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Posted on: February 26, 2021

Sioux Center Municipal Utilities Acts to Decrease Impact of High Natural Gas Prices

Natural gas burner

Sioux Center Municipal Utilities (SCMU) has taken action to lower the impact of February’s extreme natural gas prices for our customers.

Widespread frigid temperatures across the Midwest and Texas drove natural gas prices to record highs February 13-18. Wholesale market prices of natural gas spiked to 100 times or more than what they were earlier that week. In addition, individuals’ use of natural gas use was driven up due to the severe cold.

SCMU had earlier locked in favorable pricing for a large portion of our natural gas for February but ultimately had to purchase some higher-priced gas to cover additional customer usage in Sioux Center during this cold weather.

As your community-owned utility, SCMU is reducing the significant impact this would have on our customers, allocating reserve funds to help cover part of the cost of this higher-priced natural gas. That decision is allowing SCMU to lower the average residential customer’s pricing-related increase.

If the entire cost of these weather-related expenses were passed on to customers, an average March 1 residential bill would see about a $90 increase on top of their normal natural gas costs for February. The decision to use some reserves reduces that average increase by about $40. All individual customers will be impacted differently, depending on their natural gas usage during February.

SCMU is able to help customers in this way because of the leadership of our mayor and council, current and past, who have governed our municipal utility in a fiscally-responsible manner.

This impact would have been more significant, but SCMU also chose to spread a remaining, smaller portion of these unforeseen expenses over the next few months. Customers will likely see about a $10 increase from average bills during those months. Despite the higher natural gas costs from February, this winter has been favorable for Sioux Center customers in terms of weather and natural gas costs overall.

The February weather-related event has been called a “natural gas disaster” by some, as the severe cold weather forced shutdowns in natural gas production in areas not typically accustomed to cold weather. The severe cold also led to significant increases in natural gas demand, which placed further strains on the market. Natural gas systems had no choice but to purchase gas at the inflated prices or pay even steeper penalties to ensure that their customers could continue to heat their homes. The extreme nature of this event led to SCMU’s national organization, the American Public Gas Association, to write to President Biden, supporting an Emergency Disaster Declaration for impacted regions of the country.

The weather event also severely impacted the region’s electric supply, taking some power generation offline and causing blackouts in many areas. SCMU was fortunate in avoiding any blackouts and does not anticipate customers will be impacted with higher electricity costs related to that crisis.

SCMU would like especially thank all who assisted us in conserving natural gas and electricity use during this weather event.

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