Vol. 20   No. 2
Summer 2015
  • MGE Talks Business
News Briefs

MGE's GEM program brings natural gas service to new areas

A plow places 4-inch polyethylene gas main into the ground along Stevenson Road in Dane.

A plow places 4-inch polyethylene gas main into the ground along Stevenson Road in Dane.

MGE continues to extend natural gas service into new territories with its gas expansion model (GEM) program. Work is moving forward on two projects:

  • The Dane/Roxbury project includes 28 miles of gas main that will be installed in rural areas. This expansion will bring natural gas service to about 185 new customers, most of which are agricultural.
  • The Lodi project involves 23 miles of gas main north and east of Lodi. This project will add about 200 customers, of which 75% are residential and 25% are agricultural.

MGE will install gas main for both projects over the summer. Services will be installed this fall, giving participating customers access to natural gas.

"GEM helps expand our gas territory and offers new customers an affordable transition from propane or oil," said Steve Beversdorf, MGE's supervisor of corrosion control.

How it works

GEM is dependent on customer participation in a specific expansion area.

"We need to reach a certain level of participation or the economics of GEM are not justified," Beversdorf said. "After we determine anticipated load growth, we need a commitment from prospective customers equaling half of that growth."

"We reached our 50% commitment goal for both Dane/Roxbury and Lodi," he added.

MGE approaches potential GEM projects with education—helping businesses and residential customers in the targeted area understand GEM and the benefits of switching to natural gas.

"We hold meetings and work closely with potential customers so they can make informed decisions," Beversdorf said. "We review how much they paid for propane or oil and then calculate what they would have paid by using natural gas during that same period."

Before the GEM program, many rural areas may not have been candidates for natural gas service. It is costly to extend gas service to areas with low population density. The cost per customer could reach a few thousand dollars—and customers had to pay that cost in full before construction could start.

GEM makes the process more feasible. Under the program, MGE adds the main extension charges to a customer's gas bill as a surcharge spread over five to seven years. Natural gas remains a cost-effective option even with that surcharge.

"Residential customers can save a couple hundred dollars per year by converting to natural gas," Beversdorf said. "Larger agriculture or commercial customers have the potential to save a couple thousand dollars annually."

Since the GEM pilot program began in 2012, MGE completed nine projects that brought natural gas service to 500 new customers. More expansions are likely in the future.

"In fact, we are currently evaluating potential expansion territories for 2016 and 2017," Beversdorf said. "It's a winning situation anytime we can offer customers fuel choices that will help grow their bottom line."