Evergy and KS utilities share plans to recoup costs from winter storm
ESKRIDGE – For Eskridge officials, the breathtaking prices of February’s winter storm Uri never cease to amaze, even though it has been almost six months since the freezing cold snap ravaged the Great Plains.
It is one of more than 50 cities with municipal gas agencies, leaving them more than most to the whims of extremely fluctuating markets. The Kansas Municipal Gas Agency’s total Eskridge bill was $ 1.1 million, 10 times more than its total gas costs for all of 2020.
The relief came at the right time, however, as Kansas lawmakers approved a loan program for cities watching these mind-boggling bills, allowing them to pay their bills. exorbitant costs without overburdening residents with dramatic rate increases – or having to dissolve their city all together.
“It was almost imperative that we had this funding facility,” said Justin Rush, chairman of Eskridge City Council. “It was either that or sticking our customers thousands of dollars bills, and we just knew we couldn’t do that. When that solution came along, it was immediately obvious to us to take it.”
A dramatic increase in energy demand in the Midwest and South has seen utility companies institute progressive blackouts, affecting thousands of Kansans.
But months later, cities and utility companies are starting to figure out how best to pay the bagpiper.
In the case of Eskridge and many other local governments, that means developing a plan to repay the state loan. In other cases, utility companies are submitting proposals – subject to the Kansas Corporation’s Commission for consideration – that could result in increased subscriber bills for years to come.
Cities chart the course to pay off loans – or take gas bills to court
Eskridge is one of many towns trying to find a way to pay off the loans.
Their plan required approval from state regulators due to the city’s population, although municipal utilities are generally not covered under the jurisdiction of the KCC.
It dictates an increase of $ 2.54 per thousand cubic feet of natural gas. The objective is to space out the repayment of the loan over one year, with the possibility of reassessing the increase at the end of the calendar year and possibly spreading it over a longer period, while maintaining the cost for residents even more towards the end of the calendar year. low.
Rush said the hope was it would disrupt residents and businesses in the city as little as possible.
“That was our main goal, to try to stretch (the payback) as long as possible,” he said.
Municipalities that have taken advantage of low-interest loans take different approaches. Some aim to pay it off as quickly as possible. Others choose to extend the process into the future, using the 10-year window they have to repay the loan.
Whether the charge is part of a monthly increase in a consumer’s gas bills or a single flat rate also differs from municipality to municipality.
But at least one city has taken a more aggressive path: pursuit.
In March, the town of Mulberry, in Crawford County, along with many of its 500 residents, filed a lawsuit against British Petroleum, arguing that the energy multinational had engaged in price hikes during winter storms.
The trial alleges that prices have risen from just over $ 2 per unit to over $ 300 per unit. The city ultimately opted out of the state’s low-interest loan program, arguing it would reward the high prices.
“It’s ridiculous,” said James Zakoura, Mulberry’s lawyer in the case, in an interview last month.
The case is currently on hold as the two sides argue over whether the case should go to Crawford County District Court or the federal system.
Evergy, gas utilities outline plans to recover costs
Likewise, utilities, both electric and gas, have begun to describe how they plan to recoup their own costs from the winter storm blast, with varying effects on taxpayer bills.
All the public services have not yet filed a file with the regulators. Kansas Gas Service, the state’s largest gas supplier, remains the most notable, although experts expect them to outline their plans in the coming weeks.
But customers of Evergy, the electricity supplier for much of eastern and central Kansas, could see their bills increase over the next two years, according to the documents filed with the KCC earlier this month.
The increase would be relatively modest – $ 4.69 per month for this period – in an attempt to offset the $ 153 million in extraordinary costs incurred by the company. The KCC has already given Evergy the option to defer costs, but the agency is reviewing the exact plan and seeking public comment.
Likewise, the KCC is evaluating a plan from Black Hills Energy, a natural gas supplier primarily serving south-central Kansas.
Their proposal would have a slightly bigger impact on customer bills: an additional $ 12.23 per month for the next five years, with the revenue passed through to wholesale suppliers who sell gas to companies like Black Hills.
The Citizens Utility Ratepayer Board, the state’s consumer advocacy body for taxpayers, is also examining what these proposals, along with other smaller utility filings, would mean for customers, David Nickel said, consumer advisor at CURB.
“Our view is that the sooner we can resolve these issues fairly and thoroughly, the better off everyone will be, as these costs are suspended,” Nickel said.
Bigger questions about rising prices remain unanswered
More general questions about the winter frost, including how and why prices have increased and whether dealers have taken advantage of historic low temperatures to increase their profit margins.
Attorneys General for Midwestern states, including Kansas, have launched inquiries into whether rising prices played a role in the crisis, and the Federal Energy Regulatory Commission is also investigating whether market manipulation has taken place.
The KCC is also continuing to examine how to improve the reliability of the power grid and whether there are more significant improvements to be made in the event of another severe winter storm.
While Kansas implemented phased blackouts as part of an effort to reduce pressure on the regional grid, the problems were not as severe as those in Texas, where millions of people were without electricity and hundreds died.
The outcome of these investigations is unclear, as is the timeframe for their completion. In the meantime, Nickel said, the debate on how to pay the mind-boggling energy bills would continue.
“We are confident that these investigative efforts will be crowned with success and determine whether or not there have been profits,” he said. “It’s just that it’s a very long and laborious process.”