KCC Consumer Alert
Forecasters predict high energy costs will continue nationwide due to increased commodity price volatility.
After watching utility bills rise over the past year in the aftermath of winter storm Uri, will ratepayers see any relief as we transition into warmer weather? It seems unlikely as forecasters predict costs could continue to climb. This will likely increase the cost to cool homes this summer and heat them this winter. Now is the time to take steps to weatherize your home and undertake energy efficiency investments as you are able.
Wholesale prices for natural gas are based on supply and demand and are not regulated, a decision made by the U.S. Congress in the 1980s. Accordingly, these costs are often outside the control of your energy provider, and they are passed through to the end consumer, outside of a rate case, without markup or profit. While natural gas companies use hedging and storage to control cost increases, and electric utilities are able to generate a substantial portion of their electricity with low or no fuel cost generating resources, it’s not possible to avoid all cost increases associated with higher wholesale energy costs.
As a result, many electric and gas utilities have increased their Energy Cost Adjustments (ECAs) or Purchased Gas Adjustments (PGAs) recently. In some cases these variable energy rates have doubled over recently low levels, and in many cases these levels are the highest seen in ten years or more. Transportation and storage costs have increased as well.
It is important to note that these higher energy costs are audited by Commission audit staff and customers only pay the actual wholesale energy costs that their utility provider pays, without markup or profit.
While these cost increases are never welcome, the information provided here offers a high level overview of some of the factors driving higher energy prices in Kansas and elsewhere throughout the country. On April 12, the Energy Information Administration (EIA) published the Short-term Energy Outlook (STEO). The report cited heightened levels of uncertainty resulting from a variety of factors, including the continuing war between Russia and Ukraine, decisions of OPEC+, and the rate at which U.S. oil and natural gas producers increase drilling in response to higher prices.
Below you will find a comprehensive update on the current state of natural gas and electricity markets written by Justin Grady, KCC Chief of Revenue Requirements, Cost of Service and Finance. There are also links to energy saving tips, utility and weatherization assistance programs, and consumer contacts.