Developer says natural gas would be cheaper for homes
The City of Bee Cave is negotiating a franchise agreement that would bring natural gas into the city limits.
The franchise agreement being negotiated with Texas Gas Service would extend a natural gas line to serve the Ladera housing development next to Bee Cave Central Park.
"We are excited about being able to bring [natural gas] to the community and to be one of the first new home communities in Bee Cave to offer it," said Adib Khoury of Taylor Morrison, the developer of Ladera.
Extending the gas line into the city increases the opportunities for future and existing developments in the Bee Cave area to have natural gas, Khoury said.
TGS announced last year that it would be extending its gas line farther out on Hwy. 71 to serve Sweetwater, a development with 1,800 residences planned near Lake Travis ISD's bus depot. Prior to the extension, the natural gas line had stopped at Fitzhugh Road.
Khoury said Taylor Morrison approached TGS about extending the line into Bee Cave after hearing about the Sweetwater agreement. Taylor Morrison had been planning to put a community propane system in Ladera, he said.
Bill Van Hoy, Texas Propane Gas Association executive director, said propane providers have been available to serve the smaller and more rural communities that have been overlooked by natural gas providers. He said he expects developers to choose natural gas over propane when given a choice.
"I think that most propane companies that own these community [propane] systems realize that they wouldn't be there or they won't be there once the natural gas is available and that the consumers are willing to do what it takes to convert," he said.
TGS spokeswoman Lori Moreno said TGS decided to look into extending a line into Bee Cave after being approached by several different developers in the area interested in natural gas.
"We would like to provide affordable natural gas service to any developments in the Bee Cave area that request service," she said. "Our ability to do so will depend on the cost to serve those customers and the existence of current utility providers."
Senna Hills resident Chris Sallee, who is part of a group that has been lobbying for propane regulation, said the propane industry has a monopoly on many developments in the area and that any alternatives are welcome. There are 73 community propane systems in Texas, and about 40 of them are in western Travis County.
A homeowner's propane bill is often more than twice as expensive as a natural gas bill, Khoury said.
Unlike natural gas, the Texas Railroad Commission does not regulate the price or service of propane.
Rep. Paul Workman, R-Austin, introduced two bills last legislative session aimed at increasing the regulation of the propane industry.
The bills would have given individual homeowners the option of installing their own propane tank and required propane businesses to be regulated under the Texas Railroad Commission in the same manner as natural gas utilities, including rate fees.
Both bills were killed, but Workman said he will introduce more bills on the issue next session.
"We will be back this session to do what we can to provide relief for those people that are in those community propane systems," he said.
Van Hoy said Workman's bill to regulate propane distributors was not developed enough to gather the needed support. He said the propane distributors could be open to future legislative efforts aimed at regulating the industry.
"The last thing [propane companies] want is people screaming at them and trying to get legislation and regulation," he said.
Additional revenue source
With natural gas, the city has the option to levy a franchise fee that is passed onto customers. The City of Austin charges a 5 percent fee, while the standard fee is 2 percent, Bee Cave City Manager Frank Salvato said.
Councilman Mike Murphy said an additional revenue source would be welcome as he does not foresee another large growth spurt from the city in the immediate future. He said a 2 percent franchise fee would be fair and result in a gas bill that would still be significantly lower than propane or electric.
"I'm not looking to soak anybody here," he said of a potential 2 percent franchise fee.
Because it is unregulated, cities cannot levy a franchise fee on propane. However, propane providers can sign contracts with developers that give the developers a portion of their residents' propane bills.
Bankruptcy documents for Sonterra Energy Corporation, a propane distributor that served multiple Travis County developments before it went out of business, showed the propane distributor had signed a contract with Senna Hills that gave the Senna Hills developer a part of its residents' propane bills. Sonterra had signed similar contracts with Lake Pointe and several other neighborhoods that gave the developers a percentage of their residents' propane bills, Lake Pointe resident Larry Fox said.
The so-called kickbacks to the developers stopped after Sonterra declared bankrupcy, Fox said.
Sallee said it is outrageous that a propane business could come to such agreements with developers without residents knowing.
"This is the wild, wild West, and there are no rules and regulations," he said.
Van Hoy said while he sympathized with residents who felt they were uninformed about where some of their money for a propane bill was going, a natural gas bill is also not clear on what taxes or fees are going where. He said he believes much of the anger toward the propane industry is misdirected.
"The propane companies are simply trying to fill the void that the natural gas companies failed or refused to see," he said.