North Jefferson News, Gardendale, AL

February 26, 2014

Update: Lowery, Phillips haggle over Fultondale Gas Board contract with Gardendale

By Robert Carter
North Jefferson News

GARDENDALE — [Note: This story updates a previous article about the Fultondale Gas Board's contract with the city of Gardendale, adding Gardendale Mayor Othell Phillips' replies to Fultondale Mayor Jim Lowery's assertions about the board's service.]

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, informed 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 is signed by Lowery in his capacity as superintendent.

He said the city council has yet to respond to the letter in order to work out a new agreement, but the attorneys for Gardendale and Fultondale have met to discuss the issue.

“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.”

Gardendale Mayor Othell Phillips said his only concern is to look out for the citizens of Gardendale.

“The item of contention is that they’re wanting to remove the 2.5 percent cap on Gardendale rate payers,” Phillips said.

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.

The cap was put into place because the Alabama Public Service Commission does not regulate rates and services for municipal systems such as Fultondale Gas; the PSC only regulates municipal systems for safety.

“The city of Gardendale wants a fair rate for our city,” Phillips said. “We’re not interested in removing any kind of cap that would let Fultondale gas have unfounded rate increases.”

Phillips said Fultondale Gas’s proposed rate increase is the reason the Gardendale City Council agreed to seek bids for other gas providers.

However, Lowery said Tuesday that the gas board has not even discussed raising the 2.5 percent cap.

“There’s no talk about raising the cap,” he said. “We will continue to do exactly what we have done. We will continue to follow the Alagasco rates as we have.”

Whether or not the gas board has abided by the 2.5 percent 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.”

— Melanie Patterson contributed to this report.