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 uations 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.