2021 Winter Weather Event – FAQs
WHY IS CITY UTILITIES IN THE SPP?
The Southwest Power Pool, or SPP, is one of 9 regional transmission organizations. The SPP is a non-profit corporation that is mandated by the Federal Energy Regulatory Commission (FERC). By being a part of the SPP, City Utilities can ensure reliable supplies of power, adequate transmission infrastructure, and competitive wholesale priced electricity.
WHY DID THE ROLLING BLACKOUTS HAVE TO HAPPEN?
SPP is responsible for the overall reliability of our region. When the demand for energy in the region exceeds the supply, the power grid becomes unstable. The rolling blackouts allowed our area to avoid widespread blackouts that could have left households without power for days. The rolling blackouts provided stabilization to the grid. All SPP utilities were required to reduce the demand on their systems.
WHY DID I NOT RECEIVE MORE NOTICE OF THE ROLLING BLACKOUTS?
When SPP ordered the reduction in electric load, that had to be done immediately to maintain the stability of the electric grid. We wish that we could have given notice prior to the rolling blackouts starting, and since then we have been working on better communication methods should an event like this ever happen again.
WHY DID WE HAVE ROLLING BLACKOUTS BEFORE THE PROPANE PEAK STATION WAS ONLINE? WASN’T THE POINT OF PAYING FOR THE PEAK STATION TO AVOID BLACKOUTS?
The peaking station is designed to add capacity to the natural gas system when we are in extreme scenarios, like what our community experienced the week of February 15. The peaking plant has not been used for electric generation.
During this weather event, the peaking station was used exclusively, and at capacity, for our natural gas customers. This was the first time the propane peak shaving station had been used.
WHAT DOES CITY UTILITIES DO TO ASSURE NATURAL GAS PRICE STABILITY?
City Utilities works year-round to negotiate affordable rates on behalf of our customers. The utility buys natural gas in the summer months when prices are generally lower and stores it until it is needed in the heating season when prices are generally higher. CU also secures both short and long-term fixed price contracts for additional price stability. Due to the amount of natural gas being used by our community from February 11-19th, we maximized our ability to withdraw from our storage each day forcing the utility to purchase a portion of natural gas at market prices to keep homes in our community heated.
Just like homeowners shop around for food and household items, City Utilities shops around for natural gas providers. City Utilities maintains a variety of contracts with natural gas suppliers with varying terms to meet the needs of our community.
WILL THE FUEL ADJUSTMENT AFFECT ME IF I AM ON LEVEL PAY? SHOULD I EXCPECT TO SEE A CHANGE WHEN MY LEVEL PAY RENEWS?
Even though you are on Level Pay, you are still charged for what you use. When City Utilities reviews your account to balance it with your usage, then your Level Pay amount will be adjusted accordingly to include the fuel adjustment. A month before your Level Pay changes, a message will be placed on your bill to notify you of any changes. You may request a review at any time by contacting Customer Services at 863-9000.
HOW MUCH WILL MY BILL GO UP?
Your specific bill impact will depend on how much natural gas you use during each month. City Utilities has proposed a variance to its rate (Purchased Gas Clause) so the purchased gas cost recovery can be spread out over 24 months, instead of the regular 6-month period, to try and lessen the impact to your household. Recovery of the February gas costs will begin on your April 2021 bill and will be on a per therm basis, meaning it will only be applied to the amount that you use. This is still subject to City Council approval. It is estimated that the amount will be approximately $0.20 per therm to help recover the nearly $40 million CU incurred during this unprecedented event. You have the ability to control how much impact that will have on you individually by continuing to monitor your individual usage.
WHEN WILL THIS AFFECT MY BILL?
The gas cost recovery for the February weather event will be seen on the bill you receive beginning in April 2021. City Utilities has proposed a variance to their City Council approved rate to spread these increased costs over two years, rather than 6 months, to lessen the impact to customers.
I HAVE HEARD THAT THE TOTAL AMOUNT PER CUSTOMER IS $375. CAN I PAY THAT ALL AT ONCE?
The $375 impact was an estimate provided to give some idea of how much an average residential customer could expect. The actual amount may be more or less depending on how much the residential customer uses. The under-recovered amount will be collected over a period of time as an additional cost per therm, rather than a lump sum. City Utilities has proposed a variance to their City Council approved rate to spread these increased costs over two years, rather than 6 months, to lessen the impact to customers.
I DON’T USE GAS IN MY HOME. MY HOME IS ALL ELECTRIC. WILL I SEE A FUEL ADJUSTMENT/RATE CHANGE FOR MY ELECTRIC BILL?
The fuel adjustment rate for electric will be adjusted as it normally is every six months. Therefore, “all electric” customers will not see the impact of the natural gas cost recovery adjustment. The gas recovery adjustment will only apply to customers who use natural gas. Furthermore, natural gas customers will only be charged for what they used.
WHAT STEPS ARE YOU TAKING TO PREVENT THIS FROM HAPPENING AGAIN?
We are looking at this event to see what can be done in the future, or if there is a similar situation, how can we do better. This review is also being done by the Southwest Power Pool and other utilities across the entire Midwest.
WHY AREN’T YOU USING THE MILLIONS OF DOLLARS IN SURPLUS FROM LAST YEAR TO PAY FOR THIS?
City Utilities used cash reserves to pay for the natural gas, even at the higher prices. However, to maintain the utilities’ credit rating – which in turn saves customers millions – those reserves must be restored to ensure our utility remains reliable for our community.
IT’S NOT FAIR THAT A PERSON WITH A STUDIO APARTMENT WILL PAY THE SAME $375 AS A PERSON WITH A LARGE HOME. PLEASE EXPLAIN WHY?
You likely will not. The $375 per residential customer is just an estimate based on the additional gas costs incurred during this event and the average residential customer usage. The cost recovery will be part of the purchased gas cost adjustment, which means that what you pay will be based on your actual usage. City Utilities has proposed for the gas cost recovery from this event to be spread out over 24 months, instead of 6 months, to help minimize the impact on everyone.
WOULD THIS CRISIS HAVE BEEN AVOIDED IF CU HADN’T RETIRED JAMES RIVER POWER STATION?
The James River Power Station reached the end of its life, and the plant not being in service during this February’s weather event, had no impact on the outcome our community experienced. The last time the James River Power Plant used coal as a fuel was in 2015. After that, it operated as a natural gas peaking plant. Natural gas would not have been available during this event due to multiple gas pipeline and gas supplier issues, including the suppliers’ pipes freezing in Texas.
WHO WAS ASKED TO CONSERVE OR REDUCE LOAD?
All City Utilities customers, commercial and residential, were asked to reduce their usage during this weather event. It took the whole community coming together to lessen the impact. Many of our largest industrial customers had their own fuel source as a backup to their CU gas service and helped the community by removing their gas load from the system.
WILL ELECTRIC-ONLY CUSTOMERS SEE A SPIKE IN THEIR BILL?
Due to the utility’s diversified portfolio mix, City Utilities currently believes electric only customers will likely not see a significant impact on their bill. However, CU is presently evaluating customer’s bill impact associated with the actual costs of electricity during this February event. As soon as those impacts are known, we will share that information with our customers. Electric customers will only pay for their usage. If you used more electricity in February, then your bill will reflect your electric usage during that time.
DID PRICE GOUGING HAPPEN? WILL THERE BE LAWSUITS PURSUED TOWARDS NATURAL GAS PRICE GOUGING?
It is too soon to tell. City Utilities is currently tracking the facts of the weather event. There are active investigations going on at the federal and state levels to review the practices of natural gas suppliers during the timeframe of the rolling outages.