Lower natural gas prices should lead to lower overall monthly bills for City Utilities customers.
CU Director of Rates and Fuels Austin Beshears presented some overall figures to the Springfield Board of Public Utilities on Sept. 28, and explained bills should be lower in the winter months of December, January, February and March.
“We do expect our average residential customers to see lower bills by about $40 per month throughout those winter months,” Beshears said.
About $18 is linked to the end of cost recovery from Winter Storm Uri, which chilled Springfield with subzero temperatures. On Feb. 14, 2021, outdoor temperatures in Springfield reached a high of 6 degrees. Low temperatures between -13 and -10 were reported around Springfield. Users consumed 1.25 million therms of natural gas that day, representing the single-day peak for the year. City Utilities customers have been paying for the spike in demand from Winter Storm Uri ever since, on a 24-month recovery schedule to the tune of about 21 cents per month per therm of natural gas.
“Actual bill impacts for our firm customers will be dependent upon their usage, which is quite seasonal,” Beshears said.
About $20 in monthly savings for the average Springfield utility customer is linked to a decline in the price of natural gas. Prices have been volatile over the past two years, but they are expected to drop between now and March 2024.
“We’re seeing gas right now in the $3 to $3.50-per-dekatherm range,” Beshears said. “For comparison, last winter that price was approaching $7 per dekatherm for the first couple months before winter when prices began to fall.”
City Utilities serves about 85,000 gas customers, and about 76,000 are residential customers. Residential customers accounted for about 44.9 percent of Springfield’s natural gas consumption in 2022, according to data from City Utilities.
In an effort to keep costs down for consumers, City Utilities buys and stores natural gas during warm weather months. The utility also buys gas from a variety of sources, so that day-to-day fluctuations in the gas market don’t impact billing month-to-month.
“We inject natural gas into storage during the spring, the summer and the fall in preparation for winter,” Beshears said. “We have several long-term natural gas supply agreements at discounted prices, and we also execute some shorter-term contracts for the winter months.”
Electric bills should also fall
Electric bills should also decrease across Springfield, with a rate hike on the horizon in the spring of 2024. Beshears said that’s because of a drop in coal and natural gas prices.
“Customers will see a $3.90 decrease per 1,000 kilowatt hours as compared to the most recent six months, and a $15.20 decrease as compared to a year ago,” Beshears said.
For the average household’s monthly bill, the cost for a month’s worth of electricity will drop about $3.50.
City Utilities plans to roll out its first electric rate increases in a decade, which will go into effect incrementally over the next three years. Electric rates in Springfield will increase by 4.8-percent, 4-percent and 3.9-percent in 2024, 2025, and 2026, respectively, in April of each year, resulting in a nearly $15 per month increase for an average residential customer.
“I just think this is great news for our customers,” City Utilities President Gary Gibson said. “When you look at it, our base rate electric increase is going to start going into effect next April, having that $55 savings compared to last winter for our customers is going to be huge.”
Water rate adjustment
Effective with the October billing cycle, water customers of City Utilities will see the first of three annual rate adjustments on the water usage portion of their bill. The 5.3% increase was approved by the Board of Public Utilities and City Council in 2022, and is designed to cover increased operating and maintenance costs of the water utility. The average monthly residential bill increase will be approximately $2 per month for the first phase of this adjustment from October 2023 through September 2024.
