Gas utility bankrupt; village in Wood County uncertain

BY HOMER BRICKEY BLADE SENIOR BUSINESS WRITER

WEST MILLGROVE, Ohio - The gas is still on in this southeastern Wood County village of 180, but residents don’t know to whom they will mail their gas bills next month.

West Millgrove Gas Co. filed a Chapter 7 bankruptcy in U.S. Bankrupcy Court in Toledo this week, an action described as "extremely rare" by an official of the Public Utilities Commission of Ohio.

PUCO and the bankruptcy trustee, John Graham, a former Owens-Illinois, Inc., executive, said yesterday they are hopeful they can find a buyer soon for the tiny utility, which has only 17 miles of pipe and just 124 customers.

The firm’s demise was blamed on rapidly rising natural-gas prices, lack of rate relief, and perhaps even leakage into old Wood County gas wells that weren’t capped off.

Bankruptcy Judge Richard Speer held an emergency hearing Tuesday and authorized the trustee to operate the gas company for 45 days while a buyer is sought, a move agreed to by PUCO.

"Residents currently depend on [the company] for their natural-gas supply," Judge Speer wrote in his order. "In addition, there are public safety issues involved in the operation or shut down of the gas pipelines."

The bankruptcy petition listed assets of $38,870 and liabilities of $971,399, more than $750,000 of which is owed to Columbia Gas Transmission Corp. Among the other creditors is Bob Herman, a subcontractor who maintains the gas lines, $150,000; the Internal Revenue Service, $4,000; the Ohio Public Utility Tax Department, $3,397; and Wood County’s treasurer, for a gas-line tax, $10,000.

The business essentially was abandoned and no money is left, said Mr. Herman. The president and owner of West Millgrove Gas, Douglas Gearhart, could not be reached for comment yesterday. The phone at another business he incorporated three years ago in West Millgrove, 3G Environmental Specialties, Inc., has been disconnected. He has no listed phone at his address named in the bankruptcy petition - a KOA campground in Orange City, Fla.

The trustee, Mr. Graham, said he hopes to find a buyer soon who is willing to operate the small company, which has decades-old metal pipes. "You don’t take 124 homes and just shut them off," said Mr. Graham. The company, which draws some supplies from old wells in the area, has lost "a ton of money," he said.

The gas company’s financial situation deteriorated when it had to pay premium prices to get gas, Mr. Graham said.

Steve Puican, chief of the natural-gas division for PUCO, said yesterday he is "very optimistic" a buyer will be found soon. The owner was in over his head, had lost his regular suppliers several years ago, and was getting gas from the Columbia Gas Transmission pipeline but wasn’t paying for all of it, Mr. Puican said. After Columbia set a cutoff date late last year, PUCO became involved.

The commission held two hearings, and in December it ordered Mr. Gearhart to stop paying dividends or fees to any officers or directors, and on Jan. 30 it told Mr. Gearhart he had 10 business days to file bankruptcy or face a fine of $1,000 a day, said Mr. Puican. "What we were concerned about was that the gas supply not be shut off," he remarked.

Rates for small utilities such as West Millgrove Gas are set by village ordinance. "I’m reluctant to say who’s at fault," Mr. Puican said. "[The company] could have asked for a rate increase at any time." The company has charged the same rate, 58 cents per 100 cubic feet, since 1986 and only recently was able to impose a higher rate of $1.15 per 100 cubic feet, said Mr. Herman, the subcontractor. By comparison, Columbia Gas of Ohio charges just over 86 cents per 100 ccf.

"It’s business as usual," said Mr. Herman. "Everything is operating as usual." Customers are to get letters from the PUCO explaining the situation, he added.

West Millgrove Gas has only one employee, who identified herself on the phone as "Pam." Her only comment: "I’ve got my hands full with this one."

A spokesman for Columbia Gas Transmission in Charleston, W.Va., said he was not familiar with the bankruptcy case or Columbia’s role.

The future of a gas supply is just one of numerous problems faced by West Millgrove in recent years. Four years ago, health officials shut down a tire-recycling facility that stored 800,000 old tires, and the state auditor took control of the town’s finances to resolve a crisis. The village put its town hall and park up for sale. James Carr, who was elected mayor in 1996 and led the village out of the fiscal emergency, said, "It’s still under control and has been since I took over." The mayor said he had no comment on the gas company’s problems.

http://www.toledoblade.com/apps/pbcs.dll/artikkel?Dato=20010215&Kategori=BUSINESS06&Lopenr=102150030&Ref=AR

-- Martin Thompson (mthom1927@aol.com), February 18, 2001