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   Kentucky Frontier Gas
   PO Box 408
   Prestonsburg, KY 41653

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   Kentucky Frontier Gas
   2963 Ky Route 321 North
   Prestonsburg, KY 41653

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Kentucky Frontier Gas

      Kentucky Frontier Gas purchased BTU Gas on August 20, 2012.

      Frontier was appointed operator of B.T.U. Gas Company on August 11, 2011 by the US bankruptcy trustee in Case No. 10-70767-TNW. The former owners of BTU were involved in a personal bankruptcy case which encumbered BTU's ability to continue operations. BTU didn't have credit to buy adequate gas supply for its customers which led to outages, and the utility was in danger of bankruptcy. Separately, BTU was in jeopardy with Kentucky Public Service Commission over pipeline safety compliance.

      In its operation of BTU, Frontier found the BTU system runs with inordinately high gas losses. For the last 5 months in 2011, about 59% of the gas purchased by BTU simply disappeared. Gas utilities normally average less than 3% losses. Some of this discrepancy is from leakage, but a leak survey in 2010 indicates leakage is a minor issue. Some of the lost gas is due to inaccurate measurement, since most BTU meters are older and were never tested as required by KyPSC.

      But Frontier believes that most of the loss is simply customers taking gas without meters or payment. BTU had many "deals" to give Free Gas for various reasons, sometimes for a pipeline easement (which a distribution utility almost never buys) or as a gift to friends or churches or for local political reasons.

      Such deals are not allowed by KyPSC or any other state, since all other customers must pay for any "Free" Gas given to another. By law, every customer taking gas must have a meter; and there are almost no instances where Free Gas is given to any customer by a regulated utility. Frontier has installed proper meters and regulators on more than 60 customers that were taking Free Gas.

      Frontier also suspects other pipeline entities take gas from illicit connections. All of these factors lead to BTU losing 2/3 of the gas it purchased, which in turn was bankrupting the utility. BTU Gas was not going to survive without intervention.

      Frontier made numerous arrangements for new gas supply, since BTU lost all of its former suppliers. Frontier eliminated many Free customers, fixed some leaks, and improved metering. Frontier as operator of BTU filed several Gas Cost Adjustments starting in Oct11, which is a rate calculating process that every other gas utility uses. Frontier has filed quarterly GCAs since then.

      Frontier is now authorized by KyPSC to consolidate BTU Gas into the Frontier brand, with the same rates and rules and rights as every other Frontier customer.

      In combining BTU into Frontier, none of these steps were easy. None of these steps were popular, since the price of gas service has necessarily increased. This was particularly true for those who got "Free" gas for years. If you believe you are in this group, please contact Frontier immediately.

      Frontier is committed to greatly improving the service of BTU Gas, and to make it up-to-date and reliable. Contact Frontier or the KyPSC if you have further questions or comments.


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