Business Monday

Florida City Gas: Doral-based business focuses on growth

Florida City Gas headquarters at 4045 NW 97th Ave. in Doral. The company recently moved here from Hialeah.
Florida City Gas headquarters at 4045 NW 97th Ave. in Doral. The company recently moved here from Hialeah. adiaz@miamiherald.com

When Roberto Barretto was building a swimming pool at his home in Westchester last year, he decided to follow his construction contractor’s advice and use natural gas to keep the water at a comfortable, consistent mid-80s temperature so the pool could be used year-round.

“We weren’t using natural gas at the time, but our contractor told us we were near a Florida City Gas connection,” said Barretto, a pharmaceutical representative who has lived in the home seven years. “We decided to connect and use gas to heat our pool, and we also switched our clothes dryer and tankless hot water heater to gas.

“We’re very pleased that we switched,” he said. “We’re saving a good $50 a month on our electric bill. The only thing I regret is that I didn’t switch our stove to natural gas.”

The cost savings is a big part of natural gas’ appeal, says Carolyn Bermudez, the vice president and general manager of Florida City Gas, based in Doral: “The average monthly bill for our residential customers is about $24, and that’s 27 percent less than 10 years ago.”

But there are other reasons why gas is becoming a more popular option in Florida: It’s easily available in the United States, and it is the cleanest of the fossil fuels. At the same time, power companies in Florida and across the nation are reducing their dependence on other fossil fuels — coal, oil and diesel — and using more natural gas to generate electricity.

“Natural gas is becoming a major part of the energy picture in Florida,” said Bermudez, who began working at Florida City Gas’ predecessor, City Gas, in 1986.

She also said that one the biggest-selling points of gas is that it’s safe: The industry’s practices are heavily regulated, and Florida City Gas does ongoing maintenance to avoid leaks. Customers get information on its safe practices. For instance, a gas with a “rotten eggs” odor is inserted into pipelines to alert people to leaks: Although you can’t smell gas, which is odorless and colorless, you can certainly smell mercaptan, which is harmless but stinky.

A big net

The company already reaches 107,7000 customers in five counties, but it’s looking to add more.

It supplies natural gas to residential, commercial and industrial subscribers in Miami-Dade, St. Lucie, Brevard and Indian River counties, and a part of Palm Beach County. About 3,600 miles of the company’s gas mains, or pipelines, snake through this area.

Florida City Gas is a subsidiary of Atlanta-based AGL Resources, a natural gas distributor with 4.5 million customers in seven states. Last year, it was announced that another Atlanta-based firm, Southern Company, which owns electric utilities in four states, would acquire AGL.

To prepare for its future, the company is investing $105 million over the next decade to upgrade its pipelines. “We invested about $30.5 million last year in maintenance and new construction,” Bermudez said.

The company is working, too, to expand its customer base in areas where it operates, she said. For instance, as an incentive to switch to gas, Florida City Gas pays rebates of up to $1,700 to customers who buy or replace gas-powered appliances.

The company has also “made recent expansions to Homestead, Clewiston and Sebastian,” Bermudez said.

Florida City Gas is studying other options, like selling compressed natural gas for vehicles, and liquefied natural gas, which is used in heating, cooking and generating electricity.

And it’s also looking in its own backyard. Or rather, in Doral and Brevard, where its fueling stations are: It wants to use compressed natural gas, instead of diesel, to fuel all its 70 vehicles.

Customers, too, are switching to compressed natural gas for their fleets. As part of a nationwide program, for instance, Waste Management is converting its more than 32,000 waste-collection and support vehicles.

“These CNG [compressed natural gas] trucks are a lot cleaner than diesel,” said Luke De Bock, an engineer and construction manager at Waste Management of Florida, which has 10 truck maintenance facilities in the state. “Over the last three years, we’ve been converting our diesel truck fleet to CNG, and Florida City Gas is a very good supplier. We tried converting collection vehicles to CNG, but we found it was easier to buy new trucks powered by CNG and retire the diesel trucks after they reach the end of their useful lives.”

HOW GAS GETS HERE

Gas used in Florida is usually taken from underground deposits in Texas and the Southeast, and it is moved to consumers via a complex system of pipelines. Gas is sent long distances in pipelines under very high pressure — from 200 to 1,500 pounds per square inch or more — so that sufficient volumes can be pumped through each system.

The gas Florida City Gas and other customers receive arrives from out of state in two large systems. One is the Florida Gas Transmission Pipeline, which carries gas from South Texas, enters the state north of Pensacola and reaches South Florida. The second is the Gulfstream Pipeline, which collects gas in Mississippi and Alabama and carries it under the Gulf of Mexico to Tampa.

Gas from these pipelines is fed into networks in Florida and, under lower pressure, flows to gas distribution companies and other customers, finally reaching residential, industrial and commercial subscribers.

Aside from Florida City Gas, the state has four other gas distribution companies: Florida Public Utilities Co.; Peoples Gas System (TECO Energy); Indiantown Gas Co.; and St. Joe Gas Co. But these firms do not compete directly with Florida City Gas because each has a designated territory and its own pipeline system. Like electric utilities, gas-distribution companies are assigned geographic areas and are state-regulated.

And although the biggest competitor of natural gas is electricity, over half of the electric power generated in Florida is from plants powered by natural gas.

The U.S. government expects domestic natural gas supply and demand to grow, thanks to the abundance of shale gas and its current low price. The U.S. Energy Information Administration, part of the U.S. Department of Energy, reported that domestic use of natural gas increased by 17 percent between 2000 and 2015 and predicts it will continue expanding throughout the country to 2040.

But one expert warned that while the U.S. “is swimming in natural gas,” and “the incentive to switch to natural gas is absolutely huge,” Florida — which has no large natural gas supplies of its own — could face a future supply problem, especially if a pipeline fails.

Ed del Valle is a chemical engineer who runs EGDV Consultants, a Miami-based energy consultancy; for many years, he worked at ExxonMobil. He said Florida’s natural gas supply depends on two large interstate pipelines and that future growth depends on a new pipeline: “For future gas demand to grow, even for the industrial and power sectors, Florida needs to have a reliable supply infrastructure.”

To address this issue, NextEra Energy and a partner, Spectra Energy Corp., are building two pipelines and a hub to connect Alabama to Orlando, and then to Florida Power & Light’s generating complex in Indiantown. This system is expected to be operating in May 2017 and should ensure an adequate supply of gas for the state’s largest electric utility as well as additional gas for local distribution companies like Florida City Gas.

POWERING ONWARD

Currently, all five natural gas distribution companies in Florida serve about 800,000 customers. In comparison, the state’s five-largest electric utilities have more than 7.5 million subscribers.

While gas distribution firms like Florida City Gas understand that they will always share the market with electric companies, they continue to push ahead with plans to broaden their customer base.

“Growth is critical to us, and we are always looking at new opportunities to grow our company,” Bermudez said.

The writer can be reached at josephmannjr@gmail.com.

Florida City Gas

Business: Doral-based Florida City Gas provides piped-in natural gas to residential, commercial and industrial customers in Miami-Dade, St. Lucie, Brevard and Indian River counties, as well as part of Palm Beach County. It is the second-largest of five natural gas distribution companies operating in Florida. The company became a subsidiary of Atlanta-based AGL Resources Inc. in 2004 and changed its name from City Gas Co. to Florida City Gas. AGL, which has 4.5 million customers in seven states, last year agreed to be acquired by Southern Company. Also based in Atlanta, Southern Company owns electric utilities in four Southeastern states and has fiber optics and telecommunications operations.

Founded: In Miami in 1946 as City Gas, serving Dade County.

Florida City Gas headquarters: 4045 NW 97th Ave., Doral. (It recently moved here from Hialeah.)

Senior management: Carolyn Bermudez, vice president and general manager of Florida City Gas, based in Doral.

Employees: About 80 in Doral, out of 110 statewide.

Customers: About 107,700 residential, industrial and commercial subscribers.

Revenue: Parent company, AGL Resources, had 2015 operating revenues of more than $3.9 billion.

Ownership: AGL Resources is traded on the NYSE (sticker symbol: GAS).

Competition: Electric utilities, like Florida Power & Light Co.

Website: www.floridacitygas.com.

Source: Florida City Gas, AGL Resources.

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