Hedging program avoids high prices for natural gas

NEW ULM – The Natural Gas Hedging program for New Ulm results in consistent gas prices for customers, according to a report presented Tuesday at the New Ulm Public Utility Commission’s meeting.

In February, the PUC approved the hedging program that locks in 70 percent of the base gas load from November through March. The program serves as insurance to keep consistent pricing on natural gas, according to Public Utilities Assistant Finance Director Kris Manderfeld.

In January, due to the gas lock, the weighted average for New Ulm generated an 11 percent savings. In February, prices wavered a great deal, but the price lock program saved residents 39 percent. As of March 18 the prices have decreased from $41 Mcf (one thousand cubic feet of natural gas) to $6 per Mcf.

“The concept of the hedging program is not that we’re not always going to have the lowest price,” said Manderfeld, “but we’re also not always going to have the highest price. We’re able to shelter our customers some from the volatility of the market.”

Natural gas prices have been changing daily due to a combination of cold weather, an explosion at Trans-Canada pipeline and storage issues, Manderfeld said.

Public Utility Director Patrick Wrase said that based on current information natural gas will be cheaper in the future, but currently supply is an issue. As the cold weather wanes, prices are expected to fall again.

Bids Awarded

The PUC awarded two bids. The first bid was for a Digger/Derrick truck and chassis to Dueco Inc. The low bid was $206,264 with a trade-in allowance of $15,000 for a net cost of $191,264. Two optional charges, a gel coat and a single-speed hydraulic system with a 70-gallon hydraulic oil reservoir, were not included with the base bids. However the cost of adding these items would only increase the bid to $192,339.

The second bid was for the pressure-reducing valve station at Boundary and 23rd North streets. The bid went to M.R. Paving and Excavating for $59,695.72. This pressure-reducing station will allow the North Broadway area to meet Insurance Services Office (ISO) fire flow guidelines and could lower insurance costs for customers and increase public safety.

Change Order to Pressure Steam Turbine Project

A change order was authorized for the Back Pressure Steam Turbine Project with Brennan Construction. The project was approved last September for $946,880. The change order approved several minor changes. Wrase explained that the total additions and deductions result n a net increase of $245.69.

In other business the Commission voted to offer support for legislation that would allow cities to designate their websites as the official record for publishing all public notices and minutes. Currently an official newspaper is used to publish notices. City Manager Brian Gramentz said that if the legislation passes, it would not limit the PUC to using digital media exclusively, but would allow for greater options.

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