February Newsletter

As reported to you in an earlier newsletter [here], the high gas prices that were projected are here. Unfortunately, the prices have met expectations and are now over double and triple the prices that were seen in the same periods during past years. Adding to the problem of large natural gas prices are colder temperatures this fall and winter season, which significantly increase the amount used, ultimately driving prices and bills even higher.

To date the gas fuel adjustment for the increased prices has been about $.27 per 1 ccf (100 cubic foot) of gas used (November/December). For the gas used in January this will rise to $.80 per 1 ccf of natural gas used. This new gas adjustment rate is shown on your enclosed bill and reflects the large cost of purchasing gas for January. The gas cost for February gas is estimated to be approximately $.70 per ccf, with the March gas adjustment expected to be about $.56 per ccf. After March, gas prices are expected to level out somewhat and return to approximately double the price over previous years. The gas adjustment is expected to be $.25-$.35 per 1 ccf.

The gas fuel adjustment (FA) charge seen on your bill is only the direct cost of what we are experiencing in natural gas price fluctuations. In the fuel adjustments charges there are no increases in the costs to deliver the gas to your home or business. The costs to deliver the gas to your home or business have remained the same since 1993, with all inflationary increases in the cost to deliver gas being absorbed by the utility. As you follow stories on this issue, it is the wholesale producers and suppliers of gas that are making record profits in the multi-millions of dollars. Although, various reasons are given for the huge natural gas price increases, it is widely believed that since gas deregulation that some market manipulation is occurring.

What is the City of Hawarden doing?

1. At the State and Federal level, the Mayor and Council are asking legislators to investigate this matter for misconduct in the market and for increased assistance methods or funding that can help customers with these costs.
2. At the local level the Mayor and City Council, as previously stated, are holding delivery costs constant since 1993 and are only passing on the direct cost of the increased price, with no mark-ups.
3. In addition, the Mayor and Council have authorized the implementation of the following emergency programs to help homeowners and businesses cope with this problem. It is understood that these programs will not totally alleviate the financial burden that these conditions create, but it is hoped that these programs will be of some assistance. The programs are listed below:

a. Emergency Residential Gas Credit Assistance.

The Mayor and City Council have taken the bold step of allocating $80,000 towards relieving a portion of the burden that higher costs will create [ed. see minutes Dec. and Jan.] This money is being taken from financial reserves created dunng previous gas periods and is the first type of direct credit program we have heard of in this state or elsewhere.

On your current bill and for the next two bills you will notice a credit if you are a residential customer. The amount of the credit will be based on your gas usage for your residence and will be the lesser amount of your fuel adjustment charge or the credit indicated. It is not necessary to qualify for this credit, nor contact the City to receive it. This credit will automatically be applied to your utility bill. The table on the other side of this sheet shows the dollar amount of credit can expect to recelve for each month.

b. Gas Fuel Adiustment Deferment Program.

This program is proposed to work in conjunction with the program described above and would apply to all users. The program would defer payment of any remaining gas adjustment charges (after residential credits) billed for usage in January, February, and March (bills sent in February, March, and April) until the usage bills for April, May, and June (bills sent in May, June, and July) are sent out, respectively. This would allow the higher gas amounts to be paid during some of the lower utility bill periods. This would require you to pay the current bill, allowing you to temporarily postpone any gas fuel adjustments charges, should you choose to register for the program. You can sign up for the program by simply sending in the blue half sheet with your bill. If you choose this option you would return the total amount shown on your bill minus the "FA" charge shown for the three months indicated. If you do not return the blue sheet you bill be expected to pay the full amount due.

What other assistance is available?

1. Mid Sioux Opportunity Inc. Fuel Assistance - For those that qualify, fuel assistance is available. Addition. funding is being sought this year for increases in the number of people applying and for higher fuel bills. Past assistance has been approximately $240 for utility bills for the winter months. The Mid-Sioux Opportunity, Inc. office is located at the old city hall in the basement past the police station or you may call them at 551-1724 for a full explanation of any heating fuel assistance programs.
2. Sales Tax Exemption - The State Legislature is considering eliminating sales tax for two or three months for heating fuels (i.e. natural gas). This exemption has not been passed yet and is still being considered. If passed, the measure could mean a savings of approximately $5-$20 per bill depending on your individual usage.[see the bill here]

If you still have questions about the information presented please call us at 551-2565.