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Natural gas contract locked in

December 19, 2012

Safety-Service Director Bill Rains

An increase is actually a decrease.

Wapakoneta residents participating in the city’s natural gas aggregation may notice an increase in the cost per thousand cubic feet (Mcf) of natural gas from their summer bills, but in reality they are paying less for natural gas than they did last winter heating season.

Safety-Service Director Bill Rains contacted American Municipal Power (AMP) officials Tuesday to determine how the natural gas costs in the city’s aggregation policy increased without city administrators receiving written notification.

“The cost for natural gas through the city’s aggregation program actually declined 43.7 cents per Mcf, dropping to $5.487 per mfc from $5.924 Mcf last winter heating season,” Rains told the Wapakoneta Daily News. “Residents may be confused because it is an increase from the $3.908 Mcf they were charged during the summer months.”

Rains explained the city signs 6-month contracts, one to cover the summer months and a second to cover the winter months and residents may notice a 38 percent increase from the summer months. He also explained separating the contracts into six-month deals is an effort to keep natural gas costs down during the summer when usage is lower.

The aggregation program is developed on the basis that city administrators should be able to negotiate a price for natural gas with a provider at a lower cost because it is negotiating for a large customer base. By having greater negotiating power and a possible lower cost per unit, any savings are passed onto the consumer.

Under the program, residents must inform the city if they intend to opt-out of the program or maintain month-to-month service with their natural gas provider. A resident may start with the city’s natural gas provider and then switch back to their previous provider but they will be assessed a fee by the city.

Residents can opt-out without being charged a fee during a specific period during the calendar year. Those dates are set by the city.

After Monday’s Wapakoneta City Council meeting, Rains empathized with residents and was upset an increase went into effect without proper notification.

“I have had talks with our gas aggregator but I have not seen a contract so I don’t even know what the final price will be,” Rains said. “I am aware it will go up because it always goes up during the winter cycle and goes down in the summer cycle.

“We contract for six months at a time and I was under the understanding that the contract was due in,” the safety-service director said. “Now that I am back from vacation, I will guarantee I will call AMP, our natural gas aggregator, to find out what is happening. Until I see the final contract, I don’t know what that number is.”

AMP negotiated a natural gas contract with Direct Energy.A charge also is applied by Dominion Gas, which charges for using the lines they own, and the charge would apply regardless who the natural gas provider would be.

Rains also called to receive an explanation on how the price went into effect without a signed contract. He did not receive an answer.

Last fall, city administrators signed a 6-month deal at $5.924 per cubic foot of natural gas to cover the program Nov. 1 through April 30,

For the winter of 2010-11, residents paid $7.24 Mcf and $10.46 Mcf for the year starting Jan. 1 and ending Dec. 31, 2009, which was an increase from the previous year of $9.97 per Mcf.

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