Published: August 29, 2008 12:11 pm            

City files suit against natural gas providers

Somerset — The City of Somerset is filing a “friendly” lawsuit against two major energy corporations in an effort to ensure that the city and its customers are paying a fair price for natural gas.

Somerset city council members unanimously approved a resolution allowing Mayor Eddie Girdler and city attorney Carrie Wiese to file the declaratory lawsuit this week.

The lawsuit is being filed against Seminole Energy Services, a foreign corporation doing business in Oklahoma, and Kentucky and North American Energy Corporation, a Florida corporation doing business in Kentucky. North American Energy Corporation was bought out by Seminole Energy. Both companies supply natural gas to Somerset.

“They are marketers who buy gas from eastern Kentucky producers, and they sell the gas to Somerset and transport (what Somerset doesn’t use) to an interstate pipeline system,” Girdler said.

The city is asking a judge to determine whether contracts with the natural gas marketing firms are legal and whether the terms and conditions of the contracts are being followed.

Girdler and Wiese explained that the city is not asking to be compensated for damages in this suit.

“The facts will be presented to a judge, and the judge will decide whether the contract is being adhered to by the supplier,” Girdler said.

After the judge makes a decision, Wiese said, the city will be able to determine whether new or revised contracts are necessary.

Girdler added that he doesn’t believe the city’s current contracts are valid.

While Somerset’s gas service owns and maintains gas transmission lines, Girdler explained, the suppliers determine the cost of the gas.

“We only use 20 percent of the gas,” Girdler said.

“Eighty percent is marketed to interstate pipeline companies. ... We don’t get anything from selling the gas, and it’s our line.”

Girdler hopes to “set up a better system of lowering the gas rates” for the city’s customers.

“We need to be proactive. ... We want to be more in control of our own pipeline so we can set the rates. ... These actions are necessary to maximize benefit and to make certain families, businesses, and industry are paying a fair and reasonable cost for natural gas,” Girdler said.

“It is in the best interest of the citizens of Somerset and natural gas customers to pursue the matter through the court system. The city must receive the best product at the least possible cost for the citizens and to protect our jobs and future jobs for our community.”

Girdler also said the gas lines are in need of maintenance and repair work.

“We can’t continue to do that out of our pockets,” he said.

“We need to make sure we have a way to pay for those expenditures.”

The city is represented in the suit by the firms of Stites and Harbison of Frankfort and Sturgill, Turner, Barker and Moloney of Lexington.

In other city business:

• Somerset’s city council has approved the first reading of an ordinance establishing the property, personal property, and bank share tax rates for 2008.

Property and personal property tax rates for the City of Somerset were set at 0.185 percent per $100 of assessed value, and the bank share tax rate was set at 0.025 percent of deposits. The property and personal property tax rates are lower than last year’s rates, and the bank tax rates are the same as last year’s.

City clerk David Godsey said properties in Somerset were assessed at a value of $717 million this year, up from $685 million last year.

“Due to the increase in assessed values, we’re able to lower the rate but still collect more money,” Godsey told the council.

• Community planner Nick Bradley told council members that he’s looking for volunteers to help build the city’s new skate park, which will be located near SomerSplash water park on Ky. 2227, in about two weeks.

“We’re going to try for 20 to 30 younger volunteers,” Bradley said, adding that he hoped the councilors and other city representatives would help show their support for the project.

        

• Click to discuss this story with other readers on our forums.