The city of Maryville is locking in another two decades of service with a national natural gas provider in what is its longest contract with the company yet.
Maryville City Council members voted Tuesday to approve an ordinance on first reading that will renew a franchise agreement between the city and Atmos Energy to serve the area with natural gas for another 20 years.
“Franchises do run out and you have to renew them,” City Manager Greg McClain told council members during the meeting. “At first there was talk about a pretty major change. Both parties spent some time together and agree just to extend (the agreement) for another 20 years as is.”
“Why do we go to 20 and not five or 10?” Council Member Andy White asked McClain.
“It’s pretty standard,” McClain replied.
“That’s what Alcoa and the county are doing,” City Attorney Melanie Davis added.
Maryville, Alcoa and Blount County each have separate contracts with Atmos, and McClain and Mayor Tom Taylor confirmed each were pursuing a similar 20-year contract extension.
An earlier agreement between Maryville and Atmos was initiated in 2004, a contract McClain provided to The Daily Times shows. That agreement was signed almost exactly 15 years ago this August.
City officials met with Atmos officials — which they do on an annual basis — around a month in advance of the Tuesday vote, McClain said. “We talked not only about the franchise agreement but also about operational things and where they are improving the system.”
Atmos continues to expand its services in the area, not only by expanding the size of its lines but by moving into new areas within the past few years. In 2017, Atmos announced plans to install 10,000 feet of pipe along East Lamar Alexander Parkway and 4,500 feet of line along West Lamar Alexander Parkway going north on Old Glory Road.
Atmos’ local investment at that time was projected to cost $4.5 million.
Notes for the renewed agreement show that Maryville is paid 5% of Atmos Energy profits in the city limits.
It also receives one half of one cent per hundred cubic feet of natural gas that Atmos transports within the city during the preceding calendar year, the notes show.
Maryville made a total $371,851 last year from Atmos-related profits.
All this money is put into the city’s general fund under miscellaneous revenue and doled out as part of the budget as needed, McClain said.
Language in the agreement initiated in 2004 shows that the company pays the city this fee on a quarterly basis.
McClain said the contract comes up for review around every five years. “(The contract) has outs where if there are issues, you can bring that up,” he explained in a phone interview. “But it would take some kind of breach on their part to do that.”
The city is in a continual dialogue with the company and McClain said Atmos gave a “really good briefing” during its latest meeting with city officials.
Approval of the 20-year agreement passed the council unanimously, but it will require a second reading before the ordinance is officially amended and the extension set in stone.