COLORADO SPRINGS, Colorado — The frigid blast of polar air that hit Southern Colorado on Valentine's Day is going to cost customers higher utility bills for months to come. In order to prevent service disruptions during the dangerous cold, many providers bought natural gas at a time when prices skyrocketed.
Colorado Springs Utilities leaders discussed strategies for how to mitigate that unexpected expense at a special board meeting Wednesday.
"Our reliability and the supply to the city is the number one priority that we have; the safety of our public, and the safety of our employees," CEO Aram Benyamin told reporters after the meeting.
"These things are non-negotiable, we will do everything possible to make sure we cover that."
CSU doesn't produce its own natural gas. So, every purchase they make is passed onto customers. Benyamin explained that the city-owned utility typically purchases natural gas through long-term contracts with supplies to avoid wild price fluctuations. However, demand during the storm outpaced the available supply.
The typical price for a standard unit of natural gas is roughly $2.50. During the peak of the storm, prices surged to nearly $200. CSU was able to sell some of its excess supply during this same time. However, early estimates indicate a $95 million loss.
Chief Financial Officer Scott Shewey said they plan to repay that debt through a temporary rate adjustment, likely appearing on monthly bills beginning in April.
A 12-month rate adjustment is currently estimated to cost customers roughly $20 more per month. A 20-month adjustment would cost an extra $12 per month.
"The longer we spread it, the lower the monthly impact will be, but the slower financial recovery the utility will have," Shewey said.
Julie Rodriguez, a spokesperson for Black Hills Energy said in a news release that customers in Pueblo will not see a rate increase in March. However, like CSU, Black Hills also needed to purchase natural gas to ensure system reliability during the storm.
Rodriguez wrote that company is currently working with the Colorado Public Utilities Commission to come up with a plan to recover those costs. Black Hills Energy did not disclose how much gas it purchased during the storm.
Governor Jared Polis has asked the PUC to investigate natural gas purchases made between February 13 and February 16. That regulatory commission has asked the private utility companies to provide documentation about their purchases and their emergency plans prior to the storm by next Friday, March 4.
Financial disclosures made to the Securities and Exchange Commission (SEC) indicate that Atmos Energy spent between $2.5 and $3.5 billion on natural gas for customers in Colorado, Kansas, and Texas.
Similar financial filings for the Public Service Company of Colorado (Xcel Energy) indicate a $650 million purchase for gas and electric service for customers in Colorado.