SW Gas to resume pipeline installation | SierraSun.com
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SW Gas to resume pipeline installation

JOHN A. BAYLESS, Sierra Sun

Southwest Gas construction crews will resume work in Tahoe Donner soon, installing new gas lines for the first time after a two-year hiatus.

Although a proposed settlement between the gas company and the Town of Truckee has not been approved by the California Public Utilities Commission, the corporation is moving ahead with construction plans this season as a show of good faith.

Southwest project manager Ron Bassler said he expects work to begin before June 1 in the region designated as Tahoe Donner South, and encouraged residents of the area who want gas service to sign up as soon as possible. Information packets have been mailed to all homeowners in the area.

Bassler said Southwest Gas anticipates completion of gas main installation this year and is now taking requests for service from anyone living on the following streets: Baden, Bermgarten, Bern, Bernese, Bolzano, Christie, Copenhagen, Cristallina, Davos, Edelweiss, Heidi, Herringbone, Innsbruck, Lucerne, Ramshorn, Sun Valley, Swiss, Weisshorn, Zermatt and Zurich. In addition, crews will be working on Northwoods Boulevard between 15113 and 17437, and Skislope Way between 10760 and 12848.

As work progresses to other parts of Truckee, Bassler said homeowners in those areas would be notified of the opportunity to sign up for service.

“We want to make the signup process as easy as possible,” Bassler said. “That’s why customers can call our toll-free number to apply return the application using the postage-paid envelope. There’s no need to visit an office. The important thing is that they apply for service now so services can be installed while crews are working in the area and before the town begins its repaving project.”

Bassler said conduct free pre-conversion inspections for residents, help subsidize the permits by $50, and provide standardized parts for converting propane appliances natural gas.

Town council has authorized Southwest Gas to route traffic around construction areas during the course of construction, to allow crews to complete work at a quicker pace. Bassler said Southwest employees will put out door-hanger notices at homes to notify residents as work advances to their streets.

“We understand the Town of Truckee plans to repave many of the streets we will be working on this summer,” Bassler said. “This is another good reason for residents to sign up now. We look forward to working closely with residents and town officials as we continue bringing the community the advantages of natural gas.”

The toll-free signup number to request connection to natural gas is 1-800-654-2765.

When construction begins, it will mark the true end to two years of acrimony and accusations between the Town of Truckee and Southwest Gas. Under the proposed settlement agreement between Truckee and Southwest Gas, the town will endorse the plan before the CPUC.

The settlement package will bring natural gas to all regions in Truckee covered by Southwest’s original agreement with the town – at the cost of extending the 12.3 cent surcharge for an additional period of time.

Southwest Gas experienced $15 million in cost overruns constructing Phase I and II of its project, and will absorb $8 million of those losses as a direct write-off by shareholders. An additional $2 million will be expended by the company to underwrite Donner Lake mains and services. A general rate-freeze extension for three additional years accounts for another $7.3 million, while carrying costs on a deferred plant will save ratepayers $3.3 million. In total, Southwest Gas will contribute $20.6 million in in-kind services, according to the proposed settlement.

The rates to be paid for the service will remain the same as those originally proposed, with an earlier removal of the surcharge if gas sales exceed current expectations. The surcharge will recover a maximum of $13.7 million in principal plus interest of 8.2 percent, and is expected to end in 2015.

Anyone interested in receiving natural gas, including the Donner Lake area, must request connection by 2003, before the project is complete. Any resident seeking to connect after that date will be subject to the standard mains and services rules, which will allow Southwest to charge the cost of the installation and connection.

Background

Citing cost overruns, the company halted most gas line construction in 1997, and in early 1998 attempted to revise its plans for Truckee through the California Public Utility Commission’s Office of Ratepayer Advocates – increasing the surcharge to 18.6 cents, extending its timeframe and scaling back the project to exclude Donner Lake as well as parts of Tahoe Donner and Prosser. The increased rates would have added $17.6 million to Truckee ratepayers’ costs.

Parties to the proceeding, including the CPUC’s Office of Ratepayer Advocates, initially agreed upon a settlement to recover most cost overruns from ratepayers. As part of the proceeding, the CPUC conducted a public hearing in Truckee in February 1998, and the proposed settlement was discussed with potential customers.

Truckee residents rallied, and pointed out that they had modified their homes to receive the natural gas promised to them, but that 1,500 of them were now being excluded from the expansion. They objected to the increased facilities charge from 12 cents to 18 cents per therm that would occur if the settlement were approved. Residents and representatives of the town made their concerns known in letters and in presentations to the CPUC by town delegations.

Former mayor Kathleen Eagan and Attorney Jim Simon led the campaign to hold Southwest to its original deal.

According to the commission, it is not known whether the cost overruns were reasonably incurred. Because of the proposed settlement, it was not determined whether they were the result of changes in government regulations, unforeseen changes in construction practices or excusable clerical errors in excess of the 10 percent contingency specified in Southwest’s contract.

Southwest Gas filed a motion in August to stay the CPUC decision which ordered it to proceed with its project here at the original price. The motion to stay the decision was filed in conjunction with a request for a rehearing of the commission’s decision on July 2 holding Southwest to the terms of its original agreement with the town.

The CPUC in September 1998 rejected the motion for a stay, and Southwest Gas filed a $15 million claim and later a federal complaint against the town, alleging that selective regulations enforced by Truckee caused the company to have a $15 million cost overrun while installing natural gas lines within the town limits.

If the current settlement is approved, Southwest Gas would drop its lawsuit and the complaint against the town, Town Attorney J. Dennis Crabb said.

SIDEBAR

Construction timeline:

Phase III – Downtown, Tahoe Donner (exc. Ski Slope Way), Prosser Lakeview and Prosser Heights – Work will begin in June 1999 and should be completed Nov. 1, 2001, weather permitting.

Phase IV – Ski Slope Way, Prosser Acreage and Donner Lake – will commence after Phase III and after Caltrans replaces the Donner Pass Road overpass leading to Donner Lake, currently planned for 2002. If the overpass is not replaced by 2002, Southwest Gas will determine the lowest cost alternative to construct an approach main to Donner Lake. Completion of the mains and Donner Lake lines is anticipated in 2003.

New District Office – Southwest will be locating a district office in Truckee by May 1, 2001.


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