OKLAHOMA CITY – Utility bills in Oklahoma soared to staggering heights during the record-breaking winter storm that struck in February.
In a filing with the U.S. Securities and Exchange Commission (SEC), American Electric Power, parent company of Public Service Co. of Oklahoma, reported that between Feb. 9 and Feb. 20 PSO spent $175 million on natural gas expenses and $650 million on electricity purchases from other entities, for an estimated total of $825 million.
PSO serves more than 562,000 customer accounts in eastern and southwestern Oklahoma. It provides electricity to more than three dozen cities and towns in southwest Oklahoma, including Lawton, Altus, Duncan, Apache, Cache, Carnegie, Cement, Cyril, Davidson, Elgin, Fletcher, Fort Cobb, Gould, Grandfield, Hobart, Hollis, Manitou, Martha, Roosevelt, Rush Springs, Snyder, Sterling, Temple, Terral, Tipton and Waurika.
CenterPoint revealed in an SEC filing the week of Feb. 22-26 that because of “extraordinary increases in the price of natural gas” the company’s estimated fuel purchase costs for February exceeded corporate plans by $2.5 billion.
CenterPoint served almost 100,000 residential, commercial, industrial and transportation customers in western and southeastern Oklahoma as of Dec. 31, 2020.
Cities and towns in southwest Oklahoma that are supplied with natural gas by CenterPoint include Altus, Apache, Arapaho, Blair, Burns Flat, Chickasha, Comanche, Duke, Duncan, Elgin, Fletcher, Lawton, Mangum, Marlow, Martha, Ninnekah, Olustee, Pocasset, Sterling and Temple.
OG&E estimated the cost of its additional power purchases to be $1 billion, which the company said was necessary because of a “profound crisis” in natural gas supply during the winter storm, according to a document filed Feb. 24 with the utility-regulating Oklahoma Corporation Commission.
“To put this into perspective, OG&E’s cost of natural gas during the 2021 winter weather event significantly exceeded the company’s entire fuel cost for calendar year 2020,” OG&E informed the commission.
Oklahoma Natural Gas estimated its additional costs at $1.5 billion.
UTILITIES SEEK OK TO SPREAD COSTS OVER EXTENDED PERIOD
The extra costs faced by energy providers will be passed through to customers. However, companies are requesting more time to do so in order to avoid eye-popping utility bills.
OG&E, for example, proposed to the commission it be allowed to amortize the payments over the next 10 years.
Fort Cobb Fuel Authority (FCFA) received permission from the Corporation Commission on March 30 to maintain its purchased gas adjustment price temporarily, to avoid the sudden imposition of unusually high fuel costs on its customers as a result of the severe winter weather in February that included snow, freezing rain, and wind.
Subfreezing temperatures “curtailed energy production due to equipment outages as well as dramatically increased usage,” wrote Ron Comingdeer, attorney for Fort Cobb Fuel Authority (FCFA). Comingdeer is the managing attorney with Crowe & Dunlevy law firm in Oklahoma City and formerly was the deputy general counsel of the Corporation Commission.
The combination of those effects “precipitated spikes in energy prices throughout the region,” he wrote. “Pricing for natural gas, which began the month at $3 per MCF” [thousand cubic feet] multiplied to more than $300 per MCF, Comingdeer noted.
The Fort Cobb Fuel Authority absorbed $550,000 in additional natural gas purchase costs in February, Comingdeer said during a Corporation Commission hearing March 25. A typical bill for gas buys in February is approximately $200,000 to $250,000, he told the Ledger. The company had to borrow money to be able to pay that additional $550,000, he said.
FCFA buys gas from third-party non-affiliated gas suppliers and distributes the fuel to its customers, Comingdeer related.
To minimize the financial impact on its customers, the FCFA received a waiver from state regulators to continue charging customers its purchased gas adjustment price at the March 1 level through the April 1 billing cycle. Otherwise, those higher costs would have “flowed through” to consumers with the April invoices, Comingdeer said.
Fort Cobb Fuel Authority proposes to recover its natural gas outlays by boosting its purchased gas adjustment charge an additional $0.0872 per 100 cubic feet of gas “for an approximate period of 33 months” beginning May 1.
Company officials estimated its proposed modifications would result in “less than a $6 per month increase in customers’ bills,” on average.
Fort Cobb Fuel Authority is a privately held corporation that is a subsidiary of Navitas Utility Corp., which is based in California. The Navitas website says it serves Alma, rural Carnegie, Eakly, rural Fort Cobb and the rural Fort Cobb Lake area, Gracemont, Lookeba, Sickles, Velma, and several other communities in 17 Oklahoma counties, including Caddo, Greer, Harmon, Jackson and Stephens.
The principal office of the Fort Cobb Fuel Authority is in Eakly, in Caddo County near Fort Cobb Lake.
OTHERS, TOO, RECEIVED HIGH UTILITY BILLS
Utility companies weren’t the only ones clobbered with extraordinary bills from the February weather.
The natural-gas bill for Comanche County Memorial Hospital in Lawton for the month of February was “around $400,000,” CEO Brent Smith said. In comparison, he said, the hospital’s gas bill for all of last year was about $210,000.
“We can’t increase our prices, pass the expense along to the consumer and move on down the highway, because our reimbursements are scheduled,” Smith said. “And when we have patients in the hospital and in the ER, the community depends on us to provide health care.”
The town of Yale, a Payne County community of approximately 1,200 residents, was shocked when it received a natural-gas bill of $1.4 million for February, Acting City Manager Phillip Kelly said. The city’s gas bill is normally $20,000 to $30,000, he said.
City Hall buys the gas and resells it to the town’s residents.
Yale’s gas supplier, BlueMark Energy, issued a statement on its website that attributed the dramatic increase in pricing to freezing conditions and a reduced supply during a time of high demand for heat.
BlueMark, based in Tulsa, is a retail provider of natural gas to commercial and residential customers, its website shows. It buys and markets natural gas for more than 100 producers in the Mid-Continent region.
The Associated Press reported on Feb. 20 that exorbitant price spikes were recorded in the spot market.
For example, natural gas hit a record $600 per million British thermal units in Oklahoma.
“I don’t think anyone has ever seen fuel costs skyrocket on a spot market the way they did during this polar vortex,” Matt Skinner, public information manager for the Corporation Commission, told an Oklahoma City television station on March 5. “Not just in Oklahoma but throughout the entire region,” he added.
In Winfield, Kan., the city manager reported that a unit of natural gas that sold for about $3 earlier in the month sold for more than $400 on Feb. 18. City Manager Taggart Wall told a Wichita television reporter that Winfield, which budgets about $1.5 million a year for natural gas, expected to pay about $10 million just for the previous week.
Officials in Morton, Ill., reported that gas normally sold for about $3 per unit, but cost nearly $225 the week of Feb. 14-20 as demand soared because of the deep freeze.
A spokesman for the American Gas Association, which represents more than 200 local energy companies, said Feb. 14 and 15 set a record for the largest natural gas demand in U.S. history over a two-day period.
NGI (Natural Gas Intelligence) reported that in the Midwestern U.S., 81 billion cubic feet of natural gas were withdrawn from storage during the subfreezing temperatures. To put that in perspective: a billion cubic feet of natural gas is enough to meet the needs of approximately 10,000 to 11,000 American homes for a year.