Texas freeze puts chill on local utility bills

Astronomical energy bills resulting from the mid-February freeze in Texas were not limited to the Lone Star state.

The ripple effects of the spike in energy costs from the freeze have impacted municipal utilities in the area.

Mt. Pleasant Municipal Utilities was hit with a quarter-million dollars in energy expenses as a result of the Texas freeze.

'The Texas situation had a ripple effect on the Midwest,” General Manager Jack Hedgecock said.

However, Mt. Pleasant ratepayers will not see spikes in their bills.

'We're going to absorb $252,361.95 and not pass it on to our customers,” he said. 'A quarter-million dollars is not insignificant.

'We keep just enough in reserves to absorb something like this and tighten our belts up a little bit.”

What helped Mt. Pleasant is that the utility generates its own electricity.

Hedgecock said that during the freeze, the utility was actually a net exporter, sending electricity to other utilities.

The extra generation resulted in a gross $269,000 credit back to the utility.

'Some would look at that and say we got all the money back,” Hedgecock said. 'We spent $100,000 on fuel to generate that, and there were other generation expenses, too.”

Another move that worked well for the utility was that, as a policy, they lock in 50 percent of its annual energy needs ahead of time.

'Hedging” allows a utility to lock in a set price for energy, essentially prepaying for it.

Hedging also helped the city of Wellman, which operates its own natural gas system.

In a letter to Wellman gas customers, City Administrator Kelly Litwiller said that the city was hit with an additional $249,000 in natural gas purchases in addition to its normal February purchase.

'If the city would not have been hedged at the 95 percent the total five-day exposure would have been roughly $635,000,” Litwiller wrote.

The city of Wellman is borrowing funds to cover the cost, but the bill will be passed on to city gas customers.

'The City Council has agreed to not pass along any additional expenses that were incurred during this time, such as the interest for borrowing funds,” Litwiller wrote. 'The city will only recover the gas purchase cost during this time.”

To accommodate customers who are unable to afford the high bills, the city is offering to set up a 12-month payment plan.

The city plans to reach out to the state for assistance.

'The city of Wellman as well as many other municipalities throughout the country are working with state officials to ask for assistance, as this has caused a hardship for many municipalities and most importantly our residents,” Litwiller wrote.

Cedar Rapids television station KCRG reported a similar situation in Brighton, another city with a municipal gas system.

The station reported that Brighton customers received gas bills more than five times what they normally pay.

Like Wellman, Brighton is giving its customers the option to set up a 12-month payment plan, according to the report.

The Union was unsuccessful in its attempts to reach Brighton Mayor Melvin Rich.