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IDA reviews gas feasibility study that estimates $12M build and flags 7‑year regulatory payback requirement
Summary
Tazewell County administrators presented a consultant study outlining a natural gas extension from Pounding Mill toward Southwest Virginia Community College that models about $12 million in initial capital and two customer-demand scenarios; the State Corporation Commission's seven-year payback requirement poses a key hurdle to utility investment.
The Industrial Development Authority of Tazewell County on May 13 reviewed a consultant feasibility study for a potential natural gas extension from Pounding Mill toward Southwest Virginia Community College. County Administrator Eric Young, who said the study was funded by a Department of Housing and Community Development grant, summarized construction options, projected customer demand and a financial model that assumes roughly $12 million in up-front capital in the first-year scenario.
Young told the board the consultants built two commercial-customer scenarios — a conservative profile with about 22 commercial customers and a more aggressive profile with about 44 — and modeled a proposed rate structure (1,440 for MCF plus a $25 monthly fee). Under the conservative scenario the payback period was roughly 10 years; the more aggressive scenario shortened the timeline to about nine years and reduced the initial buy-down requirement to approximately $2.6 million. The report notes Appalachian Natural Gas would be constrained by the Virginia State Corporation Commission requirement that an investor recover costs within seven years, a constraint that Mr. Young said could prevent ANG from backing the extension unless the county or other funders reduce the utility's upfront risk.
The consultants recommended a construction approach that uses two parallel 6‑inch lines in one trench rather than a single 8‑inch line to lower initial costs and sized the main line to anticipated demand from businesses, potential large users and institutions. Mr. Young said the study also looked for potential anchor customers — including industrial users and hospitality or medical facilities — because their inclusion materially changes the project economics. He offered to provide board members with a copy of the final report and asked the board to consider what financial buy-down would be required to meet a seven‑year recovery window so ANG could present an application to the State Corporation Commission.
