KGS customers to see about $5 charge on bills for winter storm costs

Kansas Gas Service customers will soon see a charge of about $5 on their monthly bills to recover funds from the 2021 winter storm.
Published: Aug. 18, 2022 at 11:39 AM CDT
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TOPEKA, Kan. (WIBW) - Kansas Gas Service customers will soon see a charge of about $5 on their monthly bills to recover funds from the 2021 winter storm.

The Kansas Corporation Commission says on Thursday, Aug. 18, it approved a settlement agreement and financing order which gives Kansas Gas Service the authority to issue securitized bonds to recover $328 million in deferred costs from the 2021 winter storm.

KCC noted that the use of low-interest securitized bonds is expected to save customers between $35 million and $46 million compared to traditional recovery rates.

The Commission indicated that the exact amount of winter weather recovery charges KGS customers will see on their monthly bills will not be decided until the bonds are issued. It said variables include the length of term and interest rate based on current market conditions.

However, KCC said it is estimated the monthly charge - to be labeled “Winter Securitized Cost " on bills - will range from $4.87 and $6.42 over 7 - 10 years. Without securitized bonds, it said ratepayers would see charges of $9.04 on their bill each month over five years, or $13.90 per month over three years using traditional rates.

During the winter weather event in February 2021, KCC said it ordered utilities to do everything possible to continue to provide natural gas service to customers, defer the charges, then create a plan to allow customers to pay back the unusually high costs over time to minimize the financial impact.

KCC emphasized that it was in the public’s best interest for KGS to incur extraordinary costs to ensure the integrity of the system and continuous service to customers.

Later in 2021, the Commission indicated that the Kansas Legislature passed the Utility Financing and Securitization Act, which allows utilities to use securitized bonds to pay for extraordinary costs more favorably than traditional financing.

KCC said wholesale natural gas prices are not regulated by members or any other government entity. It said Congress deregulated natural gas prices back in the mid-1980s which means prices are market driven by supply and demand.

The Commission stated that any proceeds recovered by KGS as a result of state or federal investigations into possible market manipulation, price gouging, etc., will be passed on to customers.

To view Thursday’s order, click HERE.

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