Note – Kyle Becker has been an Apopka City Commissioner since April of 2016. He took time at the end of the January 18th City Council meeting to read his opinion (written below) regarding the Lake Apopka Natural Gas District fee schedule into the record during the City Council Report.
By Commissioner Kyle Becker
I wanted to take this opportunity in advance of the next regularly scheduled Board meeting of the Lake Apopka Natural Gas District (LANGD) to provide my opinions about an upcoming consideration of that Board. As presented in a recent LANGD meeting, the Board will consider modifying the manner in which it allocates its pipeline capacity, and I believe the Board has the ability to set a trajectory in which the District can serve their clients, both residential and all commercial types, in an equitable manner.
As background, and as many of you are aware, the Lake Apopka Natural Gas district was formed in 1959 with three charter members, the Cities of Apopka, Winter Garden, and Clermont. As such, a consumer of natural gas in any areas or by annexation into the District is of great concern to me, regardless of their situation inside the proper city limits of Apopka.
During my campaign for this Council, I was made aware of concerns with the District’s Tariff and pricing practices by a group of growers, and I have spent a great deal of time attempting to understand and become more versed in the natural gas supply chain. This is a complicated issue, however, there are some basic economics that don’t equate to what I see as a competitive Tariff when compared to alternatives. Let me also stress that this issue is not affecting just the Agricultural industry, this is of great concern to many other types of commercial entities in which I have had discussions.
To address the capacity allocation first, the Board next week will consider six potential options ranging from option one which is to keep the status quo, to other options that would potentially cease transportation service to Zellwood or Agricultural businesses altogether; to the final option six, which would be to assign capacity to transportation customers at a minimum actual usage based on their previous three years consumption. Some of the options proposed aim to adjust their practices simply to avoid fielding complaints from certain customer groups at the cost of other consumers of gas on their system, as referenced in the Pros/Cons list for each option. To remain with the current practice would mean keeping in place a practice that is both punitive to the transportation consumer and chosen marketer, sometimes getting charged more than double the capacity they have actually used because capacity is assigned by the District’s methods annually during contract negotiation. With that said, I strongly lend my support to option six, minimum actual usage based on the previous three years consumption which would support leveled cost between transportation and non-transportation consumers.
As previously stated, this is just the first step in the right direction, the LANGD, as allowed by the law that created it, is not subject to oversight, and can work with little to no governance outside of their Administration and Board. In addition to the capacity release considerations, I strongly encourage the Board to look at the per Therm transportation rates charged to their commercial consumers. To give an example, a nearby business that uses approximately 85,000 therms a month, based on LANGD Tariff transportation rate of .54 cents a therm, would have an increased gas cost of $35,000 a month, and $423,000 annually over a comparable gas utility in the area. How can we expect to attract and retain businesses of this scale and the folks they employ in this area if they pay that sort of premium? When faced with this high-cost disparity, commercial users, such as the group of growers, understandably try to negotiate a fair and competitive rate based on the local market. Fortunately, the growers were able to negotiate relief through 2019 at a rate roughly half of what the Tariff calls for. Other businesses have also had to go through stressful and time-consuming negotiations to get to a lower contractual rate, and those are just the businesses that have the wherewithal to do so. Why does the District not create a fee schedule that is fair and competitive, and reduces or eliminates the need to negotiate on a customer by customer basis?
I could spend more time airing additional grievances, but in the interest of time, I will wait to see the actions and outcomes of the District’s upcoming decision before making further comments. In the absence of the District’s formal external oversight, I look forward to being a vocal monitor of the District’s business practices, as goes the success of the District goes the success of our stake in it.