service to other commercial, residential and industrial customers in the vicinity of the Town of Hillsville. The proposal also includes an interconnection to a main interstate gas line and a town border station to initially serve Mohawk Industries.
In 2006, Atmos Energy applied for and received a certificate from the State Corporation Commission to operate in Carroll County. According to county officials, the company met with Carroll representatives for a luncheon in Hillsville where Atmos officials told the county it would be opening the gas tap and serving gas in Carroll County. But despite several requests from Carroll County to open the gas tap, it never happened. Carroll County Board of Supervisors’ Chairman Sam Dickson said the situation was compounded two years ago when Mohawk Industries became interested in using natural gas at its Hillsville facility.
“At that time Mohawk wanted gas and expressed interest in the project. They said they would pay Atmos up to a certain amount of money to install the gas line to their place. They needed it and it was something vital to their business plan,” Dickson said. “That has been two years ago. Since then we have done everything we could do to encourage Atmos. We told them we would purchase easements, do anything necessary to get it going, and they have done nothing. On the other side, you have Mohawk saying it costs them x number of dollars per month additional because they are having to pay for other kinds of fuels versus gas on a monthly basis. And they are saying if we cannot get this settled, then they will have to look at other options of where their plant will be.”
Dickson said Mohawk told the county if nothing was done by the end of the first quarter of 2012, it would be forced to spend that money elsewhere at a locality that could provide natural gas.
“They were waving money in front of Atmos and Atmos still did nothing,” Dickson said.
Because Atmos Energy failed to carry out the project in Carroll County and failed to apply in a timely manner with the SCC, Dickson said the company lost its certificate to operate in Carroll on Nov. 30, 2011. Because Frontier Natural Gas Company out of North Carolina also expressed interest in supplying natural gas in Carroll County, the SCC set up a March 6 public hearing date in Richmond on the matter.
Dickson said that date presented a huge problem for the county, however, because any action that took place by the SCC regarding the hearing would come well after Mohawk’s deadline of the first quarter of 2012. As a way to solve the problem, he said the county worked with the SCC looking at the Code of Virginia to find that the IDA can build a natural gas line to Mohawk, or anywhere else in the county. He said the IDA cannot operate the line, however, so the IDA would turn the line over to the county because the county is allowed to operate the line.
“And then the county would end up contracting with a gas company for that operation. That is what the RFP is for, that way we can get this thing started and going in Carroll County,” Dickson said. “The IDA would start construction of the gas line. That would be the intent, to be able to serve an interest and retain Mohawk in this community, and to potentially supply gas to other folks.”
Dickson said the price of natural gas currently costs about a third of the cost of other forms of heating. Additionally, he said the price seems to keep declining because the supply seems to exceed the demand currently.
“It could be a very positive benefit for citizens and businesses, plus it would help us get gas into the industrial park,” Dickson said. “We have lost a prospect or two with a major reason being because we could not supply natural gas to them.”
The RFP put out by Carroll County also requires the selected provider to prepare a preliminary engineering report. Should the IDA decide to proceed with the project upon review of the Preliminary Engineering Report, the selected provider would also be responsible for “the planning, design, project oversight, preparation of construction bid documents, evaluation and qualification contractors, project management and inspection, pipeline service startup, and up to three years of pipeline operations and maintenance of the project.”
According to the RFP, the selected provider must also be qualified to advise on cost recovery mechanisms, including mechanisms for metering and analysis of cost and rate structures for natural gas delivery and must be qualified to assist in negotiations for natural gas interstate pipeline capacity and commodity supplies for the period of the service contract.
“The successful offeror will advise the Authority or its assignee regarding pipeline service startup, and will advise the Authority of its assignee for up to three years concerning pipeline operations and maintenance,” the Request For Proposals states. “It is anticipated that the gas pipeline will be transferred upon completion to the County of Carroll or ongoing operations and maintenance, and the contract with the successful offeror may be assigned for remaining performance to the County of Carroll.”
The selected provider should also possess thorough knowledge of all design and safety standards applicable to natural gas transmission and delivery pipeline systems, and should have the capability to advise the IDA regarding mechanisms for metering and monitoring of natural gas consumption. The RFP also states the selected provider should be able to advise the IDA concerning the adoption of rate structures for recovery of project costs.