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SEAGD looks to form partnership

The Southeast Alabama Gas District is forming its own supply, and the cities of Troy and Brundidge have or will soon make moves to be a part, moves that could ultimately mean growth in revenues.

In conjunction with the 14-city owners of the SEAGD, Troy and Brundidge have both agreed to extend that ownership to the company’s newest Gas Supply District, which will allow the business to make long-term gas supply deals in large amounts.

The Brundidge City Council gave the OK July 6 and the Troy City Council introduced the idea July 13 to join the partnership, making them among the first of the owners to lend their support.

Troy will likely give its final approval in its next meeting July 27.

Greg Henderson, President and CEO of SEAGD, said once Troy gives approval, it will have joined Brundidge, Andalusia, Ozark and Elba in approval, but he said he expects the other nine cities will follow suit.

“Everyone was in favor at the board meeting,” Henderson said.

The new supply district will not mean much in the immediate future for Pike County’s gas district owners.

But, eventually, it could bring new revenues to the cities.

“In the long run it will allow us to do more transactions,” Henderson said.

“The big picture is it will benefit the gas district as a whole, but the fact is it will not benefit them or hurt them (right now).”

The purpose of forming the new district to make these transactions, rather than just making sales under the current structure, is simply to make it easier to track finances.

“The purpose of doing it…is to make our balance sheet and income statements be more in line with other distribution carriers,” Henderson said.

“Those deals typically “stand alone” for risk and credit and do not require the pledges of revenue derived from SEAGD’s existing customers.

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.”

Henderson said the transactions will be in the amounts of hundreds of millions of dollars.

Under the current ownership, Troy and Brundidge each receive revenues from the district.

Last year, Henderson said Troy earned about $1.1 million and Brundidge around $128,600.

These distributions are made based on the usage of each area.

Henderson said Troy is the third largest consumer in the district, something he contributes to the city’s industries.

While he said he doesn’t anticipate large profits in this new gas supply, it could increase those amounts coming to Pike County’s government.

The goal is to have the gas supply district formed by the end of October this year.