City looks at gas expansion

The City of Holly Springs is considering expanding natural gas service out into the county and also wants to move forward on the completion of replacing cast-iron gas mains with plastic lines.

Bill Stone, general manager of the Holly Springs Utility Department, and city engineer Larry Britt discussed these matters at the February 20 meeting of the board of aldermen.

Stone said gas leaks over the city may account for the department’s lost and unaccounted for gas. Several hundred leaks have been repaired going back to 2017, he said. As the cast-iron is replaced with new plastic pipe, he expects line loss of product to go down.

The unaccounted loss of product is estimated to be between 20 percent to 25 percent, he said. “Finding the leaks should give us some answers,” he said. “Lost and unaccounted for gas is a regulatory concern and is lost revenue as it is gas the city purchases but does not sell.”

Alderman Christy Owens asked about the meters being changed when GE meters were installed.

Mayor Kelvin Buck explained that the meters were not changed out under a contract with General Electric. Instead, the meter reading has been automated.

“The meters and apparatus are still there,” he said. “All we’re doing is reading the meters with technology.”

The replacement of the cast-iron mains will likely take care of a lot of line loss, Stone said.

The estimated cost to complete the replacement of cast-iron is $6 million.

Britt weighed in on the issue.

“As you all said, we had a mandate to replace about 31 miles of cast-iron pipe in the ground,” he said.

Some money to kick off the replacement of pipe is being raised with a surcharge fee that was instigated in 2011. That money collected over six or seven years is being used to implement Phase I cast-iron replacement which is east of the railroad.

A rural development application has been submitted to take care of the rest of the project – everything downtown, north, south and west of the railroad.

“We’re ready to send back all paperwork required (to Rural Development),” Britt said. “In the past, they probably funded in increments of about $2 million. They will probably commit to Phase II and then continue to take it in increments.”

Britt said if Rural Development funds the entire project at once, then there will be a shortage in the surcharge fund monthly of about $5,800 to be put toward the monthly payback of about $29,000.

Alderman Mark Miller asked how much money would be realized in savings if the line loss were stopped.

“We’re dealing with a lot of cast-iron,” Britt said. “We need to move along. You do not have leaks in the new plastic-type pipes. You think about the gas you are selling. You are having to make up that 20 to 25 percent.”

All this assumes that there will be no big surprises when the city gets into the cast-iron replacement further along.

Buck called it a big project.

“It has to be done. Once we have done it, the system will be a lot better off,” Buck said.

Stone added, “As we roll along, one way to make up the $5,800 is by selling more gas.”

Gas expansion project

Jackie Cruse, with Cook Coggins Engineering, introduced natural gas expansion and growing customers and laying out new routes.

The Holly Springs Utility Department needs to protect its certificated areas and protect the supply so the whole system does not depend upon a single source of gas, he said.

One proposed route of expansion is up Highway 311 to Mt. Pleasant, then to the east to H.W. Byers School, to subdivisions and homes.

The system will be high pressure and able to serve around 1,000 more homes. It is expected to serve growth in the Chickasaw Trail Industrial Park, new homes, businesses and individuals.

Stone said HSUD could work with Byhalia to share redundancy in the system.

Buck asked whether the line would pay itself off in revenues.

“Yes,” said Cruse. “It would generate enough gas sales to be feasible. It would pay for itself over a period of time.”

Expansion requires 10 customers per mile, and the line up 311 and in Mt. Pleasant has about 17 potential customers per mile.

Buck asked where possible sources of funding could be obtained.

Cruse said a Cap Loan program bill has passed the Senate and now is under consideration in the House of Representatives.

Stone said when you get into more rural areas outside subdivisions, a Community Development Block Grant could be applied for like New Albany did to expand gas to Bethlehem and Cornersville.

Buck asked whether the plan would supply Springs Industrial Park.

Stone said it could tap into a trunk line going up Highway 311.

Stone and Cruse provided a map where electric meters are located out in the rural areas. The density of these meters indicates areas that would support lots of gas meters.

Stone said municipalities cannot serve further than five miles outside their city limits without special legislative approval by local and private legislation, “fortunately, the city of Holly Springs got this passed years ago and we have authority to serve any area served by our electric system, with PSC (Public Service System) approval.”

The new areas would have to be certificated by the Public Service Commission. There are lots of areas south and southeast of Holly Springs that have also expressed interest in receiving natural gas service, he said.

Cruse said they are looking at six or seven areas that could be considered to expand natural gas - all east of Holly Springs, which might qualify for CDBG funding.

Stone said expansion would generate revenue to improve the whole system.

HSUD is also looking at the feasibility of operating its vehicle fleet on compressed natural gas. There are a few stations around, he said.

A filling station could possibly be paid for through a grant program funded by Volkswagen Diesel Settlement funds to go along with compressed natural gas use to reduce emissions, he said.

In addition to the possible grant program, the state already has an interest-free loan program to pay for filling facilities and acquiring or converting vehicles to CNG.

School buses and garbage contractors could be invited to change over to natural gas and partner to make a filling station feasible.

“By owning our own natural gas system, any natural gas you buy, you are buying on the wholesale market and that makes it more feasible,” Stone said.