In an extremely rare ruling the Nevada PUC ignored the recommendation of its own staff and approved the minority purchase and operations take over of Wendover Gas by Steven Shute, Wendover Gas’ trustee since 2008.
According to a draft ruling published last week, the Nevada PUC approved the plan where Shute would buy 40 percent of Wendover Gas and Wendover Propane and take total control over the Wendover Gas’ equipment, operations, and bookkeeping of the financially beleaguered company.
click link for draft decision:31421
Along with taking over financial control of Wendover Gas Shute, also the owner of Pine Dale Gas in Wyoming, 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 the PUC staff who recommended that the company be allowed to fall into bankruptcy.
That position raised eyebrows even among non-involved onlookers.
“I do not understand the motives of the PUC’s Regulatory Operations Staff (Staff) toward Wendover Gas. Staff gives the impression they want to put the company out of business. Granted Wendover Gas is a struggling utility, with some safety issues which can be easily resolved, but why not give Nancy Green and engineer Steve Shute a chance to save it? What does West Wendover and the State of Nevada have to lose?” said industry analyst and former PUC auditor Paul Kvam. “First, Wendover Gas is not a true monopoly, such as a NV Energy or Southwest Gas. People in West Wendover can generally have their own propane tank or heat with electricity (as many do).
Second, the PUC Staff puts forth no viable alternative to Nancy Green and Steve Shute owning and operating the utility. In my opinion, the PUC Staff should either put up a solution to Wendover Gas’ problems or get out of the way.”
“Staff really couldn’t offer a plan B,” Shute said Wednesday.
While PUC staff did support Shute’s assertion that Pine Dale Gas probably could easily make up for Wendover Gas’ winter shortfalls, it 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.
Staff also cast extreme doubt on Shute’s plan to revive the now defunct Wendover Natural Gas Pipeline spur.
In his Wednesday interview Shute said that he was still looking into ways for the pipeline to be built.
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.
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.