While the fate of Wendover Gas is still technically up in the air there are signs from the Nevada Public Utilities Commission that owner Nancy Green will keep partial ownership but lose control of the almost 40 year old family company.
In hearings before the PUC that stretched through September to last week commissioner were given the stark option of either revoking the company’s permits to operate as a public utility or approve the partial purchase of Wendover Gas and its sister company Propane of Wendover to the current trustee Steve Shute.
Green was called before the PUC over potential shortfalls of gas barely averted last winter and then only by emergency loans from the City of West Wendover.
Also the owner of Pine Dale Gas in Wyoming, Shute’s plan to rescue the company would be to acquire 40 percent ownership and total control over the Wendover Gas’ equipment, operations, and bookkeeping.
Along with taking over financial control of Wendover Gas Shute told the commission that he would make his own company’s cash reserve and credit line available to Wendover Gas.
In his testimony Shute said the supply problems related to the Wendover winter were relatively minor and that his company could easily cover the three or four times during the season Green faced with no cash for gas.
Shute has been the unpaid trustee of Wendover gas since the mid 2000’s when the company ran into major economic trouble.
Wendover Gas has been in severe economic straights for over a decade primarily according to owner Nancy Green because the major casinos in town opted out of receiving their propane supplied through her companies gas lines and instead went with Wendover Gas’ own wholesaler.
Shute’s offer to buy 40 percent of Wendover Gas and take over day-to-day control was however vigorously opposed by Rex Bosier, Manager of the PUC Financial Analysis Division.
click link for Bosier testimony: 30570
While Bosier did support Shute’s assertion that Pine Dale Gas probably could easily make up for Wendover Gas’ winter shortfalls, Bosier cast doubt on whether the proposal would be approved by the Wyoming Public Utilities Commission and also questioned that even under the new arrangement Wendover Gas may not to make headway on its almost quarter of a million dollar debt to its former supplier Turner Gas.
Bosier also cast extreme doubt on Shute’s plan to revive the now defunct Wendover Natural Gas Pipeline spur. And in testimony after testimony did not budge from his original opinion that Wendover Gas lose its utility status, in effect closing the company.
According to sources Bosier uncompromising opinion should carry great weight with the PUC, however there is at least one indication that the Shute plan may have a chance of winning approval.
In a separate filing dated last week Green, Shute and PUC Pipeline Safety Engineer Neil Pascal agreed to a stipulation regarding fines for not maintaining the Wendover Gas pipelines and perhaps more significantly a future plan to strictly apply any and all maintenance regulations demanded by the state.
Filed on the first of October the stipulation technically has no official bearing on the much more significant matter now before the PUC: Proceedings pursuant to Order for Wendover Gas Company to appear and show cause: why it should not be found to have breached its duty to provide safe, continuous and adequate service; why it should not be ordered to cease and desist from further violation of its duty to provide safe, continuous and adequate service; why its receivership should not be modified and/or the duties of the appointed receiver modified; why its Certificates of Public Convenience and Necessity should not be suspended or revoked; why it should not be found to have violated certain provisions of the Federal Gas Code and/or its own O&M manual and fined for such violations; and/or why the Commission should not impose any and all other remedies that the Commission may deem appropriate.
However one could ask why agree to a stipulation if there was not any hope that Green could keep at least a portion of her company.
The final decision on the future Wendover Gas should be made sometime in late October.
Wendover Gas has been in the process of being shut down by the PUC or bought out by Steve Shute since the city council unexpectedly changed its mind about buying the company last spring’
A year before the city and the company signed a letter of intent to explore the possibility of purchasing the company and even commissioned and paid for a feasibility study that was generally favorable to the purchase.
The $10,000 feasibility study prepared by Bob Springmeyer of Bonneville Research enthusiastically endorsed not only buying the beleaguered utility but also the natural gas pipeline in its synopsis. In total the city spent $24,000 in the process.
The feasibility study suggested that given the right conditions the city of West Wendover could purchase the gas company and operate it at either a profit or at least at the break even point.
That conclusion also gave the council political cover to support the project and to answer critics that the council had not done its due diligence in researching the project.
But in the two weeks between the release of the study and the council vote opposition to the purchase of the as company and the construction of the natural gas pipeline was growing most significantly from casino executives who reportedly not only read the report’s synopsis but also the numbers behind the conclusion. While initially favorable to the idea when it was first proposed and until late last year several executives in the casino industry began to weigh the savings offered by natural gas to the cost of the pipeline and the debt burden it would place on the city and the cost that would have to be incurred to change over from propane to natural gas.
According to Peppermill President William Paganetti the panacea of natural gas came with a price tag too high for his company.
“The individuals making the proposal stated approximately $2 million would need to be invested to purchase a “gasification facility” in Wendover but it was unclear how that would be financed or who would own the facility.” He wrote in a letter last year. “The individuals making the proposal stated they had no experience running an LNG facility for a municipality and they could only give a few examples of similar systems in operation. In order to switch to LNG the Peppermill would have to incur an estimated $487,500 in conversion costs, including the replacement of two boilers that could not be converted without losing factory maintenance and warranties.
The withdrawal of casino support may have been crucial to councilman Roy Briggs to vote against the project despite being one of its most ardent supporters in the past.
The doubts whether the city could break even on the gas company was perhaps compounded with the question on the cost of the pipeline. While estimated in the feasibility report to cost just over $9 million Wendover has been burned before with overly optimistic projections.
Bringing natural gas to Wendover is an old dream. 15 years ago then Mayor Walt Sanders and City Manager Keyth Durham initiated talks with the company planning to build what would become the Ruby Pipeline. Those talks however led nowhere. The pipeline was still in its planning stage and the cost also estimated to be over $20 million for a spur line to Wendover was considered to be too high.