Jon Johnson Photo/Gila Herald: The GCEC encourages members to approve a board of directors’ recommendation to sell off its natural gas division to Southwest Gas. The vote will take place during the utility’s annual meeting Saturday, Oct. 17, at the Thatcher High School Commons Area. The meeting starts at 9 a.m.
By Jon Johnson
PIMA – Members of the Graham County Utilities Inc. will decide whether the sale of its natural gas division to Southwest Gas Corporation will go through.
The utility’s board of directors approved the recommendation to sell the natural gas system but the final say will be by the utility’s members.
A vote will be taken at the end of the annual meeting set for Saturday, Oct. 17, at the Thatcher High School Commons Area at 601 Nr. 3rd Ave., starting at 9 a.m. All cooperative members are encouraged to attend and must either be present to vote or have another member with a valid poxy do so.
According to GCU bylaws, it will take a 2/3 majority for the transfer to go forward as is required to sell off any substantial asset.
Graham County Electric Co-Op/Utilities General Manager/CEO Kirk Gray told the Gila Herald that it is imperative for the sale to go through to keep costs down for the cooperative’s members.
Due to heightened regulations, Gray said if the sale didn’t go through members could expect to see a service fee increase of about $31.50 per month. However, if the sale goes through, residential customers will likely see an increase of $2.05 per month while commercial users will actually see a decrease in their bills.
“The regulatory burden has gotten so great that we’ve had to put on more and more people and has just become too cost-prohibitive for a small gas distribution utility to operate,” Gray said. “Southwest gas has 1.2 million meters, we have 5,300. So, they can spread those costs over a greater number of meters and they are in the gas business. So, they also get economy to scale on purchasing gas.”
A recent five-year work plan showed the utility would have to spend about $6.5 million on its gas system, which would cost the consumer about $31.50 per month added to the already existing charges.
“That’s a pretty significant cost increase,” Gray said.
With the sale, GCU will be able to pay off all the debt to its cooperative lender as well as the Graham County Electric Cooperative, which has been financing the gas utility. Gray said the sale would also enable them to pay off about $300,000 in capital credits that the membership has ownership on, sending money back to the membership.
Gray said a board member advised that the utility took on the gas and water utility as a cooperative decision to help out the community it serves and this point it is a business decision.
“But if we operate it any longer, we’re just digging ourselves a deeper hole,” Gray said. “We’re at a crossroads here. If we continue running it, it’s going to get very, very expensive for all of our members.”
Southwest Gas provides safe and reliable natural gas service to more than 2 million customers in Arizona, California, and Nevada. For nearly 90 years, Southwest Gas Corporation has been operating, working, and living in communities throughout Arizona.
“We were happy to be approached by GCU about the possibility of serving the people of Graham County and are honored to be recommended by the GCU Board. We take great pride in being good community partners and are excited about the prospect of the citizens of Graham County joining our growing customer base which now serves over one million customers throughout Arizona,” said John Hester, President and CEO of Southwest Gas.
“Natural gas is consistently one of the lowest household bills for our customers, and we are committed to ensuring it stays that way while providing excellent service, safety, and reliability.”
“We want to ensure that co-op members continue to enjoy safe, reliable and affordable natural
gas service well into the future, which is why we believe that transferring ownership of this
system to Southwest Gas is the most prudent course of action,” Gray said. “After evaluating the high cost of shouldering the required system investment on our own, we determined it makes better sense to bring in Southwest Gas who can address these obligations more affordably as part of its overall system. Throughout its history, Southwest Gas has demonstrated an excellent safety track record, and it has proven its good citizenship in other counties throughout Arizona. Upon approval from our members, Southwest Gas will begin collaborating with GCU to ensure a smooth transition. In the long run, members will benefit more from Southwest Gas’ ownership of the natural gas system, as opposed to GCU operating the system.”
