FMPA Joins Regional Partnership to Acquire Natural Gas
ORLANDO, Fla., April 29, 2004 – In an effort to reduce natural gas costs for its electric customers, Florida Municipal Power Agency (FMPA) signed a letter of intent with public gas and electric utilities in several states to establish a new natural gas supply agency.
FMPA is a founding member of Public Gas Partners, a nonprofit corporation that currently includes 11 public gas or public power agencies in seven states. The innovative partnership among governmental entities was motivated by increasingly volatile and historically high natural gas prices.
“This agreement culminates more than two years of work developing a remarkable new way to save money and protect ratepayers from volatile prices in the natural gas market,” said Roger Fontes, general manager and CEO of FMPA. “It is an impressive show of interstate cooperation among consumer-owned electric and gas utilities. Most significantly, this is the first such joint development project in the United States and provides additional future opportunities.”
In recent years, natural gas prices have risen dramatically—doubling and even tripling in short periods of time. The long-term price for natural gas in the United States, which historically moved in a fairly narrow range around a price of approximately $2 per MMBtu, has demonstrated significant volatility in recent years and now often exceeds $5 per MMBtu. The long-term prospects suggest continued price volatility.
By pooling the natural gas needs of its members, Public Gas Partners will acquire producing gas reserves or other long-term gas supplies and create discounts and economies of scale for everyone in the group and, in turn, their customers. The members anticipate acquiring a portfolio of long-term supplies primarily made up of producing natural gas reserves. The group favors a portfolio approach to diversify assets and mitigate risk associated with reserve acquisitions.
Public Gas Partners expects to target an initial supply portfolio capable of producing approximately 80,000 MMBtu of gas per day or 30 billion cubic feet annually. FMPA is projecting that approximately 20% of its daily gas needs will eventually be supplied by the new partnership, yielding significant cost savings below current market prices.
The day-to-day operations of Public Gas Partners will be performed under contract by the Municipal Gas Authority of Georgia. The Kennesaw-based organization is the largest nonprofit natural gas joint action agency in the United States.
All operation and management costs for Public Gas Partners will be funded through fees to its membership. Each member will appoint one representative to the partnership’s Board of Directors.
The agencies that signed the letter of intent include Municipal Gas Authority of Georgia, Florida Municipal Power Agency, Lakeland (Fla.) Electric, Lower Alabama Gas District, Municipal Gas Authority of Mississippi, Public Energy Authority of Kentucky, Patriots Energy Group, Southeast Alabama Gas District, Tennessee Energy Acquisition Corporation, City of Tallahassee (Fla.) and Florida Gas Utility. The partnership is open to other public gas or electric agencies.
Florida Municipal Power Agency (FMPA) is a wholesale power company owned by 29 municipal electric utilities. FMPA provides economies of scale in power generation and related services to support community-owned electric utilities. The members of FMPA serve approximately 1.7 million Floridians. FMPA’s members include Alachua, Bartow, Bushnell, Chattahoochee, Clewiston, Fort Meade, Fort Pierce, Gainesville, Green Cove Springs, Havana, Homestead, Jacksonville Beach, Key West, Kissimmee, Lake Worth, Lakeland, Leesburg, Moore Haven, Mount Dora, New Smyrna Beach, Newberry, Ocala, Orlando, Quincy, St. Cloud, Starke, Vero Beach, Wauchula and Williston. Additional information is available on the Internet at www.fmpa.com.