$1.2 million gas bill anticipated for month of February
HUMBOLDT — The City of Humboldt convened a special meeting Monday night, with discussion centered on soaring gas costs. Ultimately, the council unanimously approved a resolution declaring a local State of Financial Emergency.
The City’s bill for the month of February is projected at $1.2 million. The monthly projected budget was $35,000, and the yearly budget was $375,000.
“It could take years for us to recover from this one week,” Humboldt City Administrator Cole Herder told The Tribune, adding that figure was based on some “real assumptions. We would probably have to borrow the money and have a loan that is spread out over years to pay it off.”
Herder was concerned about the $1.2 million projection.
“You take the difference on that and say ‘How much can I pay a month on that for the next 10 or 20 years?’ – that we can pass on to people that they can reasonably absorb for a long period of time,” he said. “And, I don’t want to do that. I think we need to know the information before we can make that decision.”
Humboldt contracts with Kansas Municipal Gas Association (KMGA). KMGA projects gas supply requirements for Humboldt and the various towns it serves.
The Humboldt City Council was advised by KMGA on Feb. 9 that it anticipated costs could be as much as 10 to 20 times the normal unit rate, equivalent to $35-$40 per unit for that timeframe, and projected it to be as high as $70 per unit.
“Our message (to residents) is that we had a severe event, and it’s our job to figure it out,” Herder said. “We are working with agencies all the way to the federal level to prevent this from affecting local individuals. As we learn more, we’ll adjust accordingly.”
During Monday’s meeting, the council advised that customers should expect February’s billing to be doubled, going from an average of $3-$3.50 per thermal unit to roughly $6.53 per unit. That figure was $3.39 in January, and originally projected to be at $3.63 for February.
Herder indicated that he suspects market manipulation and price-gouging may have taken place. Herder noted he’s already been in contact with Kansas State Senator Caryn Tyson regarding the topic.
“We are doing everything we can with state and federal agencies to look into market manipulation or price-gauging,” Herder said. “And to consider disaster relief, so we reduce the impact on the city and (its) customers.”
Herder said that since Humboldt contracts through KMAG, they city does not need to know specifics of the gas market, as that’s their job.
“It’s kind of like a stock market for gas, and (KMAG) buys from 20 different suppliers,” Herder said. “That weekend, when we couldn’t find it, they were taking it for whatever price they could get it. Because they’re obligated, for the safety of the people, to keep gas flowing. Their number-one priority was to keep gas flowing. At that point, life and death was the only thing that mattered.”
Herder further elaborated on potential price-gouging.
“It just seems likely,” Herder said. “There’s enough volatility in the price over that period of time that I believe there was probably some profiting going on — above what their cost was. There was probably some cost associated with cold weather; I don’t deny that. But, that cost was probably much less than what they tried to pass on.”
Herder said he shared the impact of the city’s emerging crisis with Sen. Tyson, and how it affected the city’s budget. Herder said he also framed it in a manner to illustrate how it negatively impacts homeowners and other residents.
“(Tyson) was still gathering facts and trying to understand the situation — and was asking why we buy the way we do,” he said, adding that Tyson asked if the city could have purchased more gas in advance, thus avoiding the major volatility. “She was taking everything in, and was very aware of the situation.”
Herder summed up the situation.
“We’re doing everything we can in this financial crisis, caused by a natural disaster,” he said. “We’ll share information as it’s available.”