Extreme cold has cost the City of Winfield $10 million over six days due to unprecedented increases in natural gas prices, according to Winfield City Manger Taggart Wall.
In a letter to residents Thursday, Wall said natural gas costs for the city typically amount to $1.6 million over the course of an entire year.
“While typically trading in the daily index at less than $3.00/MMBTU, the daily index on the City’s pipeline beginning Feb. 13 soared over 100 times the norm and landed at $375.00/MMBTU,” Wall wrote.
“This was compounded by extreme rises in demand.
“On Feb. 17 that price reduced to $300.00/MMBTU and late last night, I was notified that the price for Feb. 18 hit another all-time high of $428.00/MMBTU.”
Wall said that at this time, estimated costs to customers for six days of energy supply would be equal to approximately 25 times a normal natural gas billing.
Wall urges citizens to contact elected leaders at the state and federal level.
“We are exhausting every effort and will leave no rock unturned to seek relief for our community,” Wall said.
“You can join us in this effort by reaching out to state and federal authorities and letting them know that the impact of these prices cannot stand.
“These costs are detrimental to the economic prosperity of our community.”
Wall’s full letter can be read below:
Dear Residents—
As you know, beginning Friday February 12th, the City of Winfield began managing a natural gas emergency for the community.
On February 12th, the City was notified by its commodity manager, the Kansas Municipal Gas Agency, that the commodity of natural gas had reached never before seen price levels.
We took immediate action to contact the system’s largest users and requested immediate operations modifications to reduce the use of natural gas.
This included my request to USD 465 to cancel school on Monday February 15th. We also notified all customers via social media and other news outlets to request a reduction in natural gas usage.
As experts in the natural gas purchasing markets since 1990, KMGA follows industry standards of purchasing gas for the City of Winfield and 48 other member cities.
This pooling together has afforded our customers reliable and affordable natural gas. KMGA utilizes a four-prong approach to their gas supply portfolio.
Approximately one third of gas is pre-purchased on a fixed-price contract to cover the winter heating season, another third is bought one month ahead based on forecast models and the final third is bought in the daily market.
In addition, we optimize our storage assets by purchasing gas in the summer months at lower prices and withdrawing from the storage during high demand and prices. This is an industry wide model.
We have a large group of over 18 suppliers/marketers to work with each day.
While typically trading in the daily index at less than $3.00/MMBTU, the daily index on the City’s pipeline beginning February 13th soared over 100 times the norm and landed at $375.00/MMBTU.
This was compounded by extreme rises in demand.
On February 17th that price reduced to $300.00/MMBTU and late last night, I was notified that the price for February 18th hit another all-time high of $428.00/MMBTU.
As wind chill temperatures dipped as low as -31 degrees, our number one priority has been to maintain the flow of natural gas to our homes, hospital and businesses.
This decision was made to preserve human health and property assets.
Those were balanced against our local economic welfare and people’s need to also go to work and for our factories to survive as well.
That process has been a tenuous one. The majority of our natural gas usage is consumed in our homes.
As the situation continued, we again called on schools to remain closed and for everyone in the community—especially large system users to reduce their usage of natural gas.
The cost of this event to our community has been one that we have had very little control over.
We are seeking every avenue of relief as this is an insurmountable cost for us that, without relief, will be felt for years to come.
At this time, estimated costs to customers for six days of energy supply would be equal to approximately 25 times a normal natural gas billing.
We have incurred over $10M costs in six days.
Our typical gas purchase is approximately $1.6M for the entire year.
As the situation continues at the time of this communication, we do not have the full scope of this impact to our community and cannot give details yet on how these costs will be passed on to customers.
I can assure you that, together with our local elected officials on the City Commission, we will be working continuously on a plan to balance the impact of this now evolving and devastating financial situation.
Over the weekend and this week, the City and KMGA worked around the clock on this situation and have brought in Federal Energy Regulatory Commission legal experts, legislative lobbyists, Kansas Municipal Utility leadership and the City’s own natural gas legal team.
We have been in contact with state and federal leadership throughout this crisis and continue to have daily dialog.
It was our proactive approach that led to Governor Kelly as well as the Cowley County Commission issuing a State of Disaster over this issue.
We are reaching out to the attorney general and seeking inquiries into these never-before-seen levels of natural gas pricing.
This is a issue much larger than just Winfield. Utilities across the Midwest will be impacted by this event.
We are exhausting every effort and will leave no rock unturned to seek relief for our community.
You can join us in this effort by reaching out to state and federal authorities and letting them know that the impact of these prices cannot stand.
These costs are detrimental to the economic prosperity of our community.
You can also continue to impact a reduction of the impact of these prices by reducing your natural gas usage.
I know these are difficult times. We do not have all the answers yet. We are continuing to ask people to make sacrifices to lower our natural gas consumption.
We will continue to provide updates to you. We will continue to fight for you—for our community.
Respectfully,
Taggart Wall
City Manager
