The unprecedented winter storm which crippled power grids around the country by freezing natural gas wells, distribution pipelines, and wind turbines, may seriously impact Oklahoma’s electric and gas utility customers in the coming months.
The production and transportation of natural gas were seriously restricted here in Oklahoma during the last two weeks, while at the same time, demand went up dramatically. The result was gargantuan spikes in the price of natural gas this week. As early as Monday, February 17, it was trading on the spot market—where commodities are traded for immediate cash value—for $622 a dekatherm. A few days earlier, it was $3.54 a dekatherm. Oklahoma Corporation Commission Public Utilities and Consumer Services Director Brandy Wreath said there were reports of spot prices for natural gas trading for $1,000 per MCF.
A dekatherm is a unit of energy used to measure natural gas and is equal to1million Britsh Thermal Units, 1.055 Gigajoules, or 1000 metric cubic feet.
This astronomical increase in the price of natural gas will most likely result in an increase in future natural gas bills. However, the extent of the increases from this week won’t be known for several weeks.
Oklahoma Natural Gas Director of Customer Communications Alex Schott said, “While we do not markup the price of natural gas, these events will have an impact on customer bills. At this time, we cannot quantify what the impact will be. We will be working with the Oklahoma Corporation Commission on options related to the impact to customer bills associated with the current price spikes in natural gas.”
The increase in bills caused by increased fuel costs would not be considered a rate increase. instead, it would be a Cost of Gas Factor that changes monthly to reflect charges by natural gas suppliers and transporters. Schott said the increases would probably not show up until the April bill.
Smaller gas utility companies are also warning their customer of potentially higher bills. The City of Kiefer sent out a notice this week that gas bills could be substantially higher due to the price of Natural gas. Kiefer buys natural gas from Blue Mark Energy and resells it to its customers.
On Wednesday, February 17, the City of Grove and its utility company, the Grove Municipal Services Authority (GMSA) issued an urgent notice to its customers asking them to conserve gas. The notice stated that the utility authority had depleted its allocation and had to buy on the spot market, which was at the time experiencing an exponential increase in the precious commodity.
GMSA provides natural gas service to Afton, Fairland, Jay, and Rural Water District #10.
Jay mayor Becki Farley warned residents to expect “enormous” gas bills. She stated on social media, “As an example, a household of 5 people last month used 7500 [cubic feet] of gas and had a bill of $91.80. At this rate of $622, their gas bill would be $4788.90,” Farley wrote. “Please anticipate an extremely significant higher gas rate. Which we or GMSA have no control over.”
Attorney General Mike Hunter said his office was looking into the natural gas market price increases.
“We are looking into the circumstances of the natural gas cost and supply phenomenon and in discussions with state leaders on a mitigation plan for its impact on consumers moving forward,” Hunter said.
Electric bills could be significantly higher due to increased fuel costs but it would be midsummer before electric utilities can request a mid-year adjustment.
Stan Whiteford, spokesman for Public Service Company of Oklahoma said it was too early to know whether a mid-year adjustment filing with the commission will happen. “Without knowing what the impacts have been to us yet, I can’t say whether or not there will be,” Whiteford said. “But what I can tell you is this: what is more likely to affect customer bills is whether they used more or less electricity during this time.”
OG&E Vice President of Communications Brian Alford stated it was too soon to know the impact the spike in gas prices would have on future bills. When asked by the Sapulpa Times what the impact of the increases in natural gas prices would have on electric bills, Alford said via email: “Too soon to know at this point. We need gas supplies to stabilize, thus stabilizing prices before we know what the impact will be.”
