SNOW HILL – The Worcester County Commissioners approved a 25-year fully exclusive agreement with Chesapeake Utilities after a discussion of a franchise fees.
County attorney Roscoe Leslie presented the commissioners with a new agreement with Chesapeake Utilities on Tuesday, as the county’s existing agreement — which was put in place in 2000 — was set to expire Friday. The commissioners approved the agreement after Chesapeake officials addressed concerns regarding the $2 per customer franchise fee.
“You actually would be getting more than some of the other counties in the area,” said Lindsay Orr, associate general counsel for Chesapeake Utilities.
Leslie told officials the agreement being proposed was similar to the last agreement and maintained the same franchise fee of $2 per customer. He said the primary change was the fact that the last agreement had been partially exclusive and this one would be fully exclusive. He pointed out there were only six natural gas providers in the state.
“Basically there’s nobody else on the Eastern Shore,” he said. “They’re functionally exclusive right now.”
Commissioner Ted Elder questioned the $2 per customer fee, as that was the same figure that had been in the agreement approved 20 years ago.
Steve Ashcraft, manager of external affairs for Chesapeake Utilities, said the size of the company had grown significantly so there were more customers now. He added that customers would continue to increase in the coming years.
“That’s where you’ll be coming in to additional funding,” he said.
The company estimates that the county will receive $21,808 this year and $22,312 next year. By 2024, the company estimates the county will receive $23,632. Ashcraft said franchise fees typically got passed on to utility customers.
“While we are not seeking to get something for nothing we’re seeking to try to temper that with not increasing what our customers are paying for their gas bill,” he said.
Commissioner Joe Mitrecic said he shared Elder’s concerns regarding the fact that the rate was the same as had been approved in 2000. Leslie said that as the proposed agreement was being drafted, Chesapeake Utilities had initially proposed a $10,000 flat fee.
When asked about the franchise fee in Chesapeake’s agreement with Somerset County, Ashcraft said it was a $10,000 one-time fee but the county could review the exclusive aspect of the agreement after three years.
The commissioners voted 6-0 to approve the franchise agreement, with Bertino abstaining.
