PUC locks in gas prices for next winter
NEW ULM – The New Ulm Public Utilities Commission agreed to continue its natural gas futures hedging program during its meeting Tuesday.
The NUPUC has authorized the hedging since 2004, locking in 70 percent of the base load for November through March. The program serves as insurance to keep consistent pricing on natural gas. With the current fluctuation in natural gas prices some analysts are concerned this will worsen in the future.
NUPUC Assistance Finance Director Kris Manderfeld gave a presentation on the program and showed that through the program New Ulm has seen significant savings in the past two months. Daily market prices have spiked to over $50 per thousand cubic feet. With the price lock, New Ulm residents natural gas prices did spike, but only not to the $50 level. On Jan. 28, New Ulm customers avoided natural gas costs of $165,300 on single day due to the price lock.
This savings continued Feb. 6 of this year. The gas price hit $43.17, but New Ulm’s cost stayed at $28.01.
Utilities Director Patrick Wrase said New Ulm could lose money in the event of a warm winter, but the price lock has kept these cold weather prices in line.
“It’s going to be tough when people pay their gas bills next month, but at least they had something locked for pricing.”
Wrase stated that without this price lock the last month would have been unbearable to the average consumer.
Another downside to an increased price lock would be a change in customer base. The loss of an industrial customer could leave New Ulm with surplus gas that would need to be sold back at a loss. The staff recommendation was to stay with current hedging program.
During the meeting it was acknowledged that many of the large industrial customers are in favor of dropping the price lock program, preferring to deal with the volatile nature of the market. Commission Vice President William Swan admitted on a business level the price lock is unpopular, but on a residential level he appreciated the price lock and believed the staff recommendation was a prudent solution.
Commissioner Norman Melville made the motion to continue the 70 percent price locking program from November through March. The motion was unanimously approved by the Commissioners.
The Growth Incentive Program offered by Heartland Consumers Power District (HCPD) was approved by the commission. The agreement will allow cash incentives to help with startup expenses for new and expanding businesses. At this time four New Ulm four businesses have benefited with payment totaling $34,673. The incentives are awarded over three years and it expected that total payments will reach $48,225 at the end of the third year.
In other business the Electric Distribution Supervisor delivered a report on New Ulm’s electric system reliability standards in 2013. Under system average interruption frequency index (SAIFI) New Ulm scored .52 which means a little over half of New Ulm experienced a power outage in 2013. In 2012 the average was lower at .03.
Of those customers that did lose power, the average amount of time without power was 28 minutes. In 2012 the average was 88 minutes. Director Wrase commented that these figures were in line with the Minnesota Municipal Utilities Association average.
Clay Schuldt can be e-mailed at email@example.com