Implementing Our “Cooperative” Approach to Getting Gas To Centre Hall

by Don Kiel, Executive Director

Recently, the SEDA-COG Natural Gas Cooperative was awarded a Pipeline Infrastructure Program (PIPE) grant from the Pennsylvania Department of Community and Economic Development. This $1 million grant will be used to support construction of a new natural gas pipeline delivery system in the Centre Hall area of Centre County. More specifically, the grant will be used to construct a point of delivery (POD) connection station to a nearby transmission pipeline. Our main partner in this project, Columbia Gas of Pennsylvania, will then fund and construct a pipeline delivery network to serve Centre Hall Borough and surrounding areas, including major employer Hanover Foods, who is also contributing to the cost of the POD. In its initial phase, the delivery network will connect and provide natural gas to approximately 100 businesses and residents along the route. With support from Columbia’s new tariff programs, the main delivery pipelines and lateral connections will be constructed at no cost to the customers located along the route. Construction is expected to begin during 2018, and to be complete within 18 months.

This project illustrates how the Cooperative can play an integral role as a catalyst in providing new natural gas service to areas that desire it. There is currently no natural gas service in the area, but significant interest in having access to natural gas has been noted for some time. The Centre Hall area was identified as a “targeted investment area” during a systematic analysis conducted as part of a Regional Gas Utilization Initiative (RGUI) study performed by SEDA-COG during 2014 and 2015. The Cooperative followed up this study by working with Columbia Gas, local governments, business leaders, and community organizations to conduct surveys and neighborhood meetings to gauge interest in getting natural gas, answer questions, provide information, and address concerns about the proposed service. As a result, positive responses for receiving service were noted at a much higher level than is typical, helping to solidify the decision to implement a project. Much of this “legwork” was performed by the Cooperative.

Perhaps the main reason the Cooperative was successful in receiving the PIPE grant was the regional nature of the organization, which was focused on building public-private partnerships for the project. The Cooperative currently has six member counties, all of which have county commissioners, economic development planners, and community leaders serving on its board of directors. These individuals have demonstrated significant dedication, effective leadership, and outstanding coordination in pursuing new natural gas service across the Cooperative’s service region. Leveraging funding and support from different sources was effective in this instance, and should continue to be a successful approach elsewhere in building new natural gas infrastructure. In the Centre Hall example, the Cooperative also has been able to work together with the regional natural gas utility, Columbia Gas, in a complementary manner. In other instances, the Cooperative may determine that working independently is the best choice for natural gas project development.  With either approach, our capability to provide a flexible and practical means to provide natural gas throughout central Pennsylvania will be the centerpiece of our work, and we look forward to developing future projects in the region.

Why a Natural Gas Cooperative?

You may wonder why the SEDA-COG Natural Gas Cooperative was formed. With the large abundance of natural gas in the state, we have a tremendous opportunity, but also a great challenge.

Natural gas is a clean, less expensive, local energy source – but getting it to businesses and homes is where the challenge comes in.

While there are many traditional natural gas distribution companies nationwide that provide excellent, safe delivery systems to their customers, it may be costly for them to build new infrastructure because the infrastructure is underground.

Plus, in Pennsylvania, local natural gas distribution companies are regulated by the Public Utility Commission, and have limited flexibility to set rates. Their profit ceilings may influence their willingness to provide new service.

Cooperatives, however, can be more cost-effective and efficient to market or procure natural gas service. A cooperative is based on the idea that it may be better for groups or individuals to band together for a cause instead of going it alone. In fact, many electric and telephone cooperatives were formed early in the last century to establish and promote their services, especially in rural areas of the U.S.

There are natural gas cooperatives in Pennsylvania and elsewhere, but they’re not widespread and usually are small and cover limited geographic areas. Most municipalities in the state are assigned to a specific natural gas utility’s service (or tariff) area – but some of these places don’t have nearby delivery infrastructure.

The difference with our cooperative is partnerships – we’re in it together. Instead of an isolated, individual approach, we are making a coordinated, regional effort that involves cooperation by several member counties and partnerships with stakeholders and customers to better justify new natural gas service. We’re especially trying to encourage the development of natural gas projects that will directly benefit the region’s economy – which likely wouldn’t happen if we didn’t work together.

This partnership extends to natural gas suppliers. Projects may be coordinated with local natural gas distribution companies. They may actually be the builders, owners, and maintainers of new infrastructure, while the cooperative facilitates infrastructure funding.

In other cases, the cooperative may develop, own, and operate new systems on our own if appropriate. Approaches will be tailored to each project on a case-by-case basis.

The SEDA-COG Natural Gas Cooperative hopes this great opportunity proves to be an effective way to deliver new natural gas services throughout central Pennsylvania, and we look forward to adding new counties to our membership.

As executive director, I will blog about our progress and work, and plan to have exciting successes to report. Welcome to our cooperative, and please contact me if you want to know more.

Don Kiel

Executive director, SEDA-COG Natural Gas Cooperative, Inc.