The City of Winfield plans to spread the cost of purchasing a portion of customers’ natural gas at never seen before prices during the mid February winter storm over a six-year period, the City said in a press release Wednesday.
Over the course of the six-year period, the increase amounts to about $29 per month for an average user.
The amount will be based on usage and to allow for those costs to be around $6 per month during the summer months when electricity use is higher and $65 during the winter months for the average user.
While officials in natural gas utilities across the region worked to keep supply flowing during record lows over the prolonged period, costs increased nearly 200 times normal prices, the City said.
“The costs from this storm are still being processed with bills from suppliers and pipelines not all received,” the release stated. “The estimated impact for Winfield customers could be approx. $13M to be recovered through natural gas utility charges.
“The City is actively working to reduce this total.”
In the meantime, the City of Winfield has been approved for a low-interest loan from the State of Kansas to ensure the future flow of natural gas supply. The City’s first loan payment will be due in July.
The average customer used approximately 30 to 40 percent more natural gas than a normal February, according to local officials.
“We will not send immediate bills reflecting the entire situation at hand,” the City said.
The bottom line: In addition to the 30 to 40 percent bill increases due to customers’ increased February energy use, the City needs to begin the process of “recovering” for the market cost swings to make the initial payback on the loan. To minimize the current impact on customers’ bills from the extraordinary pricing, the City is planning a spread of the costs over a six-year period.
Under the City’s normal rate process, customers are charged for the same commodity price at which the utility purchases it.
That cost is usually recovered in one month. But in this case, that would make customers’ bills extreme. This proposal provides a longer recovery period and a longer period for customers to pay that back. Additionally, this process more equitably distributes the costs between residential, commercial and industrial users.
Beginning with the Wednesday, March 17 billing, customers should expect bills reflecting the increased usage costs.
Additionally, customers will see the normal adjustment for additional cost per CCF (the billing unit) used. For March, April and May the storm event’s additional cost will be set at $.80 per CCF. Following this initial period, the usage cost adjustment would then lower to a scheduled amount over the next six years.
This amount is still being determined but will be tied to usage to allow for lower costs during the summer months when electricity use is higher.
This method also allows the City to further lower the adjustment should the costs be ultimately reduced through negotiation, litigation, or other relief.
“Governor Kelly, our state legislators and our congressional delegation are at work on our behalf,” the City said. “Our local legislators’ support for the City Utility Low-Interest Loan Program will ease an immediate timing issue and sets up the quickest path to spread out these costs for customers.
Last week, Governor Kelly expanded eligibility for the Low-Income Energy Assistance Program to help Kansans with high bills.
Our Congressional Delegation is advocating to allow cities to use COVID-19 stimulus funds for this issue as well as continuing to push for investigations into price gouging.”
