On the heels of the pandemic, the extreme February weather event was not the welcome we all wanted or needed to 2021. We would like to believe that things are moving slowly back to normal for all of us. Every utility throughout the Midwest was affected by Winter Storm Uri. Natural gas and electric utilities were most affected by this unwelcome event and the impact will be felt for years. Unfortunately, the result of this event falls on the shoulders of the rate payers.
As I write this, I think back to February 12th and the disbelief we all had of what was unfolding in front of us and how impactful it could be to our members. As we started making phone calls to prepare members for what was to come, we were overcome with emotions. Frustration was high as we had no specific information to give other than we knew the natural gas prices were projected to be at unprecedented levels (over 20 times higher than the previous all-time high price).
The weather is obviously something we cannot control and many times the severity of it cannot be imagined as was the case of Winter Storm Uri. Natural gas wells were impacted by freeze offs as far south as the southern border of the U.S. while many of the production fields were still reeling from the impact of the pandemic on their operations.
Much of the electric generation relies on natural gas and we knew that electric prices would climb. During the weekend we learned of the lack of wind generation due to icing and cold weather problems. We experienced the highest consecutive number of days of electric prices anyone had seen. For the first time in the history of the Southwest Power Pool they ordered rolling blackouts to protect the grid from uncontrolled outages. This resulted in power outages for many customers.
Everyone moved quickly as we knew we needed to put a team together to help work through the enormity of what was coming. In the next few days, this team met with the Governor, Kansas Corporation Commission, the Attorney General’s office, Kansas Legislators, the Federal Energy Regulatory Commission and others. Along with this team and the help of many of our member cities the urgency of the situation was understood. The Kansas Legislature along and the Governor acted in historic time to enact a law establishing a low interest municipal utility loan program supported by the State’s idle fund account. We cannot thank Colin Hansen, his entire team at Kansas Municipal Utilities and Kimberly Svaty for all their work in this regard. Their tireless efforts were absolutely remarkable.
Many or our members took advantage of this low interest loan program to pay their gas and or electric invoices that were to come. The value of this loan program cannot be understated as without it, the outcome of this event could have been devasting for our members and their customers. Our sincere thanks go out to those lawmakers for their understanding and diligence for acting with such urgency.
Other concerns of ours were heard as well and the Federal Energy Regulatory Commission, the Department of Energy and the Kansas Attorney General have opened investigations into the results of the February weather event. These investigations will most likely focus on the cause and effects of the event on energy prices. We will continue to cooperate and monitor these investigations.
As we move forward from here, both KMGA and KMEA are focusing on the lessons we learned during February and how we can be and do better going forward. We are looking at operations, communications, and ways to mitigate the impact of extreme price spikes in the future.
Looking ahead we will be bringing you more information concerning our ongoing activities and any changes we implement in the future. Our focus has and always will be, serving your needs and meeting your expectations as it comes to issues surrounding your natural gas and electric utilities. Please know that we are always available to answer any questions and address any concerns you might have.
Here is looking to brighter days ahead and a peaceful and uneventful remainder to 2021.
Paul Mahlberg, General Manager