Municipal natural gas sales authorization amended, advanced

A bill that would allow certain Nebraska cities to contract with large-scale natural gas users advanced to the final round of debate Feb. 12 after lawmakers narrowed its scope.

LB548, introduced last session by Central City Sen. Loren Lippincott, would allow Nebraska political subdivisions that own natural gas systems to take advantage of a federal tax exemption to make discounted natural gas sales to certain large industrial users.

As amended on general file, the bill would require an industrial consumer to be located in Nebraska within 200 miles of the political subdivision. The facility would be considered within the natural gas distribution system’s service area for the term of the contract, which would be for at least two years.

Lippincott introduced an amendment on select file decreasing that radius to 100 miles.

At the request of Black Hills Energy and Omaha’s Metropolitan Utilities District, Lippincott said, the amendment would allow only first or second class cities or villages that own and operate a natural gas system to contract with industrial consumers. Contracts would have to be signed on or before Jan. 1, 2027.

Under LB548, the industrial user could not be a consumer of any investor-owned or governmentally owned gas system at the time the contract is signed.

Lippincott said the amendment would strengthen that provision, which is intended to ensure that cities could not compete with private natural gas suppliers. The amendment would specify that the industrial consumer could not have received gas service from any investor-owned or governmentally owned gas system within five years prior to the contract’s execution.

The amendment also would add protections for private natural gas marketers by preventing cities from contracting with industrial consumers that already receive service from a competitive natural gas provider, Lippincott said. Contracts would require the consumer to receive natural gas through a competitive natural gas provider registered in Nebraska.

Finally, Lippincott’s amendment would require a city council or village board of trustees to adopt a resolution stating that a contract with an industrial consumer does not pose an unreasonable financial risk to the city or village or its taxpayers.

Sen. Bob Hallstrom of Syracuse supported the amendment. He said the proposal would allow Central City to partner with a specific industrial consumer but then “close the door” to contracts beyond the sunset date, easing concerns about potential competition between government and private businesses.

After voting 36-0 to adopt the amendment, senators advanced LB548 to final reading by voice vote.