By Aaron Swanum
Clara City, a small community of about 1,360 residents, sits on the edge of the state’s west central prairie. Like many small communities, this city has its challenges related to growth and development.
One of these challenges was a lack of choices when it came to energy needs. The city relied for many years on propane, fuel oil, and electricity, but lacked access to natural gas. Leaders believed adding natural gas to the mix would put the city in an ideal position for enhanced options for business development, while also providing another choice to residents.
Discussions about bringing such a utility to the city heated up around 2001, according to City Administrator Windy Block and Mayor Mike Thein.
The community conducted a referendum on the possible implementation of a publicly owned system for natural gas, but it fell short of passage by just seven votes. “I thought it was terrible that someone wouldn’t bring a great utility like that to town,” Thein says.
When Thein ran for City Council, he made bringing natural gas to the city one of the planks of his candidacy. In 2008 he started to look into what it would take to bring natural gas to Clara City.
Hurdles to clear
Some of the main hurdles in getting this project moving forward included soliciting and identifying a private business with the vision and resources necessary for the development of a viable and sustainable natural gas utility, according to Block.
Another hurdle came in the form of two local businesses that sold propane. “Many people didn’t want to see local businesses get hurt,” Thein says. “Some people had spread rumors that natural gas was more dangerous than propane, which wasn’t true.”
The cost to the community to build and operate such a utility also became a major issue. One of the key factors in making it cost effective was to bring it to the region and not just Clara City. “It was very fundamental in the proposals when we put this together to make sure other surrounding communities and agricultural barns would have access to natural gas,” Thein says. “We also needed to have a delivery charge that was economical to the consumer. Those things had to come together to make this sound.”
Because the market for propane fluctuates so greatly and there had been reliability issues with having a steady supply of propane in the city, Thein says he knew there would be “massive cost savings to homeowners” by bringing in natural gas.
Revisiting the idea
In 2011—10 years after the failed referendum—Dooley’s Petroleum reignited discussions about natural gas. Company representatives made a preliminary presentation to the city, which was “very well” received, Thein says.
Dooley’s was a relatively new player to the city’s energy business, Block says, and the company leaders appeared to have a vision that was much broader than simply protecting their local business. They envisioned a much greater opportunity of diversifying their own business as well as providing citizens and businesses with greater choice of fuel.
The people who executed Clara City’s natural gas deal are (left to right): City Administrator Windy Block, Dooley’s Natural Gas President Randy Dooley, Mayor Mike Thein, Dooley’s Business Manager Dan Goeman, and Dooley’s Project Manager Lowell Hjelle. Photos by Danielle Voigt
Ultimately, after much discussion, the city selected Dooley’s Natural Gas—a new division of Dooley’s Petroleum— in January 2012. The city put $60,000 into the project, while the natural gas company has invested over $13 million. The system went “live” in October 2012, and now provides service to the cities of Clara City, Maynard, Raymond, Prinsburg, and a large rural area of diverse agriculture.
Thein was crucial to getting this project off the ground, according to Block. The mayor helped “energize” city councilmembers around the idea, and they authorized staff to devise a solicitation plan for the delivery of natural gas by the private sector. In addition, Block says, it was “critical to have solid teamwork on both sides of this project, the public and the private, in order for it to be as successful as this project has been.”
He credits the project’s success to the solid decision- making of the City Council, the unending support work of city staff, and the professional guidance of the city’s contracted consultants. The city received legal help from Kennedy & Graven, guidance on rates from Kelly Bay Consulting, advice about process from the Minnesota Municipal Utilities Association, and engineering advice from Rodeberg & Berryman, Inc.
The cooperation of Dooley’s was also key, Block adds, and he says he is grateful for “the unending commitment to good business demonstrated by Dooley’s Natural Gas.”
Community buy-in and benefits
“Being able to compete strategically on a more equal footing with other communities, and to afford the citizens and businesses of Clara City the opportunity to purchase their heating fuels on a broader spectrum are benefits of the utility,” Block says. Both Block and Thein note that many residents and businesses have removed propane tanks from their properties. “People switched in a great number from propane, and we’re expecting more to switch this year,” says Thein. “There has been excellent community buy-in. I have people come to me on a regular basis telling me how much they have saved by using natural gas and the convenience of not having big tanks in their yards.”
“The buy-in from the community is evidenced by their high rate of voluntary subscription,” Block adds. “No one was forced to do or change anything as it concerned their chosen heating fuel source. To me, that is the beauty of encouraging the private sector to compete for the sale and servicing of heating needs for our residents and businesses. I would say that Dooley’s has been very successful in doing just that.”
The new utility doesn’t present any burden to taxpayers, either. “Residents aren’t paying one nickel more in taxes because of this utility,” Thein says.
Another plus for the city has been the direct financial benefit from the conversion of city-owned buildings from propane fuel to natural gas, both in the efficiency afforded by new heating systems as well as in the cost of the basic fuel source.
While no new businesses have come to the city yet as a direct result of the utility, there have been several renewal projects and a couple of new buildings are either already being built or about to start. “This may well be due in part to a renewing economy, but I also believe that those who are developing and redeveloping have been energized by the onset of natural gas service as an option for their heating needs,” Block says.
He notes that it’s important to have a rate commission that “keeps natural gas rates competitive and honest with what else is going on in the world of energy prices.”
While each of the other communities are free to set their own rates and rules of service, he adds, they all have been seemingly content to adopt the rates set by the Clara City Council, which also acts as the rate commission.
“We have been successful in keeping the City Council of Clara City out front as an effective and efficient rate commission,” Block says.
More upgrades planned
The natural gas utility is just one of many upgrades that the city leaders are pursuing as they look to grow and develop into a stronger community.
“The utility is a key component of development, but there are a number of other things we need to do to help ourselves out,” Thein says. “We need to better market the benefits [of our Internet service] to local businesses, and how it can help them grow and succeed. We have very good high-speed Internet for a rural community and are very fortunate and lucky to have this.”
Clara City is also in the process of updating its water and sewer treatment and is taking down many old buildings to make way for new development.
“We have really been revolutionizing our city,” Thein says. “Local business owners now feel the community is trying to grow and improve itself. We are giving people a better quality of life.”
Aaron Swanum is a freelance writer based in Middleton, Wis.
Read the January-February 2014 issue of Minnesota Cities magazine
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