Natural gas pipeline warning signs line Central Street in Oronogo.
Oronogo to sell its natural gas system to Spire, if voters approve
Oronogo is selling its municipal natural gas system for $620,000 to Spire Missouri Inc. – if voters approve on Nov. 2.
The Oronogo Board of Aldermen unanimously approved an ordinance after a closed session Monday to put the matter before the voters.
The pending sale may be a surprise to many, but it’s not an overnight decision.
Mayor Charles Wilkins said the city has been approached by two firms interested in purchasing the system, and Spire’s offer is the most attractive.
“We think it will be in the best interest of the citizens,” said Wilkins.
The harsh cold spell in February – and the financial effect it had on all small natural gas companies – is one thing causing the board to consider a larger firm.
Although the situation was not dire for Oronogo, Wilkins admitted, “We did take a hit.” Oronogo’s contract with its supplier kept the city from going out on the open market to keep houses warm.
“Spire has a vast storage system,” said Wilkins.
Another reason for getting out of the natural gas business is that it will be difficult for Oronogo to maintain compliance with new upcoming regulations.
Wilkins said he believes Spire rates will be a little lower for customers, and he added that Spire is noted for its good response time to emergencies.
City Clerk Cyndi Jennings said the city cleared approximately $40,000 on its gas service for the fiscal year ending June 30.
Utilities clerk Pam Heltzel said she billed 267 customers for gas service last month.
It was mentioned that a public hearing will be held in September to answer questions.
If voters approve, Spire will receive a relatively new system with the latest pipeline materials.
Oronogo has always had its own gas service. Grants were received twice to replace all service lines. (Leaks occurred after the first time the lines were replaced.)
Spire is also getting a growing system, with more than 700 new homes being built in Oronogo.
The board decided to invest in its gas utility by installing gas lines at the same time the rest of the infrastructure is being installed for two major housing developments, Greystone II and Hawthorn Hill (extension of Jason Place).
“Our goal is to have 75% of the new homes hooked up to gas,” said Wilkins.
The contract with Spire calls for the city to be reimbursed for the expense of installing the new gas lines.
Moreover, Wilkins pointed out that in addition to the purchase price of $620,000, the city will begin receiving franchise fee payments from Spire.
If voters approve selling the utility to Spire, the Missouri Public Service Commission will appraise the system to make sure $620,000 is within a range that is considered fair.
Wilkins said the city has received an appraisal from an outside firm that has concluded $620,000 will be within the PSC range.
Spire, based in St. Louis, has become the predominant natural gas supplier in western Missouri (including Webb City and Joplin) since it purchased Missouri Gas Energy in 2013.
The original Laclede Gas Light Company was established in 1867 to light the streets of St. Louis. Spire has since acquired utilities serving Alabama and Mississippi to become the fifth largest publicly traded supplier of natural gas in the nation.
In 2017, five systems – Laclede Gas, Missouri Gas Energy, Alagasco, Mobile Gas and Willmut Gas – took on one name, Spire.
If voters approve, Oronogo’s 267 gas customers will be added to Spire’s list of 1.7 million customers (as of 2017).