Photo Credit: FOX 21 News
Kevin Kelley, CSU Ratepayer
Has there been an analysis of what went wrong at CSU to cause a very large cost adjustment to be passed on to utilities customers for the next 18 months?
CSU tells us that the average customer will be charged approximately $26 per month for 18 months. That doesn’t tell the whole story, as it will be less in the summer and much more during the winter, since it’s based on a surcharge of about $0.54 per CCF used. Some “average” customers could be paying an additional $140 per month on their winter bills.It’s been my understanding that there are commodities buyers at CSU that purchase natural gas ahead of the winter season and put it on contract at a fair market price, so that spikes due to shortages are avoided. Why did we have to buy at an outrageous market price for a mere 4–5-day cold snap? If we had locked in a contract price for the winter season, then wouldn’t suppliers have to provide gas to CSU at the agreed price?
Also, it seems that prior to that short spike in February, our winter had been somewhat mild, so we should have used less gas and possibly had a slight surplus.
CSU customers and the City Council should demand an in-depth investigation of what happened before simply accepting this huge surcharge, or we can expect it to become normal.
One thought on “Why CSU Rates Are Going Up”
The answer is very simple – CSU failed to hedge their gas purchases and were stuck buying on open market for about three weeks when open market was in complete chaos. This is management failure in their misunderstanding of the purpose of hedging – insurance policy against precisely such chaos as happened in February.