Matt Buxton,

FAIRBANKS — The Interior took another step toward a unified and expanded natural gas utility Tuesday night.

The municipal Interior Gas Utility’s board of directors voted 6-0 to approve an agreement to buy Fairbanks Natural Gas from the state and set into motion hundreds of millions of dollars in state project financing for the buildout of an expanded system.

Under the agreement, the Interior Gas Utility would buy the once-private Fairbanks Natural Gas from the state for $58.2 million, which includes a gas processing plant in Point MacKenzie and transportation trucks.

The Alaska Industrial Development and Export Authority also would agree to help fund the buildout of storage, processing and distribution in the Fairbanks and North Pole area for the next decade.

Public comment on the proposal was mixed, with some raising concerns about the price of Fairbanks Natural Gas and whether people would convert to natural gas given the currently low cost of heating fuel and wood.

Many of those concerns were echoed by board member Aaron Lojewski. Lojewski said he felt the state overpaid for Fairbanks Natural Gas and worried about conversions, but he said he felt that the agreement would do more good than bad for the community.

“Would we get a better deal if we wait or a worse deal if we wait? It’s probably going to get worse if we wait right now. Given the state’s fiscal environment, I have little hope that we’ll get more subsidized dollars from the state,” he said.

“I don’t like it, but I dislike doing nothing more than I dislike this (memorandum of understanding).”

Board member Steve Haagenson recognized some of the difficulty revolving around the price, but noted that in return, the Interior Gas Utility got favorable terms for state financing. In particular, the state is offering some $125 million in energy project loans at a rate well below the legal maximum.

“There’s been a lot of talk about the pricing … but we got to pick the terms,” he said. “What we have in front of us are very good terms. Most companies would die for a 15-year deferral and a 0.25 percent interest rate.”

The Alaska Industrial Development and Export Authority is set to meet today to review the agreement. The final, binding contracts for purchase of Fairbanks Natural Gas and other elements of the agreement will be negotiated in detail during the next few months with an expected closing by the end of March.

“If we had champagne, I would do that but we still have a long way to go,” said Mike Meeks, the chair of the Interior Gas Utility’s board of directors.

Contact staff writer Matt Buxton at 459-7544. Follow him on Twitter: @FDNMpolitics.