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Berlin, Ocean Pines News Worcester County Bayside Gazette Logo Berlin, Ocean Pines News Worcester County Bayside Gazette


Breakthrough with Sandpiper? Nope

(Dec. 18, 2014) A report asserting that talks between Ocean Pines and Sandpiper Energy have cleared an impasse appears to be erroneous, according to representative from both parties.
The report, published in another newspaper, referred to a “breakthrough” in the talks and went on to say that the propane supply company informed the Ocean Pines Association by letter that it was willing to negotiate a franchise fee, pay Ocean Pines “roughly $70,000” in legal fees and negotiate a turnover agreement.
Negotiations have been rocky for months, and the strained relations were on display during an Ocean Pines Association board meeting on Nov. 22 when President Dave Stevens said flatly, “We’re not making any progress … there is no real negotiation.”
Stevens said the association sent a letter, from which he openly read during the meeting. It asked for a franchise fee, reimbursements for legal costs incurred during negotiations and a turnover agreement.
Jim Moore, vice president of Chesapeake Utilities Corporation, of which Sandpiper is a subsidiary, agreed in a Nov. 26 interview with the Bayside Gazette agreed that the talks had produced little.
“It’s a situation where we have ongoing negotiations and it’s just turned into a slow process, that’s for sure,” he said at the time.
Asked this week about the claims that conditions had improved, Moore said, “Unfortunately that is inaccurate.
“The fact is that there isn’t an agreement so far,” Moore continued. “We’ve been engaged in negotiations, but there have been no agreements so far. Nothing’s been signed.”
Moore lamented the recent article, saying, “Our position all along has been that these are confidential business negotiations.
“We weren’t going to try to negotiate an agreement through the press,” Moore said. “That was the purpose of us having meetings and we’ve attempted on many occasions to try to pull something together. Unfortunately, it’s just been an issue of getting timely responses back and forth and it’s kind of drug out.”
Board Vice President Marty Clarke, who was quoted frequently in the article, also disputed its veracity.
“Either I was the most misquoted guy who ever lived, or I was drunk when I talked to [the paper],” Clarke said. “I don’t know where he got a lot of that stuff – mainly because it hasn’t happened.”
Clarke admitted he had not read the story, although he said he had received phone calls about the contents.
“From what people tell me, I basically said everything is wonderful, and I don’t think it’s all that wonderful,” he said. “Here’s the bottom line: there’s nothing that’s being done or said that I won’t repeat out loud, other than something that might jeopardize the negotiations. There ain’t no secret stuff going on – not on my watch.”
Moore denied the existence of the letter mentioned in the article.
“We’ve not sent a letter with regard to those specific issues,” he said. “What we’ve done is we have tried to continue the discussions. We’ve continued to exchange emails and things of that nature, but all of it has been confidential in nature. There’s nothing that we could say we have specifically provided to them or not provided to them.
“I will say what we have expressed to them is a willingness to discuss and come to some sort of an agreement on reasonable provisions,” Moore continued. “But there has not been anything that would specifically align with what Marty set forth.”
Clarke said Sandpiper did send a letter to OPA leadership agreeing to several issues on principal, but that neither side had discussed specifics.
“Everybody knows the devil is in the details,” Clarke said. “It’s one thing to say, ‘hey, we’re going to give you a fee – but it’s only a dollar.’ We don’t know what it is. We’ve gone back and told them what we think it should be. We’re just waiting to hear. It’s still in negotiation.”
Clarke’s comments, Moore said, were “in bad taste.”
“From that perspective it puts us in a little bit of an awkward position in that the general public may be now under the impression that if, in fact, we end up with an agreement that was somehow contrary to what was said in the paper, that we’ve maybe reneged on something we said, and that’s not the case at all,” he said.
“By the same token it doesn’t impact the negotiations from our perspective,” Moore continued. “We expect to continue to negotiate on a professional basis and we’re not going to take that and just say, just because we disagree with the way that was presented that we would just take a different position.”
One of the major obstacles in negotiations is the inability to reach a new franchise agreement. Worcester County granted Sandpiper an agreement allowing them to convert existing propane lines to natural gas. Moore said it was “surprising” that Ocean Pines balked at a similar accord.
“When we go with a natural gas option to a community, generally the governing authority that we’re talking with – whether it be a town council, mayor, or a developer – they recognize the benefits of natural gas and they’re generally very supportive of the process,” Moore said. “It’s been a challenge [in Ocean Pines.]
“Our goal is to get something in place that clarifies the easement rights,” Moore continued. “Obviously our objective is to get natural gas into the community as soon as possible. We believe that’s the right thing to do and we believe it’s the best thing for the customers.”
Both sides are also at odds over who owns the infrastructure in Ocean Pines.
“Sandpiper bought those assets from Eastern Shore Gas,” Moore said. “All the mains in the development, all the service lines that are installed in the houses, all the meters in the houses and things like that, all that is property of Sandpiper.”
Clarke disagreed.
“Without a franchise, they can’t use them,” he said. “Their argument is a legitimate argument under Maryland law if they’re pumping a regulated utility product. They’re not – they’re pumping propane.
“They bought and assumed a franchise agreement that expired a year and a half ago and they have been unwilling to sign a new one,” Clarke continued. “Hell, they were unwilling to even propose one until we did.”
When the talks in Ocean Pines initially broke down, Sandpiper chose to focus on converting the existing propane lines in West Ocean City to natural gas instead. Moore said the company would be busy there until April 2015, meaning he is in no rush to strike a deal.
“Our objective is to get things done and in place so that we could be in a place to start get things done by the spring of next year,” he said. “We don’t consider ourselves really jammed at this point in time by any stretch.”
Clarke questioned Sandpiper’s motives.
“They are in no hurry because they’re gouging the …out of us,” he said. “I wouldn’t be in any hurry either if I was selling propane for $3.64 a gallon when I could readily buy it for $1.27. If I was them, I’d be just whistling past the graveyard, for God’s sakes.”
According to the U.S. Energy Information Administration, the average statewide cost of residential propane was $3.03, as of Dec. 8. The agency does not list commercial prices.
Moore said the most important thing both sides can do at this point is continue discussions.
“From our perspective it’s really a question of just getting back to the table and making sure that we’re exchanging offers,” he said. I actually think that it’s not unrealistic to say that we could get an agreement in the next 30 or 60 days. By the same token, based on our track record so far, I would have to say that probably leans toward the optimistic side.”
Clarke was less hopeful.
“They don’t want to do anything,” he said. “They’re selling propane for $3.64 a gallon in a $1.90 market. We’re paying $2.96 a gallon for gas at the indoor pool and our manager is crying the blues because we’re over budget on propane.
“Sharp, the same people who own Sandpiper, will sell us gas for $1.27 a gallon,” Clarke continued. “Why are we paying this? Are we just idiots or it is, what I think, other people’s money and nobody seems to care. (Sharp is a subsidiary of Chesapeake).
Moore defended Sandpiper’s propane rates.
“We recognize that most consumers are inclined to look at the price of a product first,” he said. “However, we also know that the most important consideration relates to the overall value of the service received. The residents of Ocean Pines have a unique opportunity to receive reliable delivery of propane now, and eventually natural gas through the Sandpiper piped distribution system.”
Last winter, Moore argued, when propane was scarce and many providers were not able to keep customer’s tanks filled, Sandpiper’s 400,000 gallons of propane storage in the Ocean Pines area ensured that its customers were not left out in the proverbial cold.
“Sandpiper was able to do that without putting one propane delivery truck on the streets of the Ocean Pines community,” he said. “When an agreement has been reached with the OPA, those same distribution pipes will be transitioned to deliver less costly natural gas. We believe that the residents of Ocean Pines deserve that opportunity and we will continue in our efforts to make natural gas a reality for the area.”