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Alaska editorial: Gas distribution is feasible and will work

Posted: June 30, 2012 - 11:07pm

This editorial first appeared in the Fairbanks Daily News-Miner:

The distribution study presented to the Borough Assembly last week put some numbers behind the general impression that natural gas is the best fuel solution for the community.

It also should put a fire under everyone to figure out how to create that distribution system.

The consultants who wrote the report for the borough said creating a gas distribution system in Fairbanks makes sense under all reasonably foreseeable scenarios.

The system could deliver gas at roughly half the per-unit-energy cost of fuel oil within a decade, according to the study. The system also could offer deliverable propane, at a slightly higher price than the natural gas, to less densely populated areas where it’s not as economical to install gas pipes.

Converting furnaces to natural gas is expensive, with an average cost of about $8,000 for a residential customer. But the average household savings from gas in 2021 could be $4,500 to $6,300 per year, compared to fuel oil, the study projected.

That’s enough difference to make most people jump to gas, even if they have to borrow a little money to do so. The payback would require no more than two years.

By 2021, the annual savings compared to fuel oil could be $315 million, based on a mid-case scenario where government grants cover 50 percent of the cost of building the distribution system. That’s an enormous amount of savings for this community.

Even if grants weren’t forthcoming and local consumers had to pay off the entire distribution system via a charge on their monthly bills, though, it appears natural gas still would beat the alternatives. The study estimates that the cost of service from a system built and owned by a private company, which wouldn’t be eligible for grants, would be just 9 percent more expensive than a nonprofit- or government-operated system.

The study shows that a gas distribution system would be feasible in Fairbanks. The next step is to figure out how to pay for it.

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