The Municipal Gas Authority of Mississippi's governing board approved in August a natural gas purchase contract that could last for 31 years and cost up to $800 million.
It won't be the first purchase for MGAM, as the agency is tasked by law with supplying the state's 48 municipal-owned natural gas associations with natural gas in an economical and dependable manner.
According to the 2005 bond issuance report by the Mississippi Department of Finance and Administration, MGAM purchased bonds for $424,988,000 for a similar project in 2005.
Law firm Butler, Snow, O'Mara, Stevens & Canada, PLLC received $325,000 for its services as bond counsel, while Montgomery, McGraw, Collins and Rand, PLLC received $225,000 as MGAM's counsel.
Washington, D.C.-based Miller, Balis & O'Neil, P.C. received $250,000 as gas counsel and Balch & Bingham, LLP received $65,000 as issuers' counsel.
Like the potential purchase project approved in August, the 2005 bonds were financed by the Mississippi Development Bank, which was created by the Legislature in 1986 to issue revenue bonds to any local governmental entity, which would include municipalities and municipally-owned utilities.
MGAM was created by 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 low prices for the next three decades. But those prices have risen considerably since the purchase was announced.
On Tuesday, natural gas was up to $4.27 per one million British Thermal Units or MBTU) which could be due to a supply that has sunk to a 15-year low. This is because of the greater number of natural gas-fired power plants running during the summer when gas supplies are restocked and long-range weather forecasts that predicted a warmer winter.
On August 30, natural gas cost $2.87 per one million British Thermal Units or MBTU, an increase of 48.78 percent.