Reports that demand for natural gas is outstripping the capacity for the line that serves Ketchum and Sun Valley has led to widely divergent opinions on how that will affect the north valley.
Start with insufficient pipeline capacity. Rick Moore, a spokesman for Intermountain Gas Co., said Wednesday that a low-pressure pipeline that begins at the south end of Ketchum near St. Luke's Wood River Medical Center will not be enough to handle growth if a number of large-scale projects are built in the city.
According to a report filed at the Idaho Public Utilities Commission, Intermountain Gas has known about this issue for months. City leaders, however, are just getting wind of it now.
"This is a capacity issue, not a supply issue," Moore said. "We've been looking at this since last spring and hope to know in the next few months what we need to put in place and how much it will cost."
Moore said that as an area grows, the company takes steps to increase capacity. He said a new, high-pressure line is needed to serve several planned developments, at an estimated cost of $2 million to $3 million.
Until that's done, Moore said, his company might not be able to serve new projects with large natural gas demands.
"We're being cautious because we've reached the capacity of the current system and there are a number of big projects before the city," Moore said. "However, most of these are two to three years out and this is correctable within their timeframe."
However, some of those on the development side aren't quite as confident that the issue will be resolved without undue hardship on the economy.
Michael Doty, a member of the Ketchum Planning and Zoning Commission and architect for the Residences of Thunder Spring development, said the inability to provide gas service could stall proposed projects indefinitely.
"There is essentially a moratorium on building in Ketchum right now until someone figures out how to pay for the new line," Doty said. "It's a very complex situation to figure out who pays for it and where does it go. It's not equitable for the first in line to pay for it all—it's not just serving one development."
Moore added that the need to increase capacity as demand increases—including several snow-melting paver projects around the North Valley—is a common occurrence throughout the company's entire system, and that this is no reason for panic.
"This is kind of standard business for us," Moore said. "We have always had the capacity until recently, but there have been a number of large condo complexes built and snowmelt has added a significant load that wasn't there two years ago."
While Intermountain Gas, developers and the cities look for an equitable solution, developers of large projects, such as the recently approved Hotel Ketchum, could face yet another obstacle in the hunt for project financing.
Doty said that if a developer can't get a "will serve" letter from the utility, which certifies that the utility company will be able to provide service to a development, it's much more difficult to receive a loan, especially considering the current tight lending markets.
"If you can't get a loan from the bank, then you have to get private money, which usually comes at much higher interest rates and could possibly make a project too expensive to build," Doty said. "And it's been the construction industry that's been fueling our economy here, not tourists buying ski passes. This could literally shut down our ability to grow."
David Hutchinson, president of Valley Properties Inc., the firm developing the Residences at Thunder Spring, said he's not too concerned about the project, since the residential units will not be for sale for two and a half years.
"In my mind this will be taken care of in three to five months," Hutchinson said. "But I'm glad it came to a head now and is under scrutiny."
While Moore said new growth has to pay for itself through a combination of increased rates and fees on new developments, Hutchinson said Intermountain Gas should be responsible for addressing the capacity of the line.
"This is a public infrastructure issue—the company is underperforming and as a rate payer I expect them to perform," he said. "They are a monopoly with a guaranteed profit margin so it's their problem, not one specific developer's problem.
"The alternative is that we don't use gas for heat."
Hutchinson said that regardless of the projects that are before the city, the need for more capacity is inevitable considering Ketchum is only 50 percent built out.
In fact, a report filed with the Idaho Public Utilities Commission in May shows that Intermountain Gas was aware that the system was almost out of capacity, but perhaps not to the necessary extent.
Gene Fadness, a spokesman for the utilities commission, said the gas company is required to submit an Integrated Resource Plan to the commission every two years, detailing its plans for dealing with forecast development. Intermountain Gas said in its spring report that in its forecast, "a peak day delivery deficit occurs during 2009 and increases thereafter." The solution, it continues, is to add a compressor station by 2011, which would increase capacity by providing higher pressure.
But a compressor station is a different solution than the new line referred to by Moore.
"There's a time lag here," Fadness said. "The growth came more quickly than anticipated. The company looks at historic growth rates and doesn't know exactly who is building or where."
Fadness said the discrepancy is far from catastrophic, and there were similar circumstances north of Twin Falls nearly 20 years ago that were solved without major problems.
"There might not be the capacity for extremely large users right now," Fadness said. "But this is more of an inconvenience for a few months, nothing permanent."
While Ketchum Mayor Randy Hall said a meeting with the city and the gas company is set for Oct. 20, some believe this kind of communication should have taken place before the issue progressed this far.
"The projects before the city have been public for a while, so I was surprised that (Intermountain Gas) was surprised," Doty said, adding that there didn't appear to be any process for informing developers or the city of a potential problem.
Moore countered that the company has been in the process of collecting information from developers to form a comprehensive analysis of the situation.
Fadness said anyone who believes Intermountain Gas made a serious error in its handling of the issue can file an official complaint to the utilities commission.
Intermountain Gas has recently reported that the line delivering natural gas to Ketchum and Sun Valley is near its maximum capacity and could lead to problems in the near future for new developments. A new line costing an estimated $2 million to $3 million may have to be installed to meet demand. Photo by David N. Seelig
