North Jefferson News, Gardendale, AL

February 19, 2014

UPDATED: Gas company not cutting off Gardendale’s service, Lowery says

By Robert Carter
North Jefferson News

FULTONDALE — Fultondale mayor Jim Lowery wants Gardendale residents to know one thing: Their natural gas service is not being cut off.

Lowery, who also serves as superintendent of the city-owned Fultondale Gas Board, said he had fielded phone calls all day from worried gas customers after news broke about the Gardendale City Council’s plans to issue a request for proposals for gas service to city residents.

That move came after Lowery sent a registered letter to the Gardendale city clerk, with copies to Mayor Othell Phillips and all members of the council.

The letter, dated June 21, 2013, and stamped as being received by Gardendale the next day, informs the Gardendale City Council that the franchise agreement would not automatically renew. It also says that gas board members were looking forward to meeting with city leaders in order to renew the agreement.

The letter states: “Under City of Gardendale Ordinance 93-13, the Gas Board of the City of Fultondale serves notice of non-renewal of the franchise granted by the City of Gardendale on November 29, 1988, and amended by Ordinance 93-13. This letter provides sufficient legal notice to the City of Gardendale that this franchise will not renew at the end of its present term on April 1, 2014.

“It continues to be the pleasure of the Gas Board to provide quality service at reasonable rates to gas consumers within the City of Gardendale. The Gas Board looks forward to meeting with the City of Gardendale representatives to negotiate a new franchise.”

The letter is signed by Lowery in his capacity as superintendent.

The fact that the letter was sent and received nearly eight months ago prompted Lowery to wonder why Gardendale officials were moving at this late date to seek alternatives.

“We have provided service for Gardendale customers since 1959, and we’re going to continue to serve our customers,” Lowery said. “I think a new franchise agreement can be renewed easily.”

The gas board’s current franchise agreement calls for rates to be set at no more than 2.5 percent above that charged to similar customers by Alagasco, the state’s largest gas utility. Whether or not the board has abided by that cap is the focus of a lawsuit against the board. The plaintiffs are seeking class-action status for the lawsuit, which has yet to be granted.

The gas board also pays 3 percent of its gross receipts to Gardendale as a franchise fee, and an additional 2 percent as a business license fee.

“The 3 percent franchise fee is standard all across the state. That’s what they [utilities] all normally pay,” Lowery said.

State law does not allow for exclusive franchises to serve an area, Lowery added. In theory, another company could be granted a franchise, then come in and lay parallel gas lines to those which the Fultondale Gas Board installed and owns.

“They’d have to put in their own lines and meters, and there’s no guarantee that the customers would be there. There’s no doubt rates would be higher,” Lowery said. “I don’t think it’s a practical solution.

“If Gardendale wants to pass a resolution for ratepayers to pay more so they [the city] can get more, they need to pass a resolution, because that’s what we base what we pay off of.”

In the meantime, Lowery said the board would continue to provide quality service to its customers.

“When we had that cold snap a couple of weeks ago, we didn’t have so much as a pilot light go out,” he said. “We have really upgraded our lines in Gardendale and Mt. Olive. We have good relations to our customers, and we’re not going to flip some switch and turn them off.”

[Note: Updated at 10:30 a.m. clarifies that the franchise agreement does not automatically renew.]