Kansas Gas Service Says Customers Can Expect Higher Bills

This chart from macrotrends shows the Henry Hub natural gas spot price rose from $2 to $23.86 on Feb. 17.

By Michael Hooper 

Natural gas prices soared to unprecedented levels during the extreme cold spell in February. Customers of Kansas Gas Service can expect their bills to be much higher than normal. The spot price of Henry Hub natural gas prices climbed from $2 per mcf to $23.86 by Feb. 17 during the cold weather event.

"Due to the historically low temperatures that remained below freezing over an extended period of time, we experienced much higher natural gas demand that resulted in a significant increase in natural gas market prices on a portion of the supply purchased during this period," said Dawn Tripp, manager of public relations for Kansas Gas Service. "Customers should prepare for higher natural gas bills because of the increased usage for home heating."

ONE Gas (OGS), of Tulsa, owns Kansas Gas Service and also serves customers in Texas and Oklahoma.

"Many of our service areas haven’t seen such low temperatures in more than 100 years," Tripp told Thoughtful Investor. "The higher amount of gas used will be reflected on customers’ bills. We do not set the price, nor mark up the price we pay for the gas. We purchase the gas from suppliers and then deliver it to customer homes. The price we pay the suppliers for gas is the price customers pay."

A review of natural gas prices show the price was for many years between $2 and $4 per million BTU. One million BTU is approximately equal to 1,000 cubic feet of natural gas. A unit of 1,000 cubic feet of natural gas is one mcf. It's not uncommon for a household to use 1 mcf in a single day of heating in the cold weather months. When the price of one mcf soared from $2 to $23.86 on Feb. 17 during the cold weather spell, companies that needed gas would have to pay the spot price on the open market and then pass it onto their customers.

It's difficult to speculate here, but it's possible customers will see their bills rise 3 to 10 times over their normal bills. That is quite a variance but Kansas Gas Service would not provide hard numbers.

Tripp said Kansas Gas Service is working with the Kansas Corporation Commission on "options related to the impact to customer bills associated with the significantly high natural gas market prices during the cold weather event."

She said the KCC had issued an order that authorizes natural gas and electric utilities to defer any extraordinary costs incurred associated with ensuring that customers continue to receive service during the cold weather event.

She said Kansas Gas Service will make a filing with the KCC which includes a plan to minimize the financial impact of the cold weather event on customers over a reasonable period of time.

The KCC on Feb. 15 issued on Emergency Order authorizing natural gas and electric utilities under KCC jurisdiction to defer any extraordinary costs they incurred associated with ensuring that customers continued to receive service during the cold weather event. The utilities are tracking those costs and are required to make a filing with the KCC. That filing must include a plan to minimize the financial impact of the cold weather event on customers over a reasonable period of time. There is no specific due date set for those filings yet, said Linda Berry, spokesperson for the KCC.