Slide About Patriots Energy Group

About
Patriots Energy Group

Patriots Energy Group (PEG) is a joint agency under South Carolina law, organized as a public body and a body corporate and politic in 2003, pursuant to the state’s Joint Agency Act. PEG is governed by a six-person Board of Directors and has three members that are natural gas authorities located in the north central region of South Carolina: Chester County Natural Gas Authority (CCNGA), Lancaster County Natural Gas Authority (LCNGA) and York County Natural Gas Authority (YCNGA) (the Members or Authorities).

The General Assembly of South Carolina created each of the Authorities in 1954 to provide retail natural gas service through their transmission and distribution facilities in their respective service territories. The Members are political subdivisions of the state of South Carolina and are considered special-purpose districts. The Members do not have the authority to levy taxes. All revenues of the Members are derived from the sale and distribution of natural gas and appliances.

The Purpose

Lower Cost. More Efficient.

The Members’ purpose in forming PEG was to achieve lower costs of operation and greater efficiencies in a competitive environment. In July 2003, PEG adopted bylaws and executed member contracts with each of the Authorities and became a joint action agency under the Act. PEG updated its bylaws in 2010.

In conjunction with the issuance of bonds in June 2006, the Members executed new member contracts similar to those previously in place. Under the Agreements, PEG acquires natural gas supplies for the full requirements of the Members and manages their transportation and storage capacity on three interstate pipelines. During fiscal year 2011, PEG completed construction of a 39.5 mile 12-inch transmission pipeline that connects the distribution systems of the Authorities directly to the Transco interstate transmission line. The transmission line became operational in January of 2011 and gives the Authorities the flexibility not to rely completely upon one interstate transportation pipeline system. Today PEG owns and operates 60 miles of transmission pipeline and 16 miles of distribution pipeline

YCNGA, LCNGA and CCNGA each operate autonomously within their respective service territories. Nevertheless, through joint action, these public entities share the costs of like undertakings, such as natural gas purchasing, and accomplish those tasks more efficiently than if they were addressed individually. In addition, by contracting with PEG, the Members have diversified their source of supplies through a portfolio of supply arrangements, rather than depending upon the services of a single provider. Similarly, they have pooled their pipeline capacity resources and own facilities jointly. Through joint action, PEG’s Members have used economies of scale to reduce the overall cost of natural gas to their ultimate customers.

For its day-to-day operations, PEG has a contract with the Municipal Gas Authority of Georgia (the Gas Authority); a large joint-action agency created in 1987 that provides gas supply and capacity planning services and acts as PEG’s agent with certain third-party vendors. PEG also contracts with one of its members, YCNGA, for day-to-day operations and maintenance of PEG’s pipeline facilities.

PEG obtains a significant portion of its gas supplies on a long-term basis and obtains the remainder from various suppliers on a short-term basis. Under each of the long-term transactions, the gas is priced at a discount to spot market pricing with potential additional discounts distributed annually.

Patriots Energy Group (PEG) has participated in many financed natural gas transactions as a customer since 2006, providing PEG and its members with significant discounted natural gas supplies.

• Tennessee Energy Acquisition Corporation (TEAC) in 2006, 2007 and 2018
• Main Street Natural Gas, Inc (Main St) in 2007
• Blackbelt Energy (Blackbelt) in 2018
• Public Energy Authority of Kentucky (PEAK) in 2018
• Public Gas Partners Pool #4 (PGP Pool #4) in 2018
• Patriots Energy Group Financing Agency (PEGFA) in August 2018

In August 2018, Patriots Energy Group Financing Agency (PEGFA) issued 30-year Gas Revenue Bonds totaling $832,350,000. These proceeds have been used to prepay PEGFA’s first long-term gas supply agreement with the Royal Bank of Canada.

Over a 30-year period, the members of PEGFA will obtain some 216,865,600 MMBtus of natural gas supplies at a discount to the market price that is created by this structured transaction. The rest of the gas acquired will be sold to the Municipal Gas Authority of Georgia for resell to their members at a discount.

If the transaction goes to the full 30-year term, PEGFA members will save approximately $90,216,090. That represents a per unit savings of 10-15% of the cost of natural gas. The gas supply will make up approximately 50.85% of the gas required for the three Authorities until 2048, based on the last 12 months of usage.

The bonds are structured to be put back into the market “
in 2024, which will create a different unit discount. But Authorities are big winners even if their discount is less. Even if we obtain only the minimum discount provided for under our transaction, PEGFA will still see savings after 2023 of $95,953,228.

The Gas Revenue Bonds are not general obligations of the state, PEGFA, or its members, but are secured solely by a lien on the Trust Estate that is funded by the revenues from the sale of gas purchased with the bond proceeds. On August 2, 2018, Moody’s Investors Service has assigned an Aa2 rating to the Gas Supply Revenue Bonds.

PEG has entered into three natural gas production-sharing agreements (PSAs) with Public Gas Partners, Inc. (PGP), a Georgia nonprofit corporation originally composed of seven municipal gas and electric systems and joint action agencies that acquire and manage pools of long-term natural gas supplies on behalf of its members. Each PSA obligates PEG to pay, as a component of gas operations expense, its share of all costs incurred by the related PGP pool (Pool 1, Pool 2, or Pool 3) until all related PGP or participant debt has been paid and the last volumes have been delivered. In addition, each pool has the option, with at least six months’ notice, to require PEG to prepay for its share of pool costs, which may be financed by PEG through the issuance of bonds or some other form of long-term financing. PEG has decided to participate in joint financing by PGP on behalf of certain of its members. PEG’s share of acquisitions is 8.29%, 10.00%, and 2.66% in Pools 1, 2 and 3, respectively. The PSAs include a step-up provision that could obligate PEG to increase its participation share in the pool by up to 25% in the event of default of another member. PEG expects to receive physical gas supplies from PGP through at least 2027 for volumes and prices established by PGP.

In June 2006, at the time of the original financing issue, PEG entered into a 30-year financing agreement with its Members to secure the financial covenants and assurances necessary to secure PEG’s indebtedness. Under the financing agreement, Members are obligated to pay all costs billed by PEG for its services. PEG pledged its revenues as security for payment of the bonds.

In December 2008, PEG refunded the original Series 2006A bonds with Series 2008 variable-rate demand bonds for $32,455,000. Consistent with the prior series, the Series 2008 bond proceeds were used to finance the costs of acquiring, constructing and installing extensions and improvements to PEG’s original gas pipeline facilities.

The Series 2008 Bonds are held by TD Bank, N.A. (“TB Bank”). The Series 2008 Bonds bear interest at a variable rate based on LIBOR plus a margin and have a stated maturity of June 1, 2036. In connection with the purchase of the Series 2008 Bonds by TD Bank upon the remarketing of the Series 2008 Bones in December 2014, PEG entered into a Credit Agreement with TD Bank which contains certain covenants and agreements of PEG for the benefit of TD Bank. Pursuant to the Credit Agreement, on December 1 2021, TD Bank will have the option to cause PEG to purchase the outstanding Series 2008 Bonds at a purchase price equal to the principal amount thereof plus interest accrued to the purchase date.

In December 2019, Series 2019 Bonds were issued by PEG for the purpose of providing funds to refund the Series 2010B (Taxable Recovery Zone Economic Development Bonds), request an addition $5,000,000, to construct additional infrastructure, satisfy the 2019 Reserve Requirement by funding the Series 2019 debt Service Reserve Fund through the purchase of a surety bone and pay the cost of issuance of the Series 2019 Bond.

PEG was in compliance with the debt covenants associated with Series 2019 and 2008 bonds.

York County Natural Gas Authority (YCNGA)

  • 70,000 customers
  • 1750 miles of mains
  • Average Sales of 7,000,000 dts/yr
  • Service Area – York County and the northeast portion of Cherokee County (Blacksburg, SC)

YCNGA has provided safe and affordable energy solutions to residential, commercial, and industrial customers since 1957.

President & CEO – James T. (Jimmy) Sprouse, Jr

(803) 323-5304
www.ycnga.com

Lancaster County Natural Gas Authority (LCNGA)

  • 26,000 customers
  • 1,060 miles of mains
  • Average Sales of 2,000,000 dts/yr
  • Service Area – Lancaster County and the North portion of Kershaw County

LCNGA has provided natural gas service to homes, businesses, and industries since 1957.  LCNGA prioritizes low cost and efficiency when delivering natural gas supplies in their service area of Lancaster County.

General Manager – Rocky Hudson

(803) 285-2045
www.lcngasc.com

Chester County Natural Gas Authority (CCNGA)

  • 7,500 customers
  • 600 miles of mains
  • Average Sales of 4,000,000 dts/yr
  • Service Area – Chester County, Lockhart School District in Union County, and the Mitford and Blackstock areas in Fairfield County.

CCNGA began delivering natural gas in 1957 and continues to provide comfort and quality of life to their community.

General Manager – Jason Stewart, P.E.

(803) 385-3157
www.chestergas.com

PEGFA logo

Patriots Energy Group Financing Agency (PEGFA) was created in July 2018, pursuant to the Joint Agency Act, Title 6, Chapter 24, Code of Law of South Carolina, 1976 and as amended by the Joint Agency Act. PEGFA was formed by the Chester County Natural Gas Authority (CCNGA), the Lancaster County Natural Gas Authority (LCNGA) and the York County Natural Gas Authority (YCNGA) and, collectively, the “Members” as a joint agency for the purpose of enabling the Members to undertake the acquisition of long term natural gas supplies in order to achieve lower costs of natural gas in the competitive natural gas market.

In August 2018, Patriots Energy Group Financing Agency (PEGFA) issued 30-year Gas Revenue Bonds totaling $832,350,000. These proceeds have been used to prepay PEGFA’s first long-term gas supply agreement with the Royal Bank of Canada.

Over a 30-year period, the members of PEGFA will obtain some 216,865,600 MMBtus of natural gas supplies at a discount to the market price that is created by this structured transaction. The rest of the gas acquired will be sold to the Municipal Gas Authority of Georgia for resell to their members at a discount.

If the transaction goes to the full 30-year term, PEGFA members will save approximately $90,216,090. That represents a per unit savings of 10-15% of the cost of natural gas. The gas supply will make up approximately 50.85% of the gas required for the three Authorities until 2048, based on the last 12 months of usage.

The bonds are structured to be put back into the market “
in 2024, which will create a different unit discount. But Authorities are big winners even if their discount is less. Even if we obtain only the minimum discount provided for under our transaction, PEGFA will still see savings after 2023 of $95,953,228.

The Gas Revenue Bonds are not general obligations of the state, PEGFA, or its members, but are secured solely by a lien on the Trust Estate that is funded by the revenues from the sale of gas purchased with the bond proceeds. On August 2, 2018, Moody’s Investors Service has assigned an Aa2 rating to the Gas Supply Revenue Bonds.

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Joint Action Agency

A Joint Action Agency is an entity usually consisting of utility companies, municipalities who own public utilities, and/or municipalities (natural gas authorities) who purchase energy from private utilities. These entities act jointly for making decisions regarding the acquisition and delivery of energy resources or related services. Joint Action Agencies are a resource that utilities can use to accomplish their goals of providing safe, and low-cost natural gas supply/capacity and services to their members in an efficient and effective manner. Shared costs and mutual support make the effort manageable and provide an effective interface to the ever-growing complexity of the US natural gas industry. Purchasing low-cost, natural gas supplies also helps protect the local utility’s margins.

Do it once rather than multiple times and share the cost. Capacity and gas supply acquisition, intelligence gathering and continuous training efforts to maintain skills and knowledge are expensive undertakings. Joint Action Agencies provide the necessary products and services in a manner that is cost-effective for every member.

Small utilities have a difficult time getting the attention of suppliers because of the relatively small amount of energy they require. Aggregation of supply/ capacity requirements through a Joint Action Agency results in larger capacity and gas supply required by the utility. This allows for efficient use of resources in purchasing capacity and gas supply from the market, and because of the size of an optimized energy portfolio.

Municipalities (Authorities) have their staff and resources spread thinly over multiple areas of responsibility. Joint Action Agencies main focus is the safe, efficient, reliable, low cost capacity and gas supply to members. The focus created by dedicated Joint Action Agencies is even more important now as the complexity of the natural gas industry increases.

The natural gas industry, now more than ever, requires talented and experienced people and tools. These resources are needed to capture data, observe, analyze, and prioritize trends and developments, and make informed decisions about which strategies to use and how to steer the gas utility. Because of existing day-to-day operations, most utilities typically cannot justify the cost of these resources. Joint Action Agencies are an ideal solution to gather and effectively use these resources in an efficient manner for all members.

External entities, whether state and federal governments, regulators, or financial institutions, view a well-run central aggregated entity, such as a Joint Action Agency, with more credibility, respect, and relevance than they do a single natural gas utility. The ability of a Joint Action Agency to communicate, educate and articulate needs to external entities is strengthened by the single unified message from the members. Additionally, a well-run Joint Action Agency using economy of scale, efficient operations, and portfolio optimization will earn improved reputation and credit ratings.

Strategic Plan

Patriots Energy Group Executive Committee and Operations Group produced the PEG 2025 Strategic Plan in the spring of 2021.

Patriots Energy Group, a South Carolina joint action agency, supplying energy solutions to the natural gas authorities of York, Chester and Lancaster counties, delivers the safest, most reliable and economic service to its members and future partners.

As a joint action agency in upstate SC, we are about our past, our present and our future. We have a history of competitive rates, safety and reliability. Based on our ability to implement our strategic plans, we are focused, efficient and effective in providing premium services. Given that our planning provides our road map for success, and that we act in a collaborative nature, we continue to foster economic growth in upstate SC. Based on our well-known identity we are able to attract companies and industries to our service area. As a continued leader in cutting edge technology, infrastructure and facilities, we are able to offer mutual services among our members. We are preparing for tomorrow’s future, by learning from our past and our continued success means savings for you our members and customers.

Through a collaborative vision, we are reliable, safe and responsible.


Annual Report

Fiscal Year Report Card

12-Months Ending DecemberDekatherms SoldMember Customer CountHDDs
202013,000,000102,0003,000
201913,907,789101,9702,866
201814,235,99199,4452,975
201712,645,63396,3832,359
201613,208,55194,1952,281