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Posted: June 8, 2013 6:27 p.m.

Cities negotiate over future gas profits

While Baxter International builds its $1 billion pharmaceutical manufacturing plant at Stanton Springs industrial park, other companies and governments are working to ensure the company will have the water, sewer service, electricity and gas it needs to operate. It’s the last one that’s proving to be a little complicated.

Covington, which provides some utilities far outside of its city limits, plans to extend its natural gas lines to provide service to Stanton Springs. But to do so, it would have to cross through an area that Social Circle actually has territorial gas rights to, and the two cities are trying to come to an agreement to satisfy both parties, Covington Mayor Ronnie Johnston said last week.

The three cities of Covington, Madison and Social Circle have intergovernmental agreements to jointly provide natural gas — and share revenues — to the 1,620-acre Stanton Springs industrial park, which is located at the Newton/Walton county border, just south of Social Circle’s city limits.

Normally, for both gas and electrical service, cities, companies and authorities in Georgia have state-defined territories in which only they are allowed to sell that service.

According to Johnston, during a recent discussion among the cities about getting gas lines to Stanton Springs, Social Circle Mayor Hal Dally requested that Covington give a small section of its gas territory to Social Circle. The section is a small strip of land just north of I-20 in between exits 98 (Ga. Highway 11) and 101 (U.S. Highway 278).

Johnston said he told Dally he would not give that land up, especially not without asking his city council. Giving up territory means giving up future revenue potential, which cities and companies are loath to do without compensation.

As the conversation between mayors continued, according to Johnston, Dally said at one point if Social Circle doesn’t get that territory it may not give permission for Covington’s gas lines to go through Social Circle’s territory. Dally could not be reached for comment late last week.

In a follow-up meeting between the mayors this past Monday, Johnston said he offered a potential compromise that he believes might satisfy both parties.

More than a year ago, when the three cities were working with the Georgia Public Service Commission to redefine service territories, it was decided that a piece of Covington’s territory would be better served by Social Circle, because it was very close to Social Circle’s city limits. The swap was made, but the piece of land being discussed now, which is farther south, was not swapped, according to Johnston.

In light of that past, Johnston proposed the cities of Covington and Social Circle agree to split the expenses and revenues 50-50 for gas service for those two pieces of land. Johnston said Dally seemed comfortable enough with the idea to take it back to his council.

The Covington City Council reached an informal consensus at its Monday meeting to gather more information about the potential deal.

Social Circle already has gas lines going to its piece of land and tenants buying gas and providing revenues to the city. Covington’s piece of territory is undeveloped, but given its proximity to I-20 and Stanton Springs, Johnston said he believes it will see future development.

Another aspect that will have to be researched would be the cost for Covington to eventually get gas lines to the area, which would require crossing under I-20.

"It’s a neat thing for our cities to look at how to we can work together for future growth in that area," Johnston said Friday, optimistic a solution would be found.

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