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February 2021 Board Update

Feb 25, 2021

Board Approves Two Variances of Fuel Cost Recovery Due to Severe Storm

The Board of Public Utilities today approved two variances to policies due to last weeks extreme weather conditions and the cost implications on natural gas customers bills. This is intended to minimize the impact for all natural gas customers during this unprecedented weather, effects of natural gas shortages, and price hikes throughout the entire Midwest.

The total cost of this unprecedented weather event resulted in unplanned natural gas fuel purchases of approximately $40 million to initially be covered by an Operational Contingency fund. The recovery of actual fuel costs is done semi-annually, but due to the volatility of the market during this time, the Board has approved two policy variances which will now go to Springfield City Council for first reading on March 8:

  • The first variance allows for an extended timeframe for the recovery cost of natural gas and propane necessary to meet the demand of City Utilities natural gas customers during the event. The Board of Public Utilities is asking City Council to allow CU to distribute the fuel cost recovery over 24-months through a $0.20 charge per therm of natural gas used. This would be shown as approximately $3.00 additional per month in months when natural gas is used less, and approximately $27.00 during higher use months.
  • The second variance allows for a modification for customers on the Natural Gas Curtailment rate. This rate is in place for commercial and industrial customers who use 30,000 dekatherms or more of natural gas per month. The variance allows the penalty for this event to be 1.5 times rather than the contractual 10-times market cost of natural gas that used during an ordered curtailment period. The Natural Gas Curtailment last week lasted for six-days and is the longest curtailment ordered by City Utilities. Curtailment customers will pay for all natural gas used and assessed the 1.5 times market price penalty. (The Curtailment policy has been in effect since 1989. This special variance allows a penalty to be assessed for non-compliance, yet is not as severe due to the length of the curtailment order and unprecedented market prices. Curtailment customers do not pay for natural gas storage or transmission charges but are required to have supplemental on-site resources should a curtailment be ordered.)

“We know our community is hearing of devastating bills in other states and is worried that similar issues will happen here,” said Gary Gibson, General Manager and C.E.O of City Utilities. “The Natural Gas purchasing methods we’ve used for many years plus investing in a Propane-Air Peak Shaving Plant, have provided substantially lower impacts to all of our customers. It is during the past few weeks, that the value, and safety, of having a “hometown” public utility was evident as our community weathered this storm and helps reduce the impacts that many others are facing. We are working with other agencies to investigate the cost escalations and suggestions of price-gouging so we can recover any funds due to our customers.”

  • Fuel cost adjustments, due to the past weeks weather event, will not be reflected until April utility bills.
  • Customer usage during this weather event was averaging 30 to 40 percent higher. Any increases seen in the March bill do not reflect rate changes.
  • Customers who have questions or concerns with bills should contact our Customer Service Representatives at (417) 863-9000.