Tag: Natural gas prices

Settlement approved for Atmos Energy to recover 2021 winter storm costs

Customers’ bills estimated to go up $5.78 a month over 10 years

The Kansas Corporation Commission has approved a settlement agreement and financing order giving Atmos Energy authorization to issue securitized bonds to recover $92.7 million in deferred costs and associated carrying costs resulting from the 2021 Winter Storm Uri.

The use of lower interest securitized bonds is expected to save ratepayers an estimated $8.5 million compared to recovery through traditional rates, according to a KCC news release.

The exact amount of the winter weather recovery charge Atmos customers will see on their monthly bills won’t be determined until the bonds are issued due to variables such as term and interest rate based on current market conditions, according to the KCC. However, based on the interest rate estimates provided during the proceeding, it was estimated the monthly charge would be approximately $5.78 per month over 10 years. Without securitized bonds, ratepayers would see charges of approximately $10.55 per month over five years using traditional ratemaking.

During the winter storm, the KCC ordered regulated utilities to do everything possible to continue providing natural gas service to its customers, defer the charges, and then develop a plan to allow customers to pay the unusually high costs over time to minimize the financial impact, according to the KCC. The commission emphasized it was in the public interest for Atmos to incur the extraordinary costs to ensure the integrity of the gas system and ensure continuous service to its customers. A lesser response could have resulted in catastrophic property damage and serious public safety implications, including potential loss of life, the KCC stated.

In the wake of Winter Storm Uri, the Kansas Legislature passed the Utility Financing and Securitization Act, which allows utilities to use securitized bonds to pay for extraordinary costs at more favorable terms than traditional financing.

Wholesale natural gas prices are not regulated by the KCC or any other government entity. The U.S. Congress deregulated natural gas prices back in the mid-1980s. Prices are market driven by supply and demand. The KCC has stated that any proceeds recovered by Atmos resulting from state or federal investigations into possible market manipulation, price gouging, or other areas, will be passed on to customers.

Today’s order is available at https://estar.kcc.ks.gov/estar/ViewFile.aspx/22-538_Order_Approving_Unanimous_Settlement_Agreement.pdf?Id=aafadfba-968c-4bcb-9855-a314508d0d99&utm_medium=email&utm_source=govdelivery.

A recording of today’s KCC business meeting featuring comments by commissioners, is available on the KCC YouTube channel at https://www.youtube.com/watch?v=UcSxzaGi6jE.

Higher energy costs forecast, KCC says

Higher energy costs are expected in the future, based on current national forecasts, according to the Kansas Corporation Commission.

This will likely increase the cost to cool homes and businesses this summer and heat them this winter, according to the news release from the KCC.

The KCC advised homeowners to weatherize their homes and undertake energy efficiency investments as they are able.

Like many other energy and commodity prices, monthly wholesale natural gas prices have recently increased to levels not seen in the United States since September 2008, the KCC stated.

Wholesale electricity prices have increased as well. On April 18, the New York Mercantile Exchange (NYMEX) futures price for natural gas climbed to nearly $8/MMBtu (Metric Million British thermal units) for May and June, with prices over $8/MMBtu for the rest of this year and upcoming winter. For context, natural gas prices regularly traded in the $2-$3/MMBtu range for much of the last decade.

The Energy Information Administration (EIA) recently released its Short-Term Energy Outlook indicating energy price forecasts for the rest of the year are subject to heightened levels of uncertainty from factors such as the continuing war between Russia and Ukraine, decisions of OPEC+, and the rate at which U.S. Oil and Natural Gas producers increase drilling in response to higher prices.

The KCC has launched an online resource to provide additional information, help consumers minimize the impact, and find financial and weatherization assistance. The information is available at https://kcc.ks.gov/consumer-alert-spring-2022

Atmos natural gas bills to be going up

As much as $5.19 more a month could be charged

Atmos Energy natural gas bills will be increasing to pay for last February’s high natural gas costs, according to an announcement today from the Kansas Corporation Commission.

The KCC approved a settlement agreement for Atmos to recover $102 million in costs incurred during the February 2021 winter storm.

The KCC estimated that residential customers would see an increase of from $3.75 to $5.19 a month based on a 10-year or 15-year term, according to a KCC news release, although the exact amount of the increase was not yet available.

Parts of Wyandotte County are served by Atmos, while other parts of the county are served by the Kansas Gas Service Co. The KCC also approved a settlement agreement for these higher winter February 2021 costs for Kansas Gas Service Co. in February. A news release stated Kansas Gas Service residential customers may pay an estimated $5 to $7 more a month over a period of five to 10 years.

The KCC stated that under the terms of the settlement, Atmos will apply for Securitized Utility Tariff Bonds to obtain the most favorable financing to reduce costs to ratepayers. The 2021 Kansas Legislature passed the Utility Financing and Securitization Act, which allows utilities to use securitized bonds to pay for extraordinary costs at more favorable terms than traditional financing. The KCC will review the Atmos plan to ensure the lowest possible bond costs will be passed on to customers, according to the news release. The application and review process could take six to eight months.

If ratepayers had been asked to repay the charges over a one-year time period, the cost would have been an additional $47.40 per month, according to the KCC.

The KCC stated it was in the public interest for Atmos to incur the extraordinary costs to ensure the integrity of the gas system and ensure continuous service to its customers.

“A lesser response could have resulted in catastrophic property damage and serious public safety implications, including potential loss of life. When extraordinary costs are unavoidable and necessary to benefit the public, it is in the public interest to allow recovery of such costs,” a KCC spokesman stated.

Today’s order also stated that any proceeds received by Atmos from ongoing federal or state investigations into market manipulation, price gouging or civil suits will be passed on to customers.

Atmos Energy delivers natural gas to about 135,000 Kansas customers.

The KCC order for Atmos can be viewed at https://estar.kcc.ks.gov/estar/ViewFile.aspx/20220324102715.pdf?Id=a5b88cfd-87b2-4f84-8f1a-1753cf72b2f8&utm_medium=email&utm_source=govdelivery.

This story has been updated to reflect the estimates of Kansas Gas Service monthly increases for residents.