(Seguin) — City of Seguin utility customers should not experience major changes in their utility bills over the next month. Seguin City Manager Steve Parker made that announcement during Tuesday night’s meeting of the Seguin City Council. Parker was speaking about the massive electric bill spikes being seen by customers of other utility providers all across the state.
There have been reports of residential customers in the Dallas area getting $16,000 utility bills. Parker says that’s the challenge facing a number of utility providers, but he says that’s not going to happen in the city of Seguin. Parker explained that the spikes were caused by fluctuations in the cost per kilowatt rate.
“I think a lot of people will be checking in and probably the council may have gotten some calls about utility rate increases that are happening across the state related to exposure from surge pricing on the open market. Long story short, Seguin has protected itself very well from these exposures related to natural gas prices, surge pricing on the open market. Most utilities are about a six cents per kilowatt. We saw surge pricing go up to about $9 a kilowatt hour on the open market. So, that takes your utility usage bill from $90 to $13,500 if we had that exposure,” said Parker.
Parker says the way Seguin purchases its wholesale power protects its customers from those kinds of costs. He says people who get their power from the city of Seguin shouldn’t have to worry about the sticker shock being experienced by so many others.
“Seguin has fixed price contracts. Just that dynamic of that opened us up to about a $5.4 million exposure. Without that, we would have been really having to spread that cost to all of our customers at the utility and a lot of utilities are having to do that. We also had exposure with our natural gas prices but we didn’t have that exposure because if you remember last summer I believe, we took an item to the city council to talk to you about going ahead and hedging our purchase of natural gas prices so that we are protected from these things. You took that advice. That advice saved the city $7.5 million by working with the city staff and allowing us to do that. Overall, we have avoided a $12.9 million exposure to the city of Seguin utility customers,” said Parker.
It seems that most utilities are struggling to figure out how to cover those exponentially higher rates. Passing it on to the customers all at one time would create a situation where people have electric bills so high that they could never pay them. The utility providers can’t eat all those extra costs. So they will likely have to try to find a way to spread out those additional costs over a long period of time. Parker says it’s a really big challenge for some providers who saw their annual budgeted expenses for purchasing power gobbled up in just a matter of days last week.
“New Braunfels Utilities had a presentation last night (Tuesday). They have an annual budget for power of $88.5 million. They are estimating their power cost for February to be $82 million alone. The city of Denton, their annual budget with purchase power, all their people, all their fuel and everything is a $271 million budget. They spent $207 million last week in just purchase power alone,” said Parker.
Some people that reside in the city of Seguin are in the utility service area for GVEC. The electric co-op sent out a message to its members saying that it was in a good financial position to handle the massive spike. Parker says that’s good news for now for those city residents and others who get their power from GVEC, but he says eventually those costs will likely have to be repaid.
“GVEC was exposed to price fluctuations. They were the ones that were commenting on the six cents versus the nine cents. They are in a very strong position financially but eventually, they will have to come up with a plan to repay that and probably amortizing that out,” said Parker.
According to Parker, the challenges facing a number electric utility providers is so great that they run the potential of having their credit rating downgraded.
“We are getting calls from rating agencies, what happened? What are you expecting because they are knowing. Finch is actually, one of our credit rating agencies, is putting all utilities on a negative watch meaning that a lot of these entities are really going to be having their credit rating looked at very very strongly,” said Parker.
City of Seguin electric customers shouldn’t experience the big increases expected by some others, but Parker says electric bills could be higher because people used more power heating their homes during last week’s snow and ice storm. Parker says they are working on strategies to help city utility customers just in case they find themselves with a bill that’s higher than expected.
“We are doing analysis of a lot of different bills that are coming through and looking at those scenarios so we can bring you back a plan. If we are seeing a lot of people and the city council chooses, hey, well no that’s just one of the things that can happen with using more power, we protected you as much as we could, you need to pay that, we’ll do that but if it’s something we do have options for utility assistance programs. We can increase that. We can look at our rate stabilization fund if we think it’s going to be a big burden. But, we’ll continue to analyze that over the next couple of weeks and see what we can bring back to you for that. But, it shouldn’t be large spikes in utility rates like some do,” said Parker.
Parker says they are also looking at the city’s water utility service. He says the city was fortunately able to keep the water on for its customers, but he says many of them are still facing repairs of damage caused by the winter storm. Parker says they want to try to help mitigate some extra expenses if those water costs soar this month.
“What we are recommending in this declaration is that we don’t think that should really be the fault of the customers. We are recommending that if you had a break or you dripped your water and have a high usage bill, then we are going to allow you to either take last month’s bill, January which shouldn’t have any effect or the lower of the February bill which most people will probably have the January bill in effect unless you were out of water for a long time, then you may want the February bill so that’s an option that we have for you tonight. We are also recommending waiving any permit fees. Most of these little quick fixes don’t require permits but if they do, then we are recommending just waiving those for the citizens as well,” said Parker.
Parker also used Tuesday’s council meeting to brag on his staff. He says every department chipped in and made sure that all of the services provided by the city continued during some very difficult and unusual circumstances. Parker says people worked long, long hours, and made sure they took care of the people of Seguin.
“I can’t tell you the quality of staff. I think we are very competitive salary wise and this is the reason why because when we have events like this, I think it means a lot that we are able to get those quality people that end up saving you millions of dollars related to your purchase power — the people that are keeping the roads clear and making sure you are thinking outside the box, not having wastewater spills, those types of things. We did not have one accident or injury in the city and our response times were amazing. I can’t tell you how may compliments we got by the number of people. When people had a water break, a lot of times, it was five minutes. Our crews were there shutting off the water and then you saw the response times from the electric utility guys as well,” said Parker.
Mayor Donna Dodgen echoed Parker’s comments. Dodgen says that she’s proud of city staff and the community-at-large for coming together during the major winter storm.
“I would like to say thank you to everyone. I’d like to say thank you to everyone in Seguin. I’d like to say thank you to all the council. I’d like to say thank you to all of the directors and the staff for the city did an incredible job in what I’m calling Snowvid, the last week. It was trying but we managed and we did very well and I know we weren’t perfect but we did an incredible job and had incredible staff that worked 24 hours a day, seven days a week and so it was just amazing and I can’t give you enough gratitude and enough thanks for all that,” said Dodgen.
Councilman Jeremy Roy says that staff should be commended, but he also wanted to recognize the many people in the community who stepped up to help others in need.
“So many stories about neighbors helping neighbors fix pipes and plumbing and cleanup houses and stuff like that and one of those neighbors is the Niagara Bottling Company. I don’t know how many people they helped with free water. Hospitals in the area that had low water and were on a boil order. They donated water. There was just so many and they really did show up as good neighbors as so did so many. I think every plumber is out doing ministry work right now getting people going. We live in a great place. We have great neighbors,” said Roy.
After the update, the Seguin City Council approved and extended the emergency disaster declaration that was put into place last week by Mayor Dodgen. This will continue to allow the city to help provide resources to people in need, and to help with the city’s overall recovery from the winter storm.