Higher bills ahead for Kansas, Missouri natural gas customers amid extreme temperatures
Macon typically pays $5,000 a day for additional natural gas it needs but hasn’t already purchased to heat homes and businesses in the northern Missouri city of 5,300.
Amid this week’s deep freeze, the daily cost has soared to $400,000.
Across the region, subzero temperatures have sent the cost of natural gas skyrocketing as providers struggle with frozen well heads and intense demand. Astronomical price hikes are forcing small cities to reach deep into reserve funds and large utilities to warn of possible widespread gas outages.
Bigger customer bills will be next.
“It could be significant and it most likely wouldn’t be permanent, but it would be a temporary increase until we get through this,” said Fulton, Mo., spokesman Darin Wernig.
The city council planned to hold an emergency meeting Tuesday night after officials warned the city could be forced to pay up to $900,000 more per day. Fulton has spent about $2.8 million over the past four days in extra gas purchases, quickly depleting a reserve fund of about $5 million built up over years.
Utilities in Kansas and Missouri have already imposed rolling blackouts as part of an effort to curb demand for electricity within the 14-state Southwest Power Pool. But the cold has also raised the possibility that natural gas customers may face shortages as well.
More than 1.4 million residential customers in Missouri and 872,000 in Kansas rely on natural gas. Crippling temperatures have placed the utilities that serve them in a situation with few parallels in recent memory — and caused some officials to plead for assistance.
As of mid-day Tuesday, Missouri Gov. Mike Parson had not declared a state of emergency related to the deep cold. Last week, he temporarily loosened regulations on truckers hauling heating gas across the state, and on Monday said on Twitter he was “monitoring the cold weather” with emergency response agencies “to determine if a state of emergency due to dangerous weather is needed.”
Relaxing the truck regulations were “our most immediate action to address the problem,” Parson’s spokeswoman Kelli Jones wrote in an email. Parson later on Tuesday announced the state’s utility assistance program for low-income Missourians will pay more of the bill for households at risk of losing heat service.
Kansas Gov. Laura Kelly declared a disaster on Sunday. The increase in natural gas costs will “eventually flow through to consumers, and increase monthly natural gas and electric bills,” her office warned.
She and other governors of states hit by cold temperatures spoke with President Joe Biden on Tuesday. Kelly said on Twitter she had been assured Biden’s administration “will do everything possible to support our state until we are through this emergency.”
Kansas Gas Service, which supplies more than 640,000 customers across the state, said in a Monday evening update that “we could see widespread outages across our service territory. This means customers could lose gas service to their homes and businesses.”
“Even though we do not mark up the price of natural gas, the increase in natural gas prices will have an impact on customer bills,” Kent Shortridge, managing vice president of operations for KGS, said in a video posted online.
Company spokeswoman Dawn Tripp said Tuesday that KGS wasn’t currently experiencing widespread outages.
“However, based on past experience, when temperatures fall to these levels, there can be disruptions in the amount of natural gas we receive from our suppliers,” Tripp said.
Spire, which sells gas to most western Missouri households including in Kansas City, said over the weekend that customer bills will likely rise. On Monday, the company said it was implementing an “emergency curtailment plan” in southwest Missouri and asked customers to reduce usage, asking residents to turn their thermostats to temperatures as low as is tolerable and businesses to use the minimum gas necessary “to protect their buildings and inventory.”
Exactly how much of the extra costs utility providers will eventually pass on to customers remains unclear. A single home could face a bill of hundreds of dollars for just a few days of heat if customers are forced to bear the full burden.
“Right now, the only thing we can control is the usage,” said Steve Mills, vice president and general manager for Spire’s Missouri west region.
Speaking on Tuesday afternoon, Mills called the next 48 hours “crucial” for customers to conserve and curb market demand for natural gas.
Customers of St. Louis-based Ameren, a natural gas provider for much of central and eastern Missouri, appear to be less affected. Spokeswoman Jenny Barth said the company’s supplies are “adequate at this time.”
Springfield’s City Utilities only buys about 20% of its natural gas on the open market, said spokesman Joel Alexander, but like other utilities it is having trouble getting stored gas to flow into city lines. The unprecedented cold snap prompted the public utility for the first time last week to activate a piece of equipment it installed 14 years ago, which uses propane to extend the natural gas supply.
Missouri Rep. Ed Lewis, a Republican whose district includes Macon, said he raised concerns over natural gas supplies with Parson’s office and House leaders. He hopes a disaster declaration or other state action would prompt the federal government to allow Missouri to divert some coronavirus relief funds to the current emergency.
“What the Macon city utility was observing is what a lot of other people are reporting,” he said. “A lot of these municipalities that generate their own electricity from natural gas or are providing natural gas through the open market, or both, are going to be hit very hard.”
For now, local officials have urged residents to turn their thermostats down and refrain from using large appliances, for fear of exceeding the cities’ already short supplies.
“Anything helps,” said Stephanie Wilson, general manager of Macon Municipal Utilities. “It’s so on the line.”
City-owned utilities provide some of the lowest-cost service but are also among the first to bear the cost of rising natural gas prices, said Ewell Lawson, vice president of government affairs at the Missouri Public Utility Alliance. “Those are utilities that are not-for-profit, so there are no shareholders that can help shoulder the burdens on costs,” he said.
Some have relieved financial pressure by asking businesses to close. In Kennett, a railcar factory that is one of the southeastern Missouri city’s biggest gas users shut down for the week.
In Perryville, an eastern Missouri town of 8,000, officials called the city’s 100 largest gas customers to reduce their usage. Perryville has seen a fourfold increase in natural gas costs, a more modest increase than other towns, said city administrator Brent Buerck.
If the reserves run out, the city might borrow money to avoid hiking residents’ gas rates. As of Tuesday morning, citywide usage was within 1% of capacity.
“We’re still teetering,” Buerck said. “As of this morning it looks like we might have made it through another day.”
McClatchyDC’s Francesca Chambers contributed reporting
This story was originally published February 16, 2021 at 2:51 PM.
