Residents of Eagle Mountain,
Today or Tomorrow, you should receive a letter in the mail about some big news regarding the City’s gas and electric utilities. The City has reached tentative agreements to sell our gas utility to Questar Gas and to sell our electric utility assets to South Utah Valley Electric Service District (SESD) and annex in to the service district. The final agreements will still need to be approved by the City Council in the coming months. Here is a digital copy of the letter. The letter was sent to you to give some of the “what” details. Here, I hope to give you some of the “why” details. The result of this deal will be that we will eliminate roughly 26 million of our debt. This is more than a 50% reduction! We will also retain approximately six million dollars in gas fund balance, the new energy building, and some other assets. I am presenting this to you because I believe this deal is in the best long term interest of our residents and our City.
In the letter referenced above, I stated that the average household would save just over $50.00 a year when comparing Eagle Mountain’s utility rates to Questar Gas and SESD. We completed this analysis for a period of January 1, 2013 through December 31, 2013. Those calculations were correct for that period, however Questar Gas has adjusted their rates as of yesterday (June 2nd, 2014). This adjustment took place after our letter was mailed to you. With Questar Gas’s updated rates, the average customer would have saved $1.24 in total utility charges for the year and not $50.00 as was the case under the previous rates. I want you to have the most current data available, and I apologize for any confusion this may have caused.
While this may not appear to offer a significant financial benefit now, it will in the near future. For a period, Eagle Mountain City did not adjust gas rates which resulted in over-collection of gas funds. If we retain the utilities, those collected gas funds will be consumed through operational expenses and capital improvements on the gas system over time. Once those gas funds are consumed, it is unlikely that our gas rates would be lower than Questar Gas on a consistent basis.
If we sell the gas utility, the gas fund balance we retain will allow us to make significant investments to improve our community. This transaction will also decrease the size of our government without any detriment to our current employees. We have negotiated positions for all of our existing utility and utility billing employees that would be effected. While these are great reasons to sell, there are other reasons which will have an equally important impact, the greatest of which are long term benefits to our utility infrastructure, utility service capability, and long term access to future energy supply. With over 25,000 residents and growing, running gas and electric utilities is growing in complexity. To stay in the utility business will require that we adjust to meet those complex needs. Meeting these challenges will take significant time, resources, and money. There are efficiencies to be gained from partnering with two companies that have served their customers well in these capacities for many years. From manpower, access to future energy resources, and operational experience, there is benefit to partnerships with Questar Gas and SESD.
We intended to bring this decision to the public for a vote, but through conversations I held with our Utah County Clerk who is the county elections official, as well as the State Director of Elections, this item cannot be on the November ballot. There is no state code that governs the sale of a gas utility, and while we will be selling assets associated with our electric utility, the electric utility transaction will be an annexation which is governed by a specific section of Utah code. This code does not allow for a public vote as a proposition on a ballot. In spite of this, we will communicate with you and give plenty of opportunities for you to give your feedback before City Council votes. There is a good amount of information available to you at www.eaglemountaincity.com under the News section. If you have questions, please post them here as a comment or email firstname.lastname@example.org and we will do our best to respond promptly. Also, as noted in the letter, we will be holding a Town Hall Meeting to present information and address questions on June 19th at Frontier Middle School at 7 p.m.