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Gas district forms new wholesale entity

Southeast Alabama Gas District (SEAGD) is forming a new entity for long-term gas supply deals.

The 56-year-old public corporation currently provides natural gas service to domestic, commercial and industrial customers in 32 communities in the southeast portion of the state.

Now it’s giving its 14-member towns – including Andalusia and Opp – the opportunity to join the Southeast Alabama Gas Supply District.

Andalusia City Councilman and gas district board member Kennith Mount explained to fellow council members last week that SEAGD owns several natural gas wells that sometimes puts it into the position of being able to sell natural gas wholesale.

And while selling natural gas wholesale is not a new thing for SEAGD, president and CEO Greg Henderson said forming a gas supply district makes the corporation’s financial statements more clear.

“It would make SEAGD’s financial statements more clearly represent the normal course of business of other Local Distribution Companies (LDC’s) that sell gas to residential, commercial and industrial customers. From a bond buyer perspective it would make SEAGD debt easier to understand,” he said.

All 14 member cities are expected to join, he said.

“SEAGD and the New Gas Supply District will have the same ownership and long-term interest,” Henderson said.

SEAGD has been selling wholesale gas to other municipal gas utilities since 2007 with the completion of SEAGD’s first wholly-owned, long-term prepay transaction.

“Had the new gas supply district been in place then, that deal would have been done through it,” he said. “The current transaction being evaluated is planned to be completed in November 2010, depending on market conditions.”

SEAGD has a transmission system 731 miles in length and a 1,391-mile distribution system.

The 12 other member municipalities are Abbeville, Brundidge, Dothan, Elba, Enterprise, Eufaula, Fort Deposit, Greenville, Headland, Luverne, Ozark and Troy. In addition to member cities, SEAGD serves the towns of Ashford, Brantley, Coosada, Cottonwood, Daleville, Gantt, Glenwood, Midland City, Napier Field, New Brockton, Newton, Newville, Opelika, Pike Road, Pinkard, Red Level, River Falls and Rutledge.