After negotiating a transaction for several months, Powell Clinch Utility District (PCUD) joined 14 other utilities in purchasing a large volume of natural gas that will save PCUD customers approximately $1 million over the next seven years.
In late 2018,the Tennessee Energy Acquisition Corporation (TEAC) finished the long-term purchase of a 30-year supply of natural gas at discounted prices. In order to make the buy, TEAC issued $516,785,000 in tax-exempt Gas Project Revenue Bonds.
The funds then are used to buy natural gas at a substantial savings to indexed market prices from J. Aron & Company, the commodity-trading arm of Goldman Sachs Group.
The total volume is expected to be 230 billion cubic feet.
RobNeil, President of PCUD shared, “Gas deliveries began in April 2019 and PCUD customers will save $130 thousand in the first year alone with savings for the initial seven years of the transaction locked in at a savings of $1 million and with long-term savings over the life of the transaction projected to total $4.1 million. In addition, PCUD is not responsible for the bonds since we are only purchasing the gas.”
“PCUD serves 16,000 natural gas customers in Anderson and Campbell Counties and sells about 2 billion cubic feet of natural gas per year. The TEAC project will represent approximately 20% of PCUD’s annual sales,” said Neil.
Neil continued by saying, “I want to thank the PCUD Board of Commissioners for their leadership and dedication to this project which will benefit PCUD customers with lower gas costs over the next 30 years.”
TEAC will sell the gas it receives from J. Aron to the 14 project participants and also will acquire gas for 23 other associated municipalities, according to the project plan. Over-all expected savings by the participants will be $37.4 million over the 30-year life of the transaction at the minimum discount rate. Actual savings over the first seven years are $13.9 million.
Other Tennessee participants in the project are Elk River Public Utility District, Jefferson Cocke County Utility District, Humphreys County Utility District, Sevier County Utility District, Hawkins County Gas Utility District, Oak Ridge Utility District, Harriman Utilities Board, Marion Natural Gas, Rockwood Natural Gas and the City of Clarksville. Remaining participants are utilities from Alabama, Georgia and Florida.