Member Profiles: Cullman-Jefferson Counties Gas District

The Gas District is owned by six cities, the largest of which has a population around 20,000. In addition to the owner cities, the District it also serves 7-8 smaller towns. There is a tremendous amount of economic development – especially auto manufacturers – going on in this part of Alabama, but it is not growth that increases gas consumption. Like a lot of utilities, Cullman-Jefferson Gas lost many old-line gas consuming industrials when they moved out of the country to places with cheaper labor and without workplace safety and environmental regulations.

“Like most systems in the US, our volumes are decreasing due to loss of industrial load and conservation by homeowners” says Cullman-Jefferson Gas CEO Mark Bussman. “The residential market in our area of Alabama hasn’t caught up with the industrial growth yet. In addition, because of the recent high prices, as well as the lack of cold weather in the past few years, most new construction of homes less than 2000 square feet are not including gas appliances. It’s a challenge,” says Bussman. “Most of the new construction doesn’t have gas water heaters or furnaces, but are instead all electric. We have noticed the electrics are doing more indirect reimbursements, and wining and dining of contractors, which makes it difficult for a public utility. We are meeting with developers and builders as much as possible to try to entice them to use gas, with an additional $1500 – $3000 up-front cost for them, it’s an uphill battle.”

“Obviously in big developments, decisions are made well before Cullman-Jefferson Gas has any input. If the builder already has a deal with an HVAC supplier, we have no chance.” Even with all this, the system is still growing, but at much slower pace than 5-6 years ago.

Cullman-Jefferson Gas's Headquarters

Speaking of the recent high prices, last year, Bussman wrote a personal letter to all residential and commercial customers, in which he did his best to explain the situation, and more importantly describe what customers could do to effectively control their gas expenditures. For the year, the Gas District itself reduced margins 25 percent across the board, which led Cullman-Jefferson Gas to lose money when January turned warm. Bussman feels that “Since we are a public utility, for the benefit of customers, we should represent them first. The early mild winter we have had so far has provided a tremendous break, and gives us chance to catch our breath. While it is supposed to be near normal this winter, we had a little cool weather in October and November and January has been great.”

CJG joined APGA about 20 years ago, when it was a completely different organization than it is today. They initially joined for the Insurance group, since insurance rates were based on payroll, and were escalating a lot as they grew. This was giving the system difficulty in affording coverage. Although systems in Alabama are now self-insured, Bussman believes it was and still is something to be considered by every system.

APGA’s role has now transformed into the voice of public gas in Washington. “Twenty years ago, when we were all regulated, Washington representation wasn’t needed, except for rate cases, which were all pipeline specific. But now the solutions for natural gas issues can only come from DC. “

Increasing domestic production is a big part of a solution. Based on recent FERC meetings, Bussman feels that LNG is not the answer, since “an oil company will turn a boat to another country if the price is more favorable.” Alabama members are not in a position to affect that discussion, but APGA is, and “APGA has done a great job of doing that.”

Mark Bussman

The other thing that will be more important is R&D efforts. The sharp decline in R&D investment, no longer funded by rates, has been devastating to LDCs in this country.

Based on Bussman’s experiences at the Fall 2006 APGA Charlottesville meetings, he is convinced that APGA staff and the membership understand the difficult problems that lie ahead. He has been well pleased with the staff’s ability to stop and listen to what the members are saying about challenges they are facing. A lot of associations get their marching orders, start marching and don’t solicit any more advice. “APGA has done a great job at listening and changing the focus when necessary, which has been great.”

“Everybody can always do better, but APGA actually does represent the membership, which does in turn represent the customers.”

Originally in February 20, 2007 Public Gas News