After approving the gas agreement with Seminole Energy at its last meeting, the Barton County Commission Monday morning approved hedging on a portion of its natural gas purchases for the upcoming winter.
Jeff Younger, senior marketing representative for Seminole, asked that the commission consider the action. “This is kind of an insurance policy for you guys.”
The county locked in half of its gas for December, January and February at no more than $4.40 per British thermal unit, which was the market price as of Monday. If it drops, Younger said he would use the lower price.
The price is for the gas only. It does not include the deliver cost charged by Kansas Gas Service.
Younger said the market continues to firm up as colder weather sets in, bringing prices higher than they were last year during a particularly mild winter. But, the 2012 prices are lower than the 10-year average.
“My gut tells me we will have a colder winter than last year,” Younger said. This would mean more usage and less gas in storage.
But, he said, there is a risk that the price will go down. That is why he suggested only hedging half the gas for only three months.
“I don’t think any of us want to gamble with the taxpayers money,” said commissioner Don Cates. But, with the price of gas more likely to rise, this seems like a good idea. “We’re trying to save the taxpayers money.”
The matter passed by a vote of 4-1 with the sole dissenting vote coming from commissioner Kenny Schremmer. “This is playing with taxpayer money and I’m not in favor of that.”
On Nov. 5, the commission approved a contract with Seminole Energy Services for natural gas. Last year, Seminole saved the county over $4,300 on its gas bill. The company provides natural gas, risk management services, hedging and other energy management tools, that not only save money, but also help to control and budget natural gas costs while keeping customers informed on market conditions and trends.
In 2013, the county is estimated to use 3,806 million British thermal units (MMbtus) of natural gas. For its services, Seminole will receive 33 cents per MMbtu.
As for the hedging and Seminole, Younger said this is just one of their services. “There is nothing extra in it for us.”
Under the agreement, the county works through a third-party to get its gas. It qualifies for this due to the volume it uses.
Younger said several counties and communities have also done this.
In other business, the commission:
• The Kansas Association of Counties held its Annual Meeting Nov. 13 in Topeka. One item of note determined at the Meeting was the Legislative Policy for 2013. Attendees offered brief reports, saying the theme “Finding Common Ground” was a good one. Cates said it was clear counties were pulling together, and that is a lesson the state and federal governments need to learn as well.