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RANGELY | January started off 2021 with a bang, a trend that continued into February, as frigid temperatures blasted large swaths of the United States. The cold front, which blanketed much of the south and midwest triggered catastrophic power grid failures in Texas, shutting down not only power to homes but also oil/gas refineries and other natural gas infrastructure. Meanwhile, demand for natural gas increased rapidly, as millions of Americans cranked their thermostats to keep warm amidst the “once-in-a-decade polar vortex.”
The combination of these factors contributed to a significant spike in natural gas prices nationwide, leaving many small private and public gas utility providers scrambling to cover their costs and saddling many Americans with large utility bills.
The Town of Rangely has operated its own gas utility service for decades and was also impacted by the price shock, albeit to a lesser extent than in some regions of the country. Still, at least some of those impacts reflected on the bills of residents, prompting a barrage of questions to town staff and officials.
With the help of Rangely Gas Superintendent Kelli Neiberger, Town Manager Lisa Piering shared details with the HT on some of the inner workings of the town’s gas department, specifics of supply-side price increases, cost-mitigation efforts and more.
Piering said price fluctuations for natural gas are normal. As an example, from December to January the “index price” for the town to purchase natural gas from Summit Energy (the town’s provider) increased by $0.29 per MMBtu (1-Million British Thermal Units of natural gas) which Piering called a small and expected increase due to normal, seasonal shifts in temperature. However, the price increase that happened in February was not normal or expected.
From November to March, the town commits to pre-purchase a certain amount of gas at a contracted rate in increments of 5,000 MMBtu. This strategy allows them to lock in a set index price with the supplier as one way to help mitigate the impact of sudden cost increases. The town typically aims to pre-purchase less gas than will actually be used, because “once we pre-purchase a certain quantity of gas, we must pay for that quantity in that month whether you use it all or not,” said Piering.
Gas Superintendent Kelli Neiberger said she estimates how much gas the town should pre-purchase each month, based on a 10-year average of monthly usage records. According to Neiberger, usage has historically dipped below 15,000 MMBtu in February, so the town only pre-purchased 10,000 MMBtu to avoid a surplus. “The Town had 10,000 MMBtu in pre-purchased (contracted) gas at $3.16 per MMBtu,” said Neiberger.
Unfortunately the demand for natural gas this February ended up being much higher than expected, with customers using approximately 18,596 MMBtu.
The additional 8,596 MMBtu had to be purchased at abnormally high rates, costing the town $25.49 per MMBtu, an eight-times increase. Neiberger has seen price spikes before, but she said “I had not seen anything of this magnitude in the nearly 20 years I have worked in Rangely’s Gas Department.”
“If we had that 8,596 MMBtu at contracted price, it would have cost $27,163.36. Because of the polar vortex situation, that same amount of gas cost $219,112.04 so the net increase was $191,948.68,” said Neiberger, adding that number does not cover other parts of the Town’s bill, including transportation, commodities and fuel charges.
Town Manager Lisa Piering says they are now working out ways to cover their own February gas bill. Unfortunately for residents, one way the town has chosen to cover their cost is sharing some of the burden with customers.
Piering said “customer’s bills would have increased another 46% if we had not pre-purchased gas.” She also emphasized the town’s decision to reduce its “system operating charge” by $0.15 per CCF for the month of February. “This saved customers an additional 9.5% on their bills,” she said, adding “the town will be lucky to cover costs for February as it has absorbed part of the increase to assist its customers.” Both Piering and Neiberger emphasized that the town is not making money from the situation, much like many utility providers around the state and country.
One Rangely resident told the HT their February bill had more than doubled, an increase they said they could not afford. Rangely Town Manager Lisa Piering explained that the town is willing to discuss options with anyone unable to pay their bill. Options include setting up a payment plan and working with town staff to apply for financial assistance programs like the Low Income Energy Assistance Program (LEAP).
For more information Rangely residents can call the town at 970-675-8476 and ask to speak with Utility Billing Clerk Jennifer Osborne.
More information on utility price increases is available at facebook.com/townofrangely or by calling 970-675-8476
By LUCAS TURNER | email@example.com