Fairbanks Daily News-Miner editorial
News-Miner opinion: The Alaska Industrial Development and Export Authority made the right call last weekend in signing off on Gov. Bill Walker’s plan to acquire Fairbanks Natural Gas parent Pentex. Though the move isn’t a solution in and of itself, it reduces the number of question marks yet to be addressed by the Interior Energy Project and keeps the ball moving forward on the goal of low-cost natural gas delivery for many Fairbanks and North Pole residents. And, for the approximately 1,100 current FNG customers, the purchase could bring savings as soon as the coming winter.
In a bit of good news for those keeping tabs on the pool of funds available to help the Interior find energy solutions, the $52.5 million purchase won’t use funds allocated to the Interior Energy Project. Instead, the state will perform the purchase through AIDEA’s loan capacity, then transfer the company to ownership by the Interior Gas Utility, creating a single natural gas utility for the Fairbanks and North Pole area.
The purchase won’t provide all of the missing pieces for the project. Crucially, sources for natural gas supply and liquefaction have yet to be lined up. Those two items will do much to determine the end cost of gas for local residents, which the state and IGU have repeatedly said must come in at around $15 per thousand cubic feet or cheaper.
But what the Pentex purchase does accomplish is significant: unification of utilities and distribution, allowing for greater efficiency in management of the resource and delivery to residents. Interior Energy Project leaders told local officials in May that combining the utilities should save roughly $2 million per year in operating costs, as well as between $5 million and $11 million in costs of expanding local storage and distribution.
That savings, the state says, will allow a rate reduction of about 13 percent for current FNG customers. That’s good news for those who already have natural gas service already, a sort of microcosm of the greater intent of the Interior Energy Project. The purchase, in lining up the facets of the utility and distribution side of the system, will also let the state focus its efforts fully on supply, liquefaction and transportation to the Interior.
The purchase of Pentex by the state isn’t a silver bullet for the state — it won’t singlehandedly provide all the pieces needed to fulfill the goal of low-cost natural gas for Interior residents.
But it’s a useful tool in the toolbox the state is building to make the Interior Energy Project a reality, and it helps reduce the number of moving pieces between residents and cheaper energy. For a price tag of about $50 million, that’s a steal.