OCEAN PINES—The vice
president of Sandpiper Energy briefed the Ocean Pines Association Board of
Directors on what homeowners can expect during the four- to six-year transition
period to convert Berlin, Ocean City, Ocean Pines and Snow Hill from propane to
natural gas.

OPA President Tom Terry
said later a key issue for him was ensuring that OPA members had a way to
communicate with Sandpiper to access information on what their options would be
and how homeowners would be affected individually.

Currently information on
the Sandpiper transition is being handled by information published on the
company Web site and a toll free customer service number, 800-427-0015.

In August, Sandpiper will
mail a customer guide to its new customers explaining the company’s operations,
including rate structure, services provided

and payment locations.
Sandpiper representatives are also preparing to host town hall-style meetings
over the next couple of months to address customer’s

questions as the
conversion process reaches different service areas, the company’s Vice
President Jeff Tietbohl said.

Company representatives
decided to blend the rates for propane and natural gas together, minimizing
possibilities that customers on the back end of the

conversion process would
pay a higher fuel rate than those who are among the first to get converted from
propane to natural gas, which is significantly

cheaper, Tietbohl said.
“As we introduce natural gas into the system, we want everybody on the Eastern
Shore system to benefit from that,”

he said. As more natural
gas service is introduced into the system, “prices will come down for
everybody.”

The propane prices that
Eastern Shore Gas charged for its underground distribution system were
unregulated, said Tietbohl, noting that since the price

for natural gas is
regulated, Sandpiper sought to be a distributor of fuel regulated by the Public
Service Commission. If Sandpiper, which replaced ESG as a fuel distributor on
June 1, wants to change the rates it charges at any point in the future, it
must first seek permission from the PSC, Tietbohl said. The

rates will be the same
for either propane or natural gas.

There will be two rate
schedules, one for residential users, the other for commercial users, Tietbohl
said. He also said the rates would include a two-part charge, one for the
pooled costs associated with converting and installing the infrastructure
needed to distribute the new fuel throughout the community and another charge
for delivery of an individual homeowner’s actual fuel.

Sandpiper will be allowed
to apply for its first rate adjustment for the pooled costs fee in December
2015, if the company decides to seek that option, Tietbohl said.

The company has
anticipated that customers would save $1 million as a result of Chesapeake Utilities’
acquisition of ESG. According to Tietbohl during his presentation, the savings
would come from lower fuel costs. All customers would share in the conversion
costs, he said.

Customers will be “very
involved” in the conversion process because company representatives will
conduct onsite evaluations to assess the appliance

and infrastructure needs
for each home and business, Tietbohl said.

“When we start doing this
we are going to be in every home along the way, because we can’t convert it
unless we do an assessment of that house. So those consumers are going to get a
one-on-one interaction with our group initially just to do an assessment—What
do you have there? What type of piping do you have? What do your appliances
look like? So they’ll have a chance to initially engage in that interaction
before anything even happens,” Tietbohl said.

Directors Sharyn O’Hare,
David Stevens and Marty Clarke asked different versions of the same question:
Who would bear the costs when an appliance conversion was needed to switch from
propane to natural gas? The pooled line rate will serve as a community-shared
pass-through account that will help pay for conversion costs for appliances
inside homes, like water heaters and furnaces, Tietbohl seemed to say. The
costs of converting outside fixtures, like heated swimming pools, would be
borne by individual consumers, he said.

However, it was unclear
exactly how much Sandpiper will help owners who must either convert or replace
their appliances.

For customers who have
appliances that can be converted, Sandpiper will develop a standard dollar
amount for what the company will pay homeowners for those conversions, Tietbohl
said.

For customers who have an
appliance that can be converted, but want to replace them with an upgraded
appliance, Sandpiper will reimburse up to the conversion amount and the
customer would pay the balance, Tietbohl said, “but we are still working
through some of those specific issues.”

Directors Dan Stachursky
noted that a significant part of the Ocean Pines community was not hooked up to
the current underground fuel distribution pipeline system. To connect lines throughout
the entire community would require a significant capital investment to build
new gas lines he pointed out. In those situations, Tietbohl said, an economic analysis
will be conducted to determine the feasibility of extending service to
locations that do not already have it.

Director David Stevens
advised Tietbohl that nearly half of the Ocean Pines homeowners are year-long
occupants. He asked Tietbohl how company representatives would handle
scheduling onsite examinations for empty homes.

“We
understand that is going to be one of the challenges that we are going to have
to deal with,” Tietbohl said, adding that communication will a big part of the
conversion process.

In response to questions
about a shortened billing period during the first cycle of billing due to the
transition process, he said the payment period is supposed to be 10-11 days,
with a 10 day grace period and without late fees. There is a fee associated
with using a credit card to make payments, Tietbohl said.