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Municipal gas authority starts process on $800 million purchase of natural gas

The Municipal Gas Authority of Mississippi and the Municipal Energy Agency of Mississippi are located at a small, remote office near Interstate 220 in Jackson. Photo by Steve Wilson

The governing board of the Municipal Gas Authority of Mississippi voted unanimously at a hearing Wednesday to start the process on a natural gas purchase contract that could last for 31 years and cost up to $800 million.

MGAM is tasked by law with supplying the state's 48 municipal-owned natural gas associations with natural gas in an economical and dependable manner. The organization was created by a bill passed in the Legislature in 1988.

The so-called natural gas prepaid project would allow the state's municipal natural gas associations to buy natural gas at present low prices ($2.87 per one million British Thermal Units or MBTU) for the next three decades.

MGAM executive director Geoffrey Wilson said that the project isn't an authorization for the agency to buy bonds immediately. The group would start a project and would go back to the customers for approval once the structure and terms of a deal was established.

Not everyone supported the move. Howard Randolph, the CEO of UMC Solutions, had several questions for the MGAM board about the purchase, including what would happen if one of the municipalities went bankrupt and whether the other municipal customers would have to pay for the default.

Wilson said that answer awaited the structure of a deal. He also said that state and city taxpayers would not be responsible for paying back any default on the bonds.

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