Wyoming customers surprised by high natural gas bills

RAWLINS —As temperatures dropped below zero this week, people across Wyoming reported a steep increase in their natural gas bills, with charges $100 or more greater than in the same month of the previous year.

“In my neighborhood, there are four or five people all wondering what is happening,” said Cheyenne resident Charlie Hardy, explaining that the charge for natural gas from Black Hills Corp. on his January 2021 statement was $283.71. That jumped to $399.35 for the same time period this year.

“All last year, our total gas and electric bill never got over $400,” he said. “Then I get a bill: $520.”

Hardy is retired and said that cost represents a significant portion of his monthly income.

Consumers across the nation have noticed rising prices on everything from groceries to gasoline, and natural gas is no exception. According to the U.S. Energy Information Administration, natural gas prices have remained relatively low in recent years, but trended higher over the last year.

The delivered cost of natural gas to electricity generators grew from $3.19/MMBtu in January 2021 to an estimated $5.04/MMBtu in the fourth quarter of 2021, according to the EIA.

“The cost of natural gas, like all commodities, is set by the market and driven by factors like supply and demand,” Laurie Farkas, community affairs manager at Black Hills Energy, said. “Natural gas is a pass-through cost, meaning we do not make money on natural gas, even when prices increase.”

Hardy noticed that the major jump in his bill was listed under an acronym: GCA, which in January of 2021, was $0.2949 cents. That cost rose to $0.4923 this month.

The increase refers to a regulated rate of “gas cost adjustment,” or a periodic rate adjustment that allows natural gas utilities to account for changes in the price of the gas they purchase. It is not a fixed rate, and utilities may not profit from GCAs, Farkas said.

A GCA of $0.4923 is the highest listed on a historical rate sheet of prices in Casper, Gillette and Torrington, publicly available online on Black Hills Energy’s website. The low was $0.2345 in September of 2020, although the GCA did climb to $0.4339 in June of 2019.

Cold weather often exacerbates costs, as was apparent in February of 2021 when an extreme winter storm in Texas and surrounding states knocked out the power grid.

According to the EIA, prices rose that month from just under $4 per MMBtu to a record high of almost $16 per MMBtu. Prices generally run from $2-$6.

On Feb. 3, natural gas prices were at $4.93 in the United States, according to Oilprice. com.

“We know that rates are a topic of conversation in the Wyoming communities that we serve, and a combination of factors like the increased cost of natural gas and recovery of costs associated with last February’s extreme weather have impacted monthly energy bills,” Farkas said.

Black Hills Energy has a “Gas Supply Team” that works to mitigate cost impacts for its customers, she said, considering winter natural gas needs through a combination of term contracts, monthly baseload supply contracts, storage supply, peaking supply, daily spot supply market purchases and intra-day market purchases.

“To determine our forecasted load, or how much natural gas we need to purchase, our Gas Supply Team models historical data, including demand and weather, while also accounting for growth trends,” she said.

But there are always national and global market factors that impact the cost of natural gas.

“Leading into the winter months, we looked at factors like storage inventory levels and the increased use of natural gas-fired generation related to the warmer-than-typical summer temperatures,” Farkas said. “We recognize the impact that cost increases have on customers, no matter the source.”

She said people worried about affording their bill are encouraged to enroll in budget billing, a free payment plan that averages the amount owed each month. The program supports customers looking to avoid the seasonal increases in bills that result during extreme weather by averaging out their usage over a 12-month period.

Black Hills Energy has also designed a program called “Winter Ready,” where the company uses a variety of communications platforms to share information about winter weather, gas prices, conservation and safety reminders.

“We’re here to help,” Farkas said. “We’re making a major effort to help customers conserve energy. We also encourage any customers struggling to pay their bills to reach out to our customer service team.”

This story was first published on Feb. 4, 2022, in the Wyoming Tribune Eagle. (It subsequently appeared in other APG publications.)