Lakeland Electric Looking to ‘Exit the Pipeline Ownership Business’

Gas pipeline overview

A long-sought project to widen State Road 33 and rebuild its obsolete 60-year-old interchange with I-4 has had a side effect of convincing Lakeland Electric it’s time to get out of the pipeline ownership business.

It could take nearly a decade and at least $100 million to widen a 3.75-mile stretch of State Road 33 and revise the I-4 interchange. Before work can begin, a matrix of pipelines along SR 33 and I-4 need to be moved, according to the Florida Department of Transportation.

One of those pipelines, a nine-mile, 16-inch natural gas conduit, belongs to Lakeland Electric and the SR 33 project presents the city-owned utility an opportunity to “get out of the pipeline-ownership business,” Lakeland Electric General Manager Joel Ivy told the city’s Utility Committee today.

Under a tentative agreement that will be presented to the Lakeland City Commission at its Feb. 21 meeting, Lakeland Electric will cede ownership of the pipeline to Florida Gas Transmission (FGT) and pay it an estimated $3 million to remove it.  

“We are going to pay for the relocation of the pipeline,” he said, and are negotiating a “pay as you go” plan with FGT for sharing relocation costs that will be “paid back over a 20-year period” without “much impact on the fuel rate” that the city pays for natural gas because the tentative agreement has those estimated costs “baked in.”

“Until we have an agreement, we are responsible” for removing and relocating the pipeline, which would require the city to purchase easements and rights-of-way in addition to retaining liability for it, Ivy said. 

Gas pipeline overview

“We’re ready to cut and run from this,” he said. The tentative pact with FGT “gets (the pipeline) back in the ownership of people who do this for a living and gets us out of eyes of the (Florida) Public Service Commission,” he said.

Lakeland Electric has no long-term contract and obtains fuel, including natural gas, through spot market purchases. The utility has interconnections and service agreements with FCT and Gulfstream Natural Gas System to provide natural gas, which diversifies energy sources and fosters price-cutting competition.

As part of its NextGen plan, Lakeland Electric is adding five natural gas-fired internal combustion engines and increasing its solar power and battery storage capacity. The utility shuttered a coal-fired generator in November.

Lakeland Electric contacts with FGT to transmit natural gas to its C.D. McIntosh power plant. In 1991, according to a historical account in Lakeland Electric’s 2020 financial statement, the utility requested FGT to construct “a new delivery point to relieve an existing capacity constraint” on FGT’s existing 6-inch natural gas line feeding the plant.

That delivery point was FGT’s St. Pete Lateral line off SR 33 between Lake Deeson and the Bridgewater subdivision, 2.5 miles northwest of the plant on East Lake Parker Road. Lakeland Electric extended the pipeline north, across I-4 to the Tomkow Road area for reasons Ivy said are lost upon current LE staff.

“I can only surmise somebody ran a cost analysis and it came out more favorable for us to build our own pipeline at the time,” he said.

Commissioner Phillip Walker asked if negotiations over pipeline removals and replacements were delaying the project.

FDOT estimates the project will cost $97 million with no funding dedicated to the I-4 interchange until 2028. However, the project received a boost in August when an infrastructure deal approved by the U.S. Senate earmarked $20 million for reconstruction of the SR 33 and I-4’s Exit 33 interchange.

The interchange is “functionally obsolete” and hasn’t been touched since its original construction in the 1960s, Lakeland Transportation & Development Review Manager Chuck Barmby told The Ledger in September.

Local officials hope the $20 million in federal money will garner state funding to push project timelines up by three to four years. The Polk Transportation Planning Organization is actively lobbying lawmakers to secure that funding.

Ivy said securing a tentative agreement with FGT will also avoid confusion. “Right now, there’s a little bit of chicken and egg going on between the two of us and the state” in developing a cohesive pipeline removal and relocation plan, he said.

The pending pact with the pipeline operator “doesn’t change anybody’s timeline as far as I know, but FTG is a much bigger entity than we are and they have been having conversations with DOT about what happens next.”

Ivy, who has been LE general manager since 2012, will leave Lakeland in May to become director of Lubbock Power & Light in his native Texas. He said he’ll feel good that among his final achievements will beginning the process to “get the city out of the pipeline business.”

When the SR 33 widening and I-4 interchange project secured the $20 million in federal money and planning began in earnest, Ivy said he challenged his staff to sort through costs of removing, relocating and continuing to own the nine-mile pipeline and there were no good answers other than to try to transfer ownership to an actual pipeline operator. 

”Why do we feel like we need to continue to own this?” he asked. “Our recommendation is to exit the pipeline ownership business and turn it over to FTG. We don’t need to be in this business.”