Matt Buxton, email@example.com
FAIRBANKS — The state approved an agreement Wednesday to sell Fairbanks Natural Gas into local control, but it came with a warning against repeating the mistakes of the past.
The Alaska Industrial Development and Export Authority’s board of directors unanimously approved an agreement for the sale of the once-private natural gas utility to the municipal Interior Gas Utility.
The Interior Gas Utility’s board of directors approved the agreement the day before at a special meeting on a 8-0 vote. The agreement sets the framework for the unification, expansion and operation of the utility with some $330 million of state bonds, loans and grants approved by the Legislature in 2013.
It’s a significant step forward for the Interior Energy Project, a state effort to bring natural gas to the Fairbanks and North Pole area, that has seen numerous setbacks since its inception.
AIDEA Board member Gary Wilken, a former state senator from Fairbanks, has been a major supporter of the project and lauded the progress. But, before he voted in favor of the agreement, Wilken gave a word of warning about the utility’s future.
“I’m concerned that we’re going to have four elected officials that will act not as public servants but politicians and will set rates not what is best for the public utility, but what’s best for their reelection bid,” he said. “I speak from experience.”
Wilken recalled the collapse of the city of Fairbanks’ Municipal Utility System — which provided water and sewer, telephone, power and district heat to city residents — in the 1990s due to what he said was politics. The utility fell into disrepair and was eventually sold, a transaction Wilken had a hand in.
“I lived through 1970 and 1980 and 1990 when I saw the city of Fairbanks MUS deteriorate little, by little, by little because we had city councils and mayors who were elected that would not take the recommendation of the utility, would not raise rates, would not support bonds,” he said. “Even though the utility was falling apart, they valued their seat more than they valued doing what was right.”
The Interior Gas Utility board of directors is a seven-member body with three directors appointed by the three local governments and four that are elected by the borough at-large. He said he was concerned that in a decade, the hard-fought progress on bringing gas to the Interior could be in danger.
Interior Energy Project team lead Gene Therriault responded that there are sideboards in the agreement that will require the board to at least set utility rates to cover the debt service the utility will owe to the state. Other things, like maintenance of the system, are also covered by the agreement.
Despite the word of warning, Wilken and others had plenty of excitement about the agreement.
“Seldom in your life do you get a chance to participate in something that provides benefit for generations to come and this is what we’re doing today,” Wilken said. “People that will come long after us, after we’ve all assumed room temperature, will benefit from the work we’ve done over the last couple years.”
Interior Gas Utility general manager Jomo Stewart said there’s still a lot of work ahead for the project as the utility and AIDEA hash out the specifics of contracts, but said it’s moving toward a concrete project.
“It’s exciting, we can really get up and running,” he said. “We’re moving from a concept to a project, and a project to a functioning, successful utility.”
Contact staff writer Matt Buxton at 459-7544. Follow him on Twitter: @FDNMpolitics.