While gasoline prices have continued their roller coaster ride through consumers’ wallets, the price of natural gas has remained remarkably steady during the past few years.
Iolans hope the stable natural gas prices — roughly a third of what they were about four years ago — coupled with so-far warmer than average winter temperatures, will keep utility bills manageable through the winter.
“Iolans really do get some of the best-priced gas of any communities in the area,” said Scott Shreve, Iola’s energy consultant.
Shreve spoke about a number of topics related to Iola’s natural gas purchases, including a special discount the city receives for doing business with Constellation Energy, the city’s primary gas supplier. The gas purchased through Constellation is transported to Iola consumers by Southern Star Pipeline.
Iola and Chanute are the only two Constellation customers that receive 30-cent per MCF discount. An MCT is 1,000 cubic feet of gas.
“If you’re talking about gas that’s $10 per MCF, then a 30-cent per MCF discount doesn’t sound like much,” Shreve said. “But when it’s less than $4 per MCF, then it’s a significant savings.”
The discount, an incentive provided by Constellation to the two cities, has been in effect for about 18 months, Shreve said. Constellation has been able to offer the discounts to Iola and Chanute because of previous large-scale purchases. The discount saves the city about $90,000 a year.
Natural gas prices usually range in the $3 to $4 range, Shreve said.
Iola purchases roughly two-thirds of its natural gas from Constellation through Southern Star, and the remaining one-third from N & B Gas, a local supplier.
IOLA WILL use up to 450 million cubic feet of natural gas in a year, depending on the frequency the city fires up its natural gas generators, and other factors, such as weather, Shreve said.
How much the city pays each depends on the market price in comparison with the city’s gas held in storage.
That involves a bit of foresight on the city’s part, made considerably easier because gas prices are much less volatile.
Iola, under Shreve’s direction, designates shortly before the start of each month how much gas it will purchase for that month at the market price. If the city uses less than it estimates, the rest goes into storage. The opposite holds true if the city uses more than it had projected.
The city also decides whether the market or stored gas is used first, depending on which is cheaper, Shreve said.
IOLA CUSTOMERS pay a base gas charge of $5 per MCF each month, plus a cost adjustment to cover such things as the city’s gas infrastructure, transportation costs and salaries for Iola gas department employees.
For example, one such Iola family used 6,000 cubic feet of natural gas in November. With a base charge of $30 for the gas, plus another $7.50 for the meter charge and finally cost adjustments of about $2 per MCF, the customer paid $48 for the gas.
