Hospital Becomes First Public Building to Get Natural Gas

     South Peninsula Hospital is the first public building in Homer to have natural gas service. Governor Sean Parnell, hospital staff and other state officials were on hand July 25 for a valve-turning event to celebrate. And now Homer city officials are looking forward to what the lower-cost energy will mean for the town.

     After a quick countdown, Governor Parnell ceremoniously turned the valve on the Enstar Natural Gas Company meter hooked up to the hospital. The event has been several years in the making. Representative Paul Seaton, who has been instrumental in getting service to Homer and Kachemak City, was at the event. He’s been advocating for a project like this one since about 2008.

     “When oil prices went through the roof and the legislature decided to focus on energy costs for Alaska residents as one of our primary objectives, the natural gas line extension to the Homer area was one of the natural things to look at,” he said. 

     An initial attempt at getting a trunk line in the state’s infrastructure budget failed, as did a second try. At the time, Governor Parnell said the city of Homer needed more “skin in the game” before he would approve any funding. That’s when city officials started figuring out a way to show the community was definitely interested in bringing gas into town. 

     The council decided the Homer Special Assessment District was the best option on the table. Parnell said it was that move that can now be used as an example for other cities in Alaska, specifically Fairbanks.

     “This last session we all came together around a plan for Fairbanks for interior trucking of LNG there. The citizens there are coming together and buying into as well,” he said.

     Parnell said it’s symbolic that the hospital is the first building to have natural gas service.

     “Because this is where life gets most personal for every one of us. Energy is really personal to each of us. Energy, as you know from writing those checks for heating oil over the years, is really personal. Because it takes money out of your pocket, it takes away from your ability to support your family or your business,” he said.

     SPH Spokesperson Derotha Ferraro said the hospital spends about $600,000 annually on fuel oil to run the boilers. The hospital will still have a supply of fuel oil in case of emergency. But Ferraro said the reliance on natural gas is expected to bring around $200,000 in savings each year. She said that money will be used for other operational costs at the hospital.

     “What a blessing during a time when there’s unfunded mandates, where other operational costs are going up, what a blessing to have something going down. And it just gives the hospital some breathing room,” she said.

     Ferraro pointed out much of the cost to convert the hospital to natural gas service was already absorbed by the construction budget when the building was built a few years ago. Hospital officials had been planning ahead.

     “There were additional costs that we incurred over the last three to six months, and that was mainly the plumbing. We also plumbed to our kitchen, so that in the future if we choose to take all the appliances to natural gas then that plumbing work is already done,” Ferraro said.

     As far as the rest of Homer is concerned, the city council approved funds totaling about $225,000 in June for converting a handful of city buildings. City Manager Walt Wrede said he would like to see at least four buildings done this year.

     “We’ll probably start, depending on how far the distribution system gets, with the buildings that are the easiest,” he said.

     According to a cost analysis put together by Kenai Peninsula Borough Assembly Member Bill Smith, the city could see a potential annual savings of around $167,000 once all buildings are converted. Wrede said the city council definitely took a gamble when it approved the HSAD. But he said he considers this trunk line and distribution system project as an investment in the city’s residents and its business owners.

     “Anytime a business can lower its fixed costs, it’s a good thing. And so I’m hoping our local businesses will find themselves in a more competitive position now… and maybe the consumers will see a benefit too in prices,” Wrede said.

     According to Enstar, the Homer office has had more than 1,000 meter requests, which is about in line with the company’s estimate of around 1,200 service line requests for this summer.