History/Background

History/Background

Florida Gas Utility (FGU) is a non-profit joint action agency that provides natural gas management services to its municipal utility members.

In 1988, Florida Gas Transmission (FGT) filed an application with the Federal Energy Regulatory Commission (FERC) to expand its pipeline in Florida (its Phase II expansion). As part of the settlement of the Phase II application, several customers and customer groups demanded that FGT allow open access to its transmission system. As it became apparent that open access would be granted, the municipal utilities in Florida went about the business of developing a mechanism that would facilitate combined and coordinated natural gas purchasing and transportation.

The concept of forming an independent organization, what would later become known as Florida Gas Utility (FGU), was agreed upon. Making use of the Florida law called “The Florida Interlocal Cooperation Act”, FGU was created through an interlocal agreement among its members. The Interlocal Agreement provided the framework for the organization, and Bylaws were soon adopted by the Board of Directors to provide further specific guidelines. FGU’s founding members included three municipals that owned electric generating utilities and two municipals that owned both electric generation and natural gas distribution utilities. The Board of Directors adopted a plan which provided for two of the founding members to provide staff support services to FGU through contractual arrangement.

It very quickly became evident that the theories of economic benefits of combined and aggregated natural gas requirements and entitlements were indeed correct. Overall costs for natural gas purchased on the open market was significantly less than that which was still purchased under sales contracts from the pipeline. The ability to utilize the excess capacity of one member by another member that needed capacity resulted in substantial savings. The third benefit was that of more efficient administration. FGU provided staffing and expertise at a much reduced cost compared to each utility providing staffing for natural gas acquisition and scheduling on their own.

Today, FGU members continue to enjoy the benefits of joint-action and aggregated gas supply. FGU membership totals twenty-two.