Finance Board Vetoes Gas Main Appropriation
The project money will be part of next year's budget.
A special appropriation sought by the town to fund a gas main extension to East Ridge Middle School and Veterans Park was voted down by the Board of Finance at a special meeting on Wednesday.
The board, instead, voted to make the $470,000 for the project its own line item in the 2010-11 capital budget and, hopefully, its own ballot question to voters in the May referendum.
The extension, allowing the two schools' dual-fuel burners to switch from using oil to gas, would save the town about $50,800 a year, First Selectman Rudy Marconi and Town Engineer Charlie Fisher told the board last week.
"I'm supportive of the gas line for the flexibility that it gives us," finance board chairman Peter Gomez said. "What I'm weighing is our past history and the merit of the special appropriation." He said he felt more comfortable approving appropriations for public safety hazards.
"I'm more comfortable giving more people the opportunity to weigh in on the matter," Gomez said.
The town had hoped to nail down contractor prices before the busy summer construction season, and the schools had hoped to decrease the system's oil purchase for next year.
The project would extend the gas main, which currently ends in front of Town Hall, down Market Street, across the East Ridge Middle School property and then back down East Ridge Road to connect to the existing main by the police station.
CMcQuilkin
7:51 pm on Wednesday, February 24, 2010
1) I would like to see a spreadsheet on how this saves money. I think we need to make sure all the input parameters make sense.
2) I would like to see this project put out to bid. I don't currently see anything in the Town bid notices. I would not vote to approve the cost of any project that isn't based on independent bids.
Kira Goldenberg
8:15 pm on Wednesday, February 24, 2010
My understanding is that the town does plan to bid the project, but not until the funds are guaranteed.
CMcQuilkin
10:37 pm on Wednesday, February 24, 2010
Thank you for the response. For the record, I think the project might be a winner, I'd just like to be sure the numbers make sense. There was one project that came up that would "pay for itself" in just 86 years.... :)
Graybar
12:54 am on Sunday, February 28, 2010
<i>"The extension, allowing the two schools' dual-fuel burners to switch from using oil to gas, would save the town about $50,800 a year, First Selectman Rudy Marconi and Town Engineer Charlie Fisher told the board last week."</i>
I guess this means that it would save $50,800 per year if heating oil and natural gas keep their current price differential. If natural gas prices rise faster than heating oil (or if heating oil falls faster than natural gas), then this savings will be lower; if the opposite occurs, the savings will be higher.
Spending $470K to save $50K doesn't seem like that great of a payoff. Particularly if natural gas prices are currently artificially low (in comparison to the price of heating oil: if the prices rise or fall, this won't affect the savings of $50K per year if the prices move in tandem). I don't work in the energy industry so I don't know about this, but I do believe many experts believe natural gas is currently priced fairly low...
CMcQuilkin
2:17 pm on Sunday, February 28, 2010
Koblenz, I created a spreadsheet analyzing the viability of the gas main project using the future price curves of heating oil vs. natural gas. As suspected, the savings every year goes down:
Here is a a future price curve increase comparison:
YEAR ... NG ... HO
1 ... 0% ... 0%
2 ... 13% ... 3%
3 ... 18% ... 5%
4 ... 22% ... 6%
5 ... 26% ... 7%
6 ... 30% ... 9%
7 ... 33% ... 11%
8 ... 37% ... 13%
9 ... 41% ... 15%
10 ... 45% ... 18%
And here are my future projected savings:
YEAR ... SAVINGS
1 ... $ 38,211
2 ... $ 31,368
3 ... $ 29,658
4 ... $ 28,205
5 ... $ 26,506
6 ... $ 25,511
7 ... $ 24,888
8 ... $ 24,442
9 ... $ 24,260
10 ... $ 23,938
Given all this, I see a the project "paying for itself" in 27 years.
More of a write-up here:
http://www.acorn-online.com/joomla15/forums/2-town-issues/1678-new-gas-main-to-east-ridge-middle-school.html