Natural gas service expanding in Travis County

Despite the popularity of the Hill Country's picturesque scenery and lake lifestyle among homeowners, numerous areas in the region remain without basic natural gas service.

Subsequently, officials for Texas Gas Service say the company is trying to provide service and pipelines to as much new development in the area as possible.

From 2009–11, TGS officials received numerous inquiries from area developers and customers as to whether natural gas service was available, TGS Communications Manager Christy Penders said. In 2012 natural gas service began expanding into unincorporated areas along W. Hwy. 71.

In Bee Cave, the city and TGS entered into a 15-year franchise contract Nov. 6, 2012, allowing the utility right of way access to build natural gas infrastructure. On March 17, Lakeway also granted a franchise contract to TGS—a first for the city whose residents have relied on electric or propane services for heating or cooking.

Hwy. 71 connection

TGS officials determined the growth in the area's development was sufficient to warrant expanding services along Hwy. 71, TGS Regulatory Affairs Manager Larry Graham said.

"We had to make a decision to invest in a new infrastructure based on how many people would connect and what source would bring [natural] gas to the customers," he said. "We needed a reasonable assurance from developers that they would connect and grow before we installed a pipeline."

Graham said TGS, which functions as a natural gas distributor, took steps in early 2012 to deliver gas service to the Hwy. 71 corridor. TGS connected to the Kinder Morgan transmission pipeline to distribute natural gas to the area's properties, he said.

Natural gas was first available in the Sweetwater subdivision in August 2012, followed by Ladera Ranch in November 2012 and Serene Hills in March 2013, Graham said.

"There's a lot more [being] built in southwest Travis County than east, by the toll road," Graham said. "We're responding to the growth, trying to meet that demand."

TGS has 350 customers hooked up to gas in the Bee Cave and Lakeway ZIP codes—78738 and 78734, respectively—and is currently installing lines for service in Bella Colinas near Hamilton Pool Road and Hwy. 71, Penders said. A project to install lines into Spring Creek Estates located nearby is on hold, she said. The existing pipeline runs along Hamilton Pool Road from Crumley Ranch Road to Hwy. 71 and down Hwy. 71, ending at Sweetwater to the west and Ladera Ranch in the east, she said.

"We expand our main lines and service as development occurs," Penders said. "Not in advance of development but alongside development."

Although the utility cannot discuss negotiations on potential projects, there is significant interest from a number of developers to install natural gas lines in the Hamilton Pool Road and Hwy. 71 areas of Bee Cave and its extraterritorial jurisdiction, or ETJ, she said.

In addition to Bee Cave and Lakeway, TGS provides service for Austin, Sunset Valley, West Lake Hills, Rollingwood, Dripping Springs, Cedar Park and Kyle.

"The town of Spicewood is not currently in [TGS] territory," Penders said. "However, if the opportunity becomes available, we would certainly explore those possibilities. We will expand our system if the appropriate amount of developments request service."

Graham said most of the new service customers are in the unincorporated areas of Travis County, and his office is focusing on those regions, especially along Hwy. 71.

"Since we have the Sweetwater pipeline, we are in a position to capture a lot or the majority of the growth down [Hwy.] 71 [in] Bee Cave [and along] Hamilton Pool Road—the unincorporated areas of southwest Travis County," he said. "Once we fill in a subdivision, contiguous growth is pretty easy to do."

Converting to natural gas

Graham said converting to natural gas is made difficult for some western Travis County residents because many of the homeowners associations already have contracts with utility providers for propane service. A neighborhood propane system may be owned by a utility with the tank feeding lines to homes, he said.

"The owner of an [existing propane] system has to be willing to sell to us," he said.

Graham said only one propane system owner in the area offered to sell its contract to TGS in 2011, but the parties could not agree on a price. He said a parallel system is not feasible.

"The margins for natural gas utilities are pretty slim, so the economics [only] work if we can convert everyone [in an area] to the system," he said.

Oberg Properties manages 22 Lake Travis–area homeowners associations, with all of them offering only electric and/or propane service, Vice President Guy Oberg III said.

"A lot of these homeowners associations probably have long-term contracts for propane lines, and it's hard to transfer over," he said. "Also, the homeowner has to convert their appliances at their own expense."

Oberg said Lake Travis–area buyers definitely consider natural gas availability in their home purchase process.

Serene Hills will be the first Lakeway neighborhood to offer natural gas service, City Manager Steve Jones said.

"We're excited about having natural gas," said Doug Clark, vice president of Lakeway builder Russell Eppright Custom Homes.

He said that part of the draw of natural gas for his customers is that it is less expensive than other energy sources.

"Propane has been fairly well accepted, but there are clients who prefer natural gas," Clark said. "It's been a long time since we've had a new community with natural gas."

Bee Cave City Manager Frank Salvato said the turning point for Bee Cave to accept a natural gas franchise came a few years ago when the Falconhead West development ran out of propane during a cold winter. He said temporary tanks were made available, but the tanks froze because of the prolonged low temperatures. Citizens could not heat homes or cook food for about three or four days, he said.

"That was a real incentive when TGS came to the city with natural gas on the ground," Salvato said. "It's more competitively priced and regulated."

Rate increases

In May, Bee Cave, Lakeway and Austin approved natural gas rate hikes for 2014.

As the area's natural gas systems expand to meet the growing demand, rate increases are permitted by the state to recoup investment expenses, Graham said.

This year, as well as in 2011, 2012, and 2013, Central Texas municipalities approved natural gas rate increases to help fund investment in the utility system—to extend new pipes for a growing customer base and replace aging pipes, he said.

"Our decision to expand is based on the idea that we will add customers and recover those costs," Graham said. "There are more customers to allocate the fixed costs. It's in everybody's best interest to grow the system."