SANTAQUIN — The owner of a 16-acre greenhouse business who was grossly underbilled for his use of natural gas said he plans to repay the city-owned Santaquin Gas Co.
Bart Olson said he was shocked to learn last spring that he owes the gas company some $90,000.
The underbilling occurred because meter readers failed to read the meter correctly for about 18 months. The underbilling has sent the gas company into a financial tailspin.
The underbilling was discovered after city officials launched an investigation earlier this year into why the company was losing money.
Santaquin Gas, the only municipally owned gas company in Utah, has been operating in the red since its inception in 1997. It has been using a bank line of credit to keep afloat.
Olsen's Greenhouse Gardens switched from Questar to Santaquin Gas in 2000. When Santaquin Gas replaced the Questar meter, employees received improper instructions on setting it up and reading it. It has since been recalibrated and the billing process corrected.
The bedding plant grower, with 550,000 square feet of greenhouses, has entered negotiations with the city to resolve the underbilling. City officials say negotiations became stagnant when Olson went into the busy summer season and the city's attention was diverted to resolving other issues.
Mayor LaDue Scovill says he wants to work out a repayment program with Olsen. The mayor indicated a portion of the bill may be forgiven, although that would put part of the recovery on the backs of other customers.
"I intend on paying the bill," Olson said.
Olsen's initial reaction after learning he was underbilled was to consider legal action.
"But I'm a part of Santaquin," he said. "I talked with my attorney. We decided it was best to work it out. . . . The city is willing to work with me."
Santaquin Gas Co. has 309 residential customers and one business account — Olsen's greenhouse operation. City officials have concluded that all the residential billings have been handled correctly, City Councilman Frank Staheli said.
Staheli co-chairs the gas company with Scovill.
Underbilling Olsen's Greenhouse Gardens isn't the gas company's only woe.
The goals of the 1997 City Council were to provide natural gas to Santaquin residents at a lower cost than Questar, then known as Mountain Fuel, and to provide revenue for city projects. One aspect of the ongoing investigation is to determine whether those goals can be met, Staheli said.
City investigators want to determine whether the costs of installing the gas lines and the costs of operation and maintenance were correctly calculated when the company was founded, he said.
Selling the company or raising rates are still possibilities, but a final determination could be six months away, he said.
The city doesn't charge a connection fee, but that could change as the gas company expands. Projections indicate the company could add 1,700 customers in the next 15 years.
Meanwhile, Olson plans to expand his greenhouse operations to nearby Salem, where he has requested a 67-acre annexation.
"I have a master plan that uses all 67 acres," he said. "But that could take years."
The initial plan would cover three acres, he said.
The Salem City Council agreed to review Olsen's annexation request of land bordered by 8000 South, Arrowhead Trail and 1200 West, but approval likely won't come until the end of the year, Mayor Randy Brailsford said.
The first public hearing may not take place until September, he said.
E-mail: rodger@desnews.com