Do you know who your gas company is? Arnold Wickham isn’t sure.
His bills come from Mountain Energy Ltd., a small utility company in Aleppo, but a few weeks ago, he got a call from Peoples Natural Gas saying if he loses gas service, he should call the North Shore-based utility.
Mr. Wickham lives on a 50-acre farm in rural Greene County. Last December, he learned that Mountain, his gas company for the past two decades, wanted to abandon service to its 83 customers. Since then, he said, he has gotten mixed signals and confusion.
“Nobody’s telling us nothing around here, other than [us] going down the country road, asking, ‘Do you still have gas?’ ”
Last winter, Mr. Wickham had trouble turning on the gas during some of the coldest days of the year.
The supply on Mountain’s system has been dwindling since it sold most of the feeder wells to a subsidiary of Consol Energy Inc. called Leatherwood Inc. The sale took place in four stages between 2006 and 2009. Since then, Mountain has been trying to get out of the utility business.
In fact, the company never was designed as a utility in the first place, according to Bradley Bledsoe, vice president of Mountain.
Who is responsible?
Nearly 100 years ago, Mountain’s predecessor companies drilled shallow oil and gas wells and built small gathering pipelines to hook up that gas to a market. Over the years, residents connected to the gathering system, and the oil and gas company became a utility.
Mountain’s system has about 55 miles of pipeline, but Mr. Bledsoe said his company doesn’t actually own the majority of that. More than 40 miles of pipeline were transferred to Leatherwood with the wells.
“I can’t control the supply. I can’t control how safely it gets there. I can’t walk the lines to make sure it’s safe,” Mr. Bledsoe said. But “the way that the [Public Utility Commission] sees this is, at the end of the day, regardless of who owns what, Mountain is responsible.”
That’s a particularly sore point for Mr. Bledsoe at the moment. On Nov. 18, the PUC ordered Peoples Natural Gas, a North Shore utility, to take over operational control on Mountain’s system, hence the call to Mr. Wickham.
Peoples actually has been involved with Mountain for at least a year. During last winter’s brutal chill, when there wasn’t enough gas in Mountain’s system to meet demand, the Aleppo company negotiated with Peoples to build three interconnects to Peoples’ pipelines to receive additional gas.
Joe Gregorini, vice president of rates and regulatory affairs at Peoples, said the utility transferred $18,000 worth of gas to Mountain’s clients but never got paid.
On Nov. 18, when several Mountain customers reported to the PUC that they didn’t have gas, the regulators ordered Peoples to get involved. Peoples activated its interconnects and began pumping gas to Mountain’s system.
The company also called as many customers as it could reach and told them Peoples would be taking care of their issues. According to the PUC’s emergency order issued that day, regulators, Peoples and not even Mountain’s attorney could get in touch with anyone at the Aleppo utility that day.
The order also said Mountain has not maintained its system and has allowed wet gas, meaning natural gas that contains other liquid components, to freeze on the pipes. The PUC said Peoples would take over operational control and ordered Mountain to place $50,000 into an escrow account to pay for Peoples’ expenses.
“Just to sum it up, the whole thing was bogus,” Mr. Bledsoe said.
Mr. Bledsoe fired off a letter to the agency saying he couldn’t be reached in the morning because he was out helping customers. There’s no cell phone reception in the part of Greene County served by Mountain’s pipelines, he said, so he didn’t know that people were looking for him.
He objected to regulators forcing Peoples to take over the system. He took issue with some of the allegations, specifically those that accused Mountain of not maintaining its lines, and he said he can’t fork over $50,000 and help his customers at the same time.
In the end, he thanked the commission for “consideration and understanding of our company’s fragile situation.”
Peoples didn’t want to take over the system either, at least in the manner the PUC directed. In a letter to the state agency, the utility suggested that since Mountain refused to deposit the $50,000 into an escrow account and still has not reimbursed the company for the gas it supplied last winter, the PUC should consider appointing Peoples as the receiver for Mountain.
Mountain continues to bill its clients and use the revenue to pay its four service representatives, not Peoples, although it’s never enough to cover the small utility’s costs, Mr. Bledsoe said.
Behind the scenes, Mr. Bledsoe said the emergency order threatened a private deal among the two utilities and Leatherwood that has been in the works for over a year.
It’s unusual for the PUC to order one utility to assume operational control over another. Mr. Gregorini said he’s never seen it happen in his 27 years with the company.
“We’re not acquiring, operating or owning any of the customers there,” Mr. Gregorini said. “We were asked to take over operational control. That’s short of taking over the system.”
Nevertheless, Mr. Gregorini said his utility has been exploring the option of acquiring the system. “At this point, it’s a possibility — something we’re taking a real close look at,” he said.
According to Mr. Bledsoe, who said his company has been operating at a loss since he took over two years ago, it was more than just a possibility.
“We were almost completely finished with the agreement when this order was put into place,” he said.
At a conference with the PUC in early December, Mr. Bledsoe said, Mountain and Peoples agreed to continue to negotiate a deal even as the emergency order is in effect.
So much gas but not enough
It might be ironic to think of Greene County, a prolific producer of Marcellus Shale gas, as a place where there isn’t enough gas to go around, but it’s not unique. That’s because there’s another fuel in the mix: coal.
There’s a two-inch gas line that runs just 1,000 feet from the property of Aleppo Township’s Board Chairman Tim Brady. The line once supplied his home but now just whooshes the fuel right past it.
The family’s farm was once served by a utility that looked a lot like Mountain Energy. It was the successor to companies that drilled shallow wells in the early part of the 20th century and hooked on customers over time. Five years ago, Leatherwood bought those wells, and a year later the customers who drew gas from those wells lost their service, he said.
Mr. Brady was livid. Because the wells that supplied his gas were in West Virginia, he contacted the attorney general offices in West Virginia and Pennsylvania but was told he would likely need to get a lawyer to fight Leatherwood or settle.
He settled.
Now he uses a wood-burning outside stove to heat the house, in addition to some electric appliances that he paid for with settlement money.
“We’re sitting here on top of the largest gas field in the nation, and we can’t get gas,” he said. The Marcellus Shale, a gas formation that has bolstered Pennsylvania’s standing as a top producing state in the nation, runs through much of Pennsylvania and is particularly prolific in Greene County.
Consol Energy, through its Leatherwood subsidiary, bought Mountain’s more than 100 conventional wells to mine under them, according to Mr. Bledsoe.
“They purchased them for that reason. As their mining plans progressed, if any of the assets that they purchased were a potential liability on the mine, they would plug them,” he said.
The current situation gives Mountain little leeway, even though Mr. Bledsoe asserted to the PUC that the company is perfectly capable of delivering on its obligations to customers this year.
In a statement, Consol said it is working with the PUC and Peoples to “ensure that Mountain Energy’s customers receive safe and reliable service” but that such service “is the responsibility of Mountain Energy,” not Consol.
That’s the same argument that was made seven years ago when Consol bought a bundle of oil and gas wells and associated gathering lines from Equitable Production Co. and Equitrans, both subsidiaries of EQT Corp. At the time, the Downtown company still owned a utility, called Equitable Gas, and in October 2006, that utility abruptly cut service to 26 customers in Richhill Township, Greene County.
Consol bought Equitable’s wells because it planned to mine under them and as part of the sale, the coal company agreed to pay to convert the disconnected customers to another fuel source. All but one agreed to the offer.
Wayne Shough didn’t want propane, or electric heat, and he didn’t want to convert on the coal company’s terms. He brought the matter before a judge at the PUC, alleging Consol was pulling the strings behind Equitable’s dealings with landowners. But the judge ruled that Consol is not the responsible party and that it had no jurisdiction over the coal company.
In the end, Mr. Shough did get a settlement and used the money to build his own gas line to hook up to a local gas well.
Anya Litvak: alitvak@post-gazette.com or 412-263-1455.
First Published: December 16, 2014, 5:00 a.m.
