City of Covington says no to equal split of gas revenue

COVINGTON -- The Covington City Council decided Monday night that it isn't interested in splitting expenses and revenues evenly among the three cities that will provide gas to Stanton Springs and its first tenant, Baxter International.

As previously decided, expenses and revenues are to be split at 37.5 percent for Covington and Social Circle and 25 percent for Madison. A representative for the Municipal Gas Authority of Georgia wrote to the cities requesting feedback on equalizing shares 33 for each city, applying to the capital cost and all future net margins.

Although Councilwoman Janet Goodman made a motion to approve an equal sharing of expenses and revenues, she eventually withdrew her motion after further discussion by the council.

Councilman Chris Smith said he is reluctant to give up more than 4 percent in revenues. He asked one of the city's attorneys, Frank Turner Jr., for an opinion. While Turner said he didn't have a legal opinion to offer, "My personal opinion is that you've had this deal for around a decade and now that the ship has come in it's going to be revisited. I tend to agree with your logic."

The council did not formally vote but reached a consensus to keep the terms the same.

MGAG is revising the Memorandum of Understanding between the parties to get all the business terms in place and is working on intergovernmental agreements, according to a letter written by Scott Tolleson, manager, member services, Northern Division. The next step will be to hire an engineer to do some detailed construction options, Tolleson said.

In an email followup to questions on Tuesday, Tolleson said, the proposal to split the revenues and expenses equally "was brought up now to make sure that all three cities were still comfortable with the current structure before we start signing documents and spending capital on the project."

Tolleson said the project is in the engineering phase and "we don't have a firm estimate on capital cost.

"The wild card is the cost of materials (such as) steel and plastic pipe.

"The revenues are also a moving target ... we haven't seen final load information from Baxter's engineers yet, so that would only be a guess at this point," he said.

According to a press release issued by MGAG in May, the cities will design, construct and maintain the gas system "while providing reliable and competitively priced natural gas service." Construction is slated to begin later this year.