Enstar Natural Gas

Wall Street, along with the Anchorage Daily News has announced that Enstar Natural Gas - the company that provides heating and cooking fire fuel to south-central Alaska, including the “Big Wild” Anchorage - will be sold to a Canadian energy investment firm. STOP the press! An investment venture is after one and only one thing, blood out of a turnip, especially with this interest at stake. Enstar doesn't own any gas, so makes money only by delivering that commodity to its customers. And for shareholders about to approve dishing out millions to get a piece of the Alaskan pie, more money to arouse the portfolio and payback opportunities comes about by a simple formula, cut wages, cut jobs. Like already mentioned but re-emphasized for sake of concern, Enstar owns no natural gas resources, it makes money transporting that stuff to our homes for others, like Unocal, Marathon and Conoco – the natural gas lease owners. So payback has risks involved. And to think of cutting the Enstar ditch-digging staff any further, it would be an unsafe move. With that front and center, before this sale is approved, the RCA should hire a third party accounting consultant to testify on the “true” value of the Enstar infrastructure. See, the transfer of goods - assets - it will allow the new owner to file for tariff relief. Which means we the customers will pay if they get their way! And when we see this new age rip-off that is occurring upon the customers by the utilities, wherein a utility can claim that “conservation” is effecting the bottom dollar so tariffs are allowed to see increases, it points to a warped state of affairs upon regulation. And there is a valuable history lesson already written that indicates Enstar's current position is tainted. Enstar was once owned by Seagull Oil Company, an oil exploration and development corporation that held on to the Alaskan sidekick when most of its interest was in the Gulf of Mexico, instead of Alaska. It was a $30-Million dollar a year revenue infusion for the Seagull, but due the fact that it was regulated, profit margins had to be carefully controlled. If gross profits were too high after all the plausible business deductions, it meant splurging on new trucks and shovels, as over-profits on the financial statements could mean a rebate to the customers. This is where regulation means something to the rate payers. It was a pretty tight balancing act. Seagull wasn't making a killing, just a modest profit – the way it was supposed to be played out. That was the time when all was good with the relationship between Enstar and its south-central customer base here in Alaska. When Seagull went tired this business and sold out to SEMCO energy, a utility that was under fire by the state of Michigan regulatory commission for over-charging customers and was fined so by having a 5-year moratorium on gas sale increases when at the same insane time natural gas was increasing in price without bounds, that fine had too be covered by another entity far and removed from the Michigan oversight, as the loses could not be accounted for by the Michigan customer base - so Enstar became the whipping boy. Now Enstar under Seagull Oil, it was a respectable business venture. Basically the Texas based company left Alaska alone, realized modest profits from the venture and found no problems from up north. A time when the local executive branch looked out for the customers' interest and since the work force was unionized, it was a marriage meant to be. And with that, there was never the misery that came about when SEMCO came to town. Since SEMCO took over, it has been a day to day circumcision of what was once a respectable business. First and foremost, SEMCO's management thought that this little far and removed Alaskan setting could bail out the problems they were having down in Michigan, so paid way too much for the Alaskan “limited” infrastructure. For those in the know, the Alaska entity was valued at $102-Million. SEMCO, well they paid over $320-Million, so right off the bat the Michigan based owner was treading water while the Seagull laughed all the way to the bank. When SEMCO management came to Alaska with the champagne, all aboard the “Fun Bus” and championed the fact that they wanted to grow the customer base by a third more over those mountains to the east and another third over those mountains to the west, little did they realize that “nobody lived there”! So it appeared that SEMCO had not done its homework before dishing out way too much for the Enstar business. There was no growth. So right off the bat SEMCO was loosing money. That is one of the reasons in time this misfit outfit would find merit in retaining Ben Stevens – while Ben was a sitting state senator – and paid Ben $70k a year, for something we still have not a clear and convincing idea for what in return. All I know is the fact that natural gas has increased way beyond decency, over 300% since SEMCO moved in. And take Aurora Gas - a partner in crime - as an example of how “Outsiders” have tried to move in and destroy decency. When Aurora's new natural gas pipeline was slow to find the pipe segments welded together and with January the construction season shutdown, the gas controllers at Enstar were required to “cook” the books to make it appear that this pipeline was delivering gas into the network from Aurora's Lone Creek lease. There was no gas because the pipeline was still hanging on cribbing! But Aurora had customers with contracts to contend with, big customers like the Anchorage school district, so it was gas that had to be delivered from another source at a premium, so the base rate customers - you and I - paid for this shenanigans. Yes, we paid because it was a scam. In time, the Aurora bailout would crash. That is why one day Aurora performed a “force majeure” and told all their large commercial customers to get lost – which included our schools maybe going cold! Enstar had to scramble to find replacement gas, which was once again purchased at a premium since no contracts were in force for the lost supplies and then Enstar tried to pass that increase on to the customers - you and I - but got caught. Thank the regulators for keeping an eye on Enstar's maneuvers, as they knew this business was up too no good. So over time, SEMCO ended up selling pieces of the transportation and delivery system, just to stay afloat with this over-paid venture. Instead of a 3-year payback, it was more in tune to a 10-year payback. And we the customers have suffered. It has been time along those lines, so maybe SEMCO is just breaking even and the time has come to shed this business nightmare. But all in all, we the customers have paid for stupid mistakes. That is why this current takeover should be placed on hold until such time the regulatory commission can take a good look at what is really happening and what has happened over the years. If not, it will be but more of the same, a new kid on the block, and maybe Ben is already in there pockets! Yes, Enstar did “cook” the books for Aurora, I was there, complained and was fired!