Semstream Says Bankruptcy Will Not Affect Payson, Acc Unsure


Despite SemStream Arizona's assurances that Payson and Page customers won't be adversely impacted by the bankruptcy of its parent company, Arizona Corporation Commissioner Kris Mayes said Monday she's hardly placated.

In an Aug. 6 letter, SemStream Arizona President Douglas Mann asserted, "I can assure the commission and our customers that SemStream Arizona's business operations are continuing as usual."

Mann's letter came in response to a July 29 letter from an ACC lawyer, Janice Alward, which asked SemStream for measures it has taken to buffer customers here from the impact of parent company SemGroup's financial turmoil.

Mann wrote that SemStream continues to work with the same gas delivery companies it always has and is nearly finished purchasing winter heating supplies.

Mann also alerted ACC that SemStream Arizona intends to file for a new surcharge for "recovering our already incurred gas costs for the Page system." The company has under collected by $767,000 in Page, according to Mann.

"We stress that filing and request [sic] do not have anything to do with, nor have they been caused by, the bankruptcy filings," Mann wrote.

Mayes said the letter was insufficient. "It's certainly not adequate given the seriousness of the situation," she said. "There are a number of outstanding questions."

Mainly, that includes whether a storage facility will be built in Winslow.

Mayes said she will propose this week that a public meeting be scheduled so ACC can solicit answers from SemStream regarding SemGroup's bankruptcy.

SemGroup filed for bankruptcy July 22 after acknowledging $3.2 billion in losses after failed trading on the oil futures market. SemStream Arizona has not filed for bankruptcy, Mann stressed in a letter to Alward.

SemStream was also late in paying its franchise fee to Payson. The quarterly fee, based on sales, ranges from $10,000 to $40,000.

The quarter in question ended June 30, over three weeks prior to SemGroup's bankruptcy filing.

Payson's legal staff sent SemStream a letter on July 29 demanding payment, which they received last week.

Mann also wrote in his letter to ACC that he was aware of Arizona's law requiring commission approval prior to the company's transfer or sale.

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