BERLIN — The long-awaited effort to bring cheaper, cleaner natural gas to Worcester is now closer than ever after the Maryland Public Service Commission (PSC) last week approved the Chesapeake Utilities Corporation’s acquisition of Worcester County-based Eastern Shore Gas, which will allow Chesapeake to utilize ESG’s existing infrastructure to create Sandpiper Energy.
Throughout the last year or so, Chesapeake Utilities, under the guise of its subsidiary Eastern Shore Natural Gas, continued to extend its natural gas pipeline along the Route 113 corridor through Lower Sussex County in Delaware and into northern Worcester County. From there, the main transmission line now connects at a southern terminus near Friendship Rd. on the north side of Route 50 across from Stephen Decatur High School.
From the southern end of the main transmission line at Friendship Rd. the intent from the beginning has been to utilize Eastern Shore Gas’s existing propane delivery infrastructure to connect communities across northern Worcester to cheaper, cleaner natural gas if they so desire. The existing propane gas infrastructure is compatible with natural gas connections and only a simple conversion is needed at the homes and businesses desiring the energy alternative.
However, with the infrastructure largely in place, the last major piece of the puzzle has been the approved acquisition of ESG by Chesapeake Utilities by the PSC. The PSC last week approved the acquisition, which should now expedite the conversion. Chesapeake Utilities will operate its Eastern Shore Natural Gas subsidiary in Worcester County as Sandpiper Energy.
“In late 2012, Chesapeake’s interstate pipeline subsidiary, Eastern Shore Natural Gas Company, completed an expansion to bring natural gas to Worcester County,” said Chesapeake President and CEO Michael McMasters. “The acquisition of the operating assets of ESG by Sandpiper Energy is the key next step in our growth strategy, enabling us to significantly expand our footprint in Worcester County. We are excited about the prospects for natural gas distribution in Worcester County and over the next few months, we will evaluate the potential conversion of the ESG facilities from propane to natural gas. We will proceed with the conversions were economically feasible.”
With the PSC’s approval of the transaction, the next logical step is combining the assets of Chesapeake Utilities and its subsidiary Eastern Shore Natural Gas with the recently purchase Eastern Shore Gas, according to Chesapeake Utilities Senior Vice President and Eastern Shore Natural Gas President Stephen Thompson.
“We received final approval from the PSC that enabled us to proceed with the closing on the sale,” said Thompson. “The immediate step is integrating the former ESG employees into our teams and operations, and getting the ESG customers over onto our billing and customer information system.”
When the merger is completed and Sandpiper Energy is created, consumers will still have the option of converting to natural gas or remaining with propane. The PSC approval includes the implementation of delivery service tariff rates for those customers being served via underground distribution mains. With the implementation of tariff rates, the pricing and other conditions or service will be regulated by the PSC.
In the first full year of operations, Chesapeake estimates Sandpiper Energy will save the community over $1 million. Residential and commercial or industrial customers will be charged rates based on the rate schedules approved by the PSC, regardless of whether they use propane or natural gas.
“In addition to providing savings, our objective is to provide superior service to the customers and communities we serve by increasing their energy options, maintaining our systems and infrastructure in order to provide safer and reliable delivery of energy to customers and providing the highest level of customer service,” said McMasters.
The merger will likely bring a significant number of energy customers in Worcester County under the same umbrella as Sandpiper Energy. Eastern Shore Gas currently provides propane service to roughly 11,000 residential and commercial customers primarily in Ocean City, West Ocean City, Ocean Pines, Berlin, Pocomoke and Snow Hill. The propane distribution service is provided from central storage facilities through underground gas distribution mains and services. ESP provides propane bulk delivery service via individual propane tanks to over 500 customers throughout Worcester.
Meanwhile, with the addition of Eastern Shore Gas and Eastern Shore Propane, Chesapeake Utilities will now provide service to over 100,000 customers on the Delmarva Peninsula. Chesapeake owns and operates a 428-mile interstate pipeline that transports natural gas from various points in Pennsylvania to customers on Delmarva and across the Eastern Shore.