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United States : Greenville Utilities Board of Commissioners approves contracts for future natural gas procurement
Publish Date : 24-Aug-2016
Greenville Utilities Board of Commissioners has passed contracts for future natural gas procurement, continued technical support and a new sewer system.
The commission has allowed General Manager/CEO Tony Cannon to discuss and implement a 30-year prepayment deal with Alabama-based Black Belt Energy to purchase natural gas over the next 3 decades.
With a prepay deal, municipal utilities can use tax-exempt bond proceeds to prepay for natural gas.
Freddy Martin, GUC natural gas supply officer, said, savings are generated by the "spread" between the gas provider's taxable discount rate and the tax-exempt cost of capital.
The proposal provides GUC with a minimum net discount of 17 cents below market index.
Martin added that the deal is expected to save GUC $119,550 annually or nearly $3.6 million over the life of the agreement.
He noted that the aim is to secure 23 percent of GUC's natural gas supplies through the deal,
Under the new deal, GUC will be required to purchase 2,000 dekatherms per day between November and March.
