In the sixties, there was some interest shown in the development of rural natural gas distribution systems in Alberta.  Gas was a very inexpensive source of energy. It was clean and trouble-free. 

 

The first gas co-ops formed were in the Brooks-Basano area.  The capital cost per farm was about 1200 to 1500 and the footage between farms was reasonable.  The first systems used steel pipe for transmission. In the late sixties, plastic pipe was developed which could be buried in the ground with a plow instead of trenching.  This greatly reduced the cost of installation per foot.

 

In about 1970 or early 1971, there was some interest shown in this area for a natural gas distribution system.  As a result, the council of the Count of Parinweath commissioned Palmer Engineering lImited in 1971 to do a feasibility study for a system in the county.  This study indicated a capital cost of $1600 per farm provided most of the ratepayers made use of this system. 

 

In the winter of 1971-1972, A.G.T.L started negotiating for a right of way to build a 16-inch gas transmission pipeline.  

 

Eventually, a number of directors from the County of Stettler were added.  Those that remained active until the first general meeting were Herb Heier, Ed Jensen, Len Schofer and Ken Schultz. There were about six or eight other people from the Stettler area that were directors for a short period of time, however, they seemed to lose interest and did not attend further meetings.  

 

George Elman was elected President of the provisional board of directors.  Vice-president was John Godberson and Ken Perreault was Sec-Treasurer. 

 

After interviews with several engineering firms, the board hired Delta Consultants Limited to do their engineering.  Larry Burroughs was the chief engineers. It was determined by the consultants in 1972 that the cost of installing a gas system would be about $2000 per member. It was decided that to charge each member $1650 and finance the remainder through the sale of gas.  Each member would pay $100 in cash. The remaining $1550 could be paid in cash or financed by a lien note. 

 

In April of 1972, meetings were held in various communities in the county to explain the concept of a gas co-op and sign up as many members as possible.  Progress in developing the co-op in 1972 was slow. One of the problems was that the provincial government had indicated that they were developing a program to assist rural gas co-ops.  The board found it was very difficult to develop policy on financing and percentage of sign up because it would be contingent on what the government came up with.  

 

Construction start-up was tentatively scheduled for early August.  However, it soon became apparent that the government’s new gas policy had a lot of red tape tied to it.  The engineers and board were having a problem fulfilling the requirements necessary to get construction approval from the Department of Utilities and Telephones.  One other thing about the gas policy that bothered the board was that the original feasibility indicated that capital cost would not exceed $2000 per member. With the introduction of the rural gas program, the Engineering firm promptly informed us that the capital cost would be $3000 per member requiring the maximum grant.  They assured the board that they would be getting a much better system than was originally proposed. The board was of the opinion that the engineers viewed the grant as a license to print money. They were never able to verify this, of course. Engineers could not be hired on a flat rate basis. They were hired on a basis of percentage of total cost; thus the higher the cost, the more they would receive. 

 

During the summer and early fall of 1973, several attempts were made to hire a manager for the gas co-op.  Several people were interviewed by the board who had good qualifications as gas fitters; however, each one seemed to change their mind a few days after the interview and did not accept the position of gas co-op manager.  In retrospect, the board probably erred in trying to hire a gas fitter as manager instead of looking for a person with qualifications and experience in administration.  

 

In January 1974, the County of Paintearth was hired to do the gas billing for the co-op. This worked out very well as it allowed the county to make more efficient use of their equipment. The county has continued todo the billing for the co-op.

 

On February 27, 1974, the first annual meeting was held in the Castor Community Hall. The number of directors was reduced from two to one per division with allowance for extra directors in Stettler County till construction was completed there. Following that meeting, the board consisted of eleven directors--seven from the County of Paintearth and four from the County of Stettler.

    

    Directors elected were:

    

    Stettler #1 Ken Schultz and Len Schofer

    Stettler #6 Herb Heier and Ken Penosky

    Paintearth #1 George Watson

    Paintearth #2    George Ekman

    Paintearth #4 Walter Pickles

    Paintearth #5 Jim Schaftner

    Paintearth #6 John James

    Paintearth #7 Bill Richardson

 

In the spring of 1974, the government came out with a new document known as a Utility Right of Way.  It would be necessary for the co-op to get the landowners to sign one of these forms for each parcel of land that had pipeline in it. This proved to be a very difficult and unpalatable job. The landowners and gas co-op members were getting sick and tired of signing forms. The reason for the Utility Right of Way was that the original easement was not in a form that could be registered. It was necessary to have a document that director of the Paintearth Gas Co-op from the time it was organized till the third annual meeting in March of 1976. The board held 68 meetings plus a few special meetings from March 9, 1972, till March 25, 1975. Many of these meetings lasted till 2:00 or 3:00 in the morning. In addition to the meetings, many of the directors spent countless hours and miles of driving canvassing members for sign-ups and getting the various documents signed that were necessary. Many times, there was a meeting once a week. There were many times when it seemed that it would be impossible to get in control of the operation. 

 

The most difficult time for Paintearth Gas Co-op Limited occurred between the second and third annual meetings which was from March 1975 to March 1976. During that year, the board held 37 regular meetings. In June of 1975, a subsidiary Co-op known as P.G.C Co-op Services Limited was formed. In addition to the previously mentioned meetings held that year, there were 23 meetings held of this subsidiary; however, as both organizations had the dame directors many of those meetings were held the same evening. 

 

The number one priority for 1975 was to get Phase 2 in the County of Stettler constructed. The board had had many problems with engineers and the contractor in getting the first phase constructed. There remained several areas of dispute with both parties due to mistakes in construction which still had to be corrected before final settlement could be made. In analyzing the work to be done in 1975, is operating and financing costs, the board felt they were going to have to increase the price of gas anyway. It was agreed to increase the rate  $0.35 per m.c.f. to $0.85 per m.c.f. Effective with July 15th billing. This increase proved to be just the beginning of P.G.C.L.’s gas pricing problems. The Department of Utilities and Telephones felt our rate was not high enough to repay capital loans and requested a further $0.08 increase in September. In October, P.G.C.L. were informed that before Utilities and Telephones would get approval to construct the new area in the County of Stettler, P.G.C.L. would have to increase the gas rate a further $0.67 to set a rate of $1.60 per m.c.f. Plus a $4.00 per month service charge. It must be remembered that due to inflation, installation costs increased dramatically in 1975.

 

The board called a membership meeting for October 28 to discuss this turn of events. The members recommended a lower gas rate and a higher flat rate per month. Consequently, a rate of $1.30 per m.c.f. Plus $12.00 per month was set by the board.

 

Due to the information on the financial position of the gas co-op made public at the October 28 meeting and the new gas rate set by the board following that meeting, the members became extremely incensed and concerned about the future of their gas co-op. An “ex-offica” meeting of members was called for December 10, 1975. A large number of members turned out for the meeting. A committee of five members, namely Cliff was manager of the Edmonton branch of A.M.A. was hired. He was to begin employment with P.G.C.L. on January 5, 1976. 

Ken Schultz from Endiang resigned from the board in early November for health reasons. The pressure of coping with the difficulties of P.G.C.L. was having appeared to be the cause of his health problems. Ken had been a very conscientious director and his presence was missed by the rest of the board. 

 

Early in 1976, the five-man executive committee plus the manager started negotiations with the engineers D & S Rural Consultants and the contractor Caribou Construction Limited for final settlement on Phase 1 construction. These negotiations were completed by the end of January 1976. The committee and board were not happy with the settlement arrived at with the engineers; however, they felt it would not be prudent to pursue the matter through the courts as it would probably have a detrimental effect on the co-op. It should be noted here that the original engineering firm of Delta

 

In 1973 Delta Consultants became Burroughs Engineering Ltd. Then in 1974, they reorganized the company to become Burroughs Engineering Limited (1974) with Jim Herricks as Chief engineer instead of Larry Burroughs. Finally, in 1975, this company was taken over by D & S. Rural Consultants Limited. It was very difficult for the board to deal with this situation as there was never a proper cut-off from one company to the next.

 

In late February 1976, the provisional government announced a change in the grant structure whereby the government would grant 75% of construction cost over $3750 per member up to $4500 per member. After analyzing what effect this grant would have on the capital requirements needed to construct Phase 2 of the co-op, Manager Don Olesky and some department officials felt an assessment was necessary as to whether or not the co-op should still do its own construction. In view of the many difficulties that were encountered by the P.G.C.L. in developing its subsidiary to do construction work, many of the board were of the private opinion that perhaps the whole idea had been ill-conceived from the beginning.

 

At a special meeting in the forenoon of March 8, 1976, prior to the third annual meeting, a decision was made to dissolve P.G.C. Co-op Services Limited. Its assets and liabilities were to be transferred to Paintearth Gas Co-op Limited. Thus ended a venture that proved to have the most traumatic effect on the gas co-op of any development in its history.

 

The third Annual Meeting was held in the Castor Community Hall at 1:30 p.m. on March 8, 1976, with about 300 members present. There were many questions asked about the past year’s activities and many concerns expressed as to the future viability and financial position of the co-op. The committee elected at the “ex-official” meeting presented its report which was about ten pages in length and included a number of recommendations for the board to consider. 

 

Directors elected at that meeting were Herman Schwenk, encountered in constructing the first area, construction of the second area was virtually trouble-free. The difference appeared to be in having a manager who was capable of exercising proper project management.

 

During the winter of 1974-75, the Co-op had a lot of problems with the quality of gas from the Coronation tap. The gas co-op was drawing this gas from the same source as the town of Coronation. This gas was coming directly from wells and had a lot of moisture in it. Freeze-offs were common for gas co-op members and were common for Coronation as well. Coronation was blaming P.G.C.L. for being the cause of Coronation having a gas supply problem during cold weather; however, the problem was not one of quantity, it was a problem of quality. There was a supply of good dry gas available at a gas plant about ten miles southeast of Coronation but would necessitate building a 9.4-mile steel pipeline. The major problem was who was going to finance the cost of the line. As it would be a transmission line and the gas was necessary for P.G.C.L. members, the co-op would qualify for a grant through the rural gas act. An agreement was negotiated with the Department of Utilities and Telephones for a lump sum grant of $200, 000. Coronation was responsible for hiring a contractor to build the line and would pay any cost over the amount of the grant. The pipeline was installed in December 1975 by McCullough Welding and Ditching. The completion of this line solved a chronic gas problem for Coronation at minimal extra cost as well as P.G.C.L. members had no more freeze offs. February 1979, the debt load of P.G.C.L. was only a fraction of what it had been three years earlier.

 

Paintearth Gas Co-op Limited served an area of 62 square townships. It was 75 miles east to west at its longest point end 45 miles in width near the west boundary. Also served within this area were the villages and hamlets of Gadsby, Byemore, Indiang, and Fleet. The Co-op had 725 members with gas available of which 622 were using the service. As well the village of Halkirk had its own gas system but purchased its gas from P.G.C.L. The gas co-op had finally matured and become a well-run utility providing a much-needed service.

 

By: Herman Schwenk