Kansas creates loan program to help cities facing historically high utility bills

100 million dollars put into loan program.

HUMBOLDT, Kan. – “Typically we get billed about 35 thousand dollars a month. We’ve been advised that the estimate for February’s cost will be 1.6 million dollars,” explains Humboldt City Administrator Cole Herder.

It sounds like something you might hear in a movie or some other work of fiction. But for the City of Humboldt, this worst-case scenario is all too real.

“Our customers can’t stand that kind of a bill in one month. It just would bankrupt everybody,” says Herder. “That’s just unheard of. Our annual budget for the gas supply is about 375 thousand dollars. And we budget above what we think we’re gonna need.”

When the polar vortex hit the Midwest in February the price of natural gas skyrocketed.

Cities like Humboldt and Altamont usually see natural gas prices that are around $3 a unit. But Herder explains that the price hit more than $600 per unit before finally starting to come back down.

“There was problems with freeze offs in the pipeline. There were problems with demand. The Southwest Power Pool was asking for rolling blackouts over parts of 17 states for electric. Well, they use the same natural gas to generate electricity that we use here in Humboldt. When we heard of the high price, we put out a code red. We asked people to conserve even further. It’s really difficult to ask people to turn down their thermostat when it’s gonna be below zero for several days.”

Herder explains that the city sells natural gas to residents at the same price they purchase it at — aside from an administrative fee. And they don’t believe that the supplier or the gas pipelines were artificially driving the prices up either.

“The gas we buy is traded on an index, a daily index. So we believe that there were people profiting on the trading that never had contact with the gas,” says Herder.

The Federal Energy Regulatory Commission has started an investigation to see if there was market manipulation. But in the short term, cities like Humboldt are still facing bills that are multitudes higher than they can afford.

“One family that I looked up a bill, and their bill’s typically around… under 200 dollars. Their bill for this month would have been 5400 dollars,” says Herder.

But there may be some relief. On Wednesday, Kansas Governor Laura Kelly signed Senate Bill 88 — which creates a 100 million dollar low-interest loan program.

“This loan program was absolutely necessary for our cities to manage the surging utility costs,” Governor Kelly said in a press release. “It gives cities the immediate relief they need to avoid dire financial decisions while we pursue other, long-term solutions.”

The loan program would allow cities like Humboldt to get a loan from the state for what they owe on utilities from February, and pay it back over a period of ten years. That would help cities spread the cost to residents out over that same ten year period — having a smaller impact on their bills.

Herder hopes to see some federal relief come down the pipeline, likening the situation to a natural disaster. But until then, the loan program may be their only option.

“I can’t pay my 1.6 million dollar bill, when I only have 250 thousand dollars in reserves. I would be in violation of the law,” says Herder. “So, this legislation allows us to be legal and have a loan long enough to help us recover.”

Herder says the Humboldt City Council will have to approve applying for the loan — which is what he plans to recommend at a meeting on Monday, March 8th, if they don’t have a special meeting sooner.

He also recommends that Humboldt residents sign up for the Low Income Energy Assistance Program. You can learn more about that here: https://www.kansasgasservice.com/special-services/lieap. Thrive Allen County can also help residents apply.

 

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https://www.koamnewsnow.com/southeast-kansas-city-working-to-avoid-gas-crisis-as-prices-skyrocket/

https://www.koamnewsnow.com/i/senator-seeks-probe-of-natural-gas-price-spikes-during-storm/