Youngstown Daily Legal News

Bill would cut infrastructure expenses for natural gas companies

TIFFANY L. PARKS
Special to the Legal News
Published: March 14, 2014

The sponsor of a House bill that would permit natural gas companies to apply for an infrastructure development rider to cover costs of certain economic development projects has said that Ohio needs to leverage energy to boost progress.

“In the most recent survey of site selectors, utility infrastructure was ranked third out of 10 in the top site selection factors,” said Rep. Cheryl Grossman, R-Grove City.

“Companies considering investment in Ohio have found the costs to extend infrastructure to the development site to be a significant capital consideration. In order for communities in the state to enjoy the benefits of a robust economic development environment, increased tax base and job opportunities, it is imperative that potential barriers to these infrastructure enhancements are mitigated.”

House Bill 319 would allow a natural gas company to apply to the Public Utilities Commission of Ohio for authority to implement an infrastructure development rider to recover the cost of certain projects.

The bill would create an initiative called Leveraging Energy to Advance Development or LEAD.

Under LEAD, Grossman said the costs of new infrastructure would be shared between a new customer and the utilities’ existing customers in a limited set of circumstances and when an economic development opportunity is presented.

“LEAD will permit natural gas companies to create new economic development funds for the extension of utility infrastructure to the boundary of a development site, and will allow local governments or economic development entities to more aggressively pursue economic development projects that might not otherwise move forward due to the unavailability of adequate natural gas infrastructure,” she said.

According to the bill’s provisions, Grossman said that when an identified economic development opportunity is determined to require investment to extend natural gas infrastructure, the project may be eligible for LEAD funds.

For a project to be deemed eligible, the lawmaker said the initiative would have to create new jobs or avoid potential job reductions in the state and provide material benefits in the areas of economic development or infrastructure enhancements “which might not be attained absent service from a natural gas company.”

“The merits of each proposal will be presented to the PUCO, to be evaluated on a case-by-case basis,” Grossman said.

Participation in LEAD would be voluntary.

The proposed legislation, which is before the House Public Utilities committee, has gained a wealth of industry support.

In proponent testimony for the bill, Mike Jacobs, executive director the Zanesville-Muskingum County Port Authority, said he understands the importance of having available sites with all utilities available.

“In my opinion, LEAD would be a welcomed tool to get projects done,” he said.

“I have been an economic development professional in Ohio for about 20 years now. I remember how electric and natural gas lines could be extended and amortized through an industrial customer’s future bills prior to state deregulation laws.”

Under a deregulated market, Jacobs said utilities no longer offer that service without assurance the new business will be a long-term customer.

“The lack of funding for utility extensions has put Ohio at a disadvantage when competing for projects,” he said.

Like Grossman, Ohio Gas Association President Jimmy Stewart noted that availability of utility infrastructure was ranked third out of the top 10 site selection factors.

“By strategically investing in natural gas infrastructure where it will be the most attractive to companies considering investment in Ohio, we can increase our state’s competitive advantage against other states,” he said.

“Further, through such a strategic approach to gas infrastructure investment and its clear connection to potential economic development projects, we can ultimately increase overall investment into Ohio and, at the same time, increase tax base and job creation in our state.”

Although Stewart said the proposed legislation would have a significant impact on economic development in Ohio, “it will not have a significant impact on the individual Ohioan.”

“HB 319 is a relatively simple piece of legislation that could yield major economic investment in Ohio. It will focus economic development activity and encourage new investment in Ohio at a minimal cost to existing utility customers,” he said.

Gahanna Mayor Rebecca Stinchcomb penned a letter of support of HB 319 with Anthony Jones, Gahanna’s planning and development director.

“This bill is extremely important to the city of Gahanna,” the pair wrote. “We have a large parcel that currently does not have natural gas infrastructure on site. This has limited the development potential for the city.”

Stinchcomb and Jones said the upfront cost to build the infrastructure is too costly for one individual user.

“Therefore, the LEAD program would provide a solution to this problem and help position the city of Gahanna for economic success,” the two wrote.

“Utilities play a major role in the recruitment and retention of companies. Utilities need additional tools that allow them to partner with local communities to address development issues. The LEAD program is an appropriate tool that will help bring job creation opportunities to the city of Gahanna.”

The bill has had two committee hearings.

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