Emergency declared as cities brace for gas bills

Chad Frey
The Kansan
Subzero temperatures and windchills gripped much of the middle of the nation for two weeks, leading to the freezing of natural gas supply wells and massive spikes to natural gas prices. On Tuesday, the Harvey County Commission declared a state of emergency as a result.

Expected high gas bills — the result of frozen wells at supply sites during the Polar Vortex storm that started in early February — has led the Harvey County Commission to declare a state of emergency in the county. 

"This is an unusual disaster," said Commissioner Chip Westfall. 'I think this is something the commission will want to support."

The declaration is normally used for tornadoes, wildfires, public health emergencies and other disasters. 

This declaration, however, is made as the result of a winter storm that brought record cold temperatures to states from North Dakota to Texas and all in between. One week prior to Tuesday's action, Harvey County recorded a record low of nearly minus-30 degrees. Natural gas supply wells in Texas that were not winterized or prepared froze, making it impossible for gas to be pumped out of the ground. Natural gas prices spiked as a result. 

Normally, increased operating and utility costs are not a part of disaster relief. However, after natural gas prices spiked from $3 a unit to more than $620 a unit locally as the result of frozen wells from the polar vortex, cities and counties are looking to find a way to help utilities, municipalities, customers and residents.

One of those options is to apply pressure to the Legislature, and in turn, Congress.  

"Even though there is not a lot of power in this declaration, I think there is great chance to show the Legislature the true dire need when it comes to the economic impacts of this storm," said Gary Denny, director of emergency management of Harvey County. "

Cities are still assessing damage to infrastructure, which includes, but is not limited to, water main breaks and equipment failures. Those damages are a part of a normal declaration and normally part of emergency funding. 

They are also assessing the financial impact of the natural gas price spike — something not normally part of emergency funding is increased operating expense or utility expenses. 

 "The focus may be on the economic impact due to electrical shortage, gas shortage and fuel/energy crisis, there will be several items within this declaration that will be applicable and we're able to track them if we meet our threshold."

The economic threshold for a disaster declaration in Harvey County is set at $134,920 for 2021 — for the state of Kansas, that threshold is about $4 million. 

The Kansas Municipal Gas Association reported the price of gas moving from $3 per MMBTU to $622 per MMBTU in less than two weeks, and has been asking municipalities and counties to declare a disaster in an attempt to pressure decision makers to offer assistance for those expenses. That massive increase led AGCO, one of the largest employers of Harvey County, to shut down for two days and issue a letter outlining other cost-saving measures. 

In a letter to employees, AGCO of Hesston stated that one year ago the gas bill at the Hesston manufacturing facility was $120,000 for the month of February, but the company estimates that bill to rise to between $2 and $10 million for the month depending on what happens with the price per MMBTU.

The city of Burrton, a member of the KMGA, posted to social media over the weekend that city residents should expect their bill to be between 10 to 25 times higher than normal. 

The small town is not alone in bracing for the impact. 

"We expect on our next gas billing ... to be billed in excess of our annual budget for commodity," said Barry Wentz, mayor of Walton, a member city of the KMGA. "We budget 157 percent of a 10-year rolling average per year. Even with help from the state, we are being threatened with budget violations and penalties. ... The scope of this financial crisis is bad. There are communities ... that will become insolvent because of this." 

Halstead — a city that has suffered from flooding in the past and dealt with that disaster —  has found broken water lines, and expects to find more. But what has City Hall the most concerned is the natural gas bill that is coming. 

"This is not a disaster as we normally think of them, but the financial impact will be very real," said Ethan Reimer, administrator for the City of Halstead. "We anticipate that our February gas bills and those our customers receive will exceed our operating budget, That comes off our residents and business community. ... Economically, this will put a hurt on a whole lot of people and the city."