If you live in Kansas City, Missouri, chances are your wallet just got hit with the impact of last year’s winter storm.
While Kansas Citians haven’t faced widespread power outages this winter, natural gas providers are working to regain profit they lost during Winter Storm Uri in February 2021. The sustained cold temperatures caused demand for energy to skyrocket, and heating bills followed suit.
Spire Inc., which provides natural gas in both east and west Missouri, quietly announced price hikes in November to recoup an estimated $110 million in gas costs during the winter storm. The increase was approved by the Missouri Public Service Commission without any objections.
The new rates took effect in December. Customers in Kansas City, which is served by Spire West, saw a 39-cent increase in cost per hundred cubic feet of natural gas. Residents saw bills jump. Bruno Silva’s went from around $90 in December to around $190 in January.
“I’ve never gotten that big of a bill before,” Silva said. “I found out there was going to be a price increase through Reddit, but I didn’t think it was going to be that much.”
How do energy companies decide to increase gas prices?
Spire uses what is called an Actual Cost Adjustment factor to determine rates for the upcoming year. The ACA factor allows the company to track overcollection or undercollection over 12 months and to adjust prices accordingly.
In a year where Spire charged too much, for example, it would issue refunds. In years like 2021, where the company undercollects, it will raise prices.
Spire receives its natural gas from wholesale suppliers, which aren’t beholden to price regulations. Instead, those costs fluctuate based on supply, demand and weather conditions. According to a news release from Spire, approximately 50% to 55% of a customer’s total monthly natural gas bill can be attributed to the wholesale cost the company incurs.
The Kansas Reflector reported natural gas prices rising by 100 to 200 times during the winter storm. Some wholesalers, like BP Energy, have become the subject of price-gouging lawsuits as a result.
In Kansas, the Kansas Corporation Commission approved a settlement agreement detailing how Kansas Gas Service would recover its $366 million in deferred natural gas costs because of Winter Storm Uri. Under the agreement, Kansas Gas Service will use securitized bonds to pay for its losses over time. The cost to customers at this point is unknown, but according to a news release from The Kansas Corporation Commission, it could be anywhere from $5 to $7 per month for five to 10 years.
What can I do if my gas bill has recently increased?
If you’re struggling to pay your heating bill, there are several assistance options available.
Spire may provide assistance to people on a fixed income or who have a medical condition. The Low Income Home Energy Assistance Program is a federally funded assistance arm available to Missouri residents, and applications are open now.
If the COVID-19 pandemic has interfered with your ability to pay, there is also federal and state funding available. Kansas City has opened an Emergency Rental Assistance Center, which can help residents apply for aid and connect with other charitable organizations in the community.
Spire also offers a budget billing option for customers who’ve had their accounts for at least a year. Budget billing spreads gas costs evenly over 12 months, based on your past year’s usage, and can help avoid sudden cost spikes.
How long will the increased price on my Kansas City gas bill remain in effect?
Whether the natural gas prices will remain high depends on Spire’s ability to collect the $110 million it lost from the previous year. The company will reevaluate its prices using the ACA factor and will likely announce new rates in November 2022.
While this year’s cost increase was announced online at the end of November and subsequently covered by several media outlets, many customers didn’t know about the change until the new bill landed on their doorstep. Silva said he couldn’t remember receiving a letter from Spire informing him of the change, but admitted it could’ve been lost in the mix of advertisements he receives.
Regardless, Silva said, it would have been helpful for the company to put a more concerted effort into warning customers so they could plan ahead.
“I get their point, that their own costs have increased, and I understand they’re feeling this financial pressure,” Silva said. “At the same time, natural gas, which translates to heating, is a necessity, not a luxury.”
Disclosure: The Beacon’s Hilary Becker is on the board of Mid America Assistance Coalition, the organization that runs the Low Income Home Energy Assistance Program in the Kansas City region. She was not involved in this story.
