Nearly six months after the idea was announced, the Alaska Industrial Development and Export Authority board of directors approved the $52.5 million purchase of Fairbanks Natural Gas during a special meeting June 11.

Included in the purchase price are all of the companies under Pentex Alaska Natural Gas Co., the parent company to Fairbanks Natural Gas and Titan Alaska LNG, which operates the small natural gas liquefaction facility at Point MacKenzie. The two LNG-powered trucks used to transport LNG to Fairbanks are also part of the deal.

AIDEA estimates transitioning the ownership structure of the Fairbanks utility from private to public will save customers more than 13 percent on their bills nearly immediately.

“We expect the Pentex acquisition to be a short-term strategic investment that can play a significant role in helping achieve the long-term success for the Interior Energy Project,” AIDEA Executive Director John Springsteen said in a formal statement. “This acquisition will promote an integrated gas distribution system that can be built and operated in a more efficient manner for the benefit of Interior Alaska residents and businesses.”

AIDEA and Pentex leaders tentatively agreed to the deal back in late January, and in the meantime have been negotiating finer points while the authority has done its due diligence on the deal.

The current management structure at Fairbanks Natural Gas, which serves about 1,100 customers in the heart of Fairbanks, is expected to remain in place to operate the utility after the sale.

Resolutions passed by the AIDEA board allow for up to $54 million to be used from the authority’s Development Finance Program fund, with the added money above the purchase price for working capital. The sale, separate from but related to the Interior Energy Project, also includes Hilcorp’s $15.1 million deal to purchase and operate the Titan facilities.

That deal is under review by the Regulatory Commission of Alaska and Attorney General Craig Richards and is set to close by late September if it passes the regulatory inspections. It would also lessen AIDEA’s total investment in Pentex to $38.9 million.

Deputy Commerce Commissioner Fred Parady, who serves on the AIDEA board for Commerce Commissioner Chris Hladick, said purchasing Pentex is not a perfect solution, but rather a step towards lower cost energy in the Interior. He also noted that AIDEA has done a complete commercial-grade evaluation of the transaction.

“This deal cash flows on its own merits,” Parady said.

It is set to close by July 31.

The proposed Pentex purchase came under fire when it was announced from some Southcentral Republican legislators who questioned whether it is appropriate for the state to purchase a private company and potentially compete with other companies that might want to supply natural gas to the Interior.

While AIDEA is a state entity within the Commerce Department, it is a financially self-sustaining development organization in terms of its day-to-day operations.

The Alaska Gasline Port Authority attempted to purchase Fairbanks Natural Gas in 2009 under the leadership of now Gov. Bill Walker, as a way to finance a North Slope gas trucking operation. That deal, which required local approval from Fairbanks North Star Borough residents, eventually fell through.

The current deal is “government at its best,” former state senator and AIDEA board member from Fairbanks Gary Wilken said. Wilken likened it to a kick-starter project to support the Interior Energy Project, a hedge against fuel oil prices that will eventually rise again and a way to improve winter air quality in the region.

Local Interior government leaders have voiced broad support for the plan.

AIDEA leaders have said they plan to sell Fairbanks Natural Gas to a local entity within two years — likely the Fairbanks North Star Borough, which controls the developing Interior Gas Utility. Combining the utilities could provide additional operational and capital efficiencies and subsequent savings to customers, those knowledgeable with the work have said.

Fairbanks Natural Gas President and CEO Dan Britton, also a minority owner in Pentex, said in an interview that he has always believed a single gas utility is the most efficient way to serve the small Interior market.

Fairbanks Natural Gas competed with IGU before the RCA for the North Pole and broader Fairbanks service area in 2013.

Britton and Fairbanks Natural Gas have absorbed criticism over the years for not expanding its customer base. He has long said larger, long-term gas supply contracts from Cook Inlet were not available for the small, start-up utility.

The uncertainty over Cook Inlet gas supplies led to the first iteration of the Interior Energy Project, which attempted to truck LNG south from the North Slope. High capital costs ultimately doomed that endeavor.

Britton, who has worked to get additional natural gas to the Interior for more than a decade, said he is excited continue working with AIDEA to see a project that has been such a large part of his career to the end.

“For me, as I look back at the end of the day, we’re the only entity that’s ever done anything as far as get natural gas to Fairbanks,” Britton said. “We’re proud of what we’ve done.”