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Higher natural gas prices will impact CU customers 

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Customers soon will feel the effects of rising natural gas market prices that are currently more than double last year’s rate, according to City Utilities of Springfield officials, who have issued warning that higher market costs will lead to higher bills. 

CU issued an announcement informing customers of the projected cost increase, and Joel Alexander, CU’s manager of media and energy services, noted businesses, as well as residential customers, should be prepared. 

“Because of elevated market prices, nonresidential customers will be similarly impacted by the higher market natural gas costs and should look for ways to be prepared before winter arrives,” he said. 

Alexander said the market price is now well over double than it was a year ago. 

“Now is the time to see what steps they can take to minimize the impact of the pricing,” he said. 

Following years of relatively stable and lower market prices, the cost of natural gas is at a level not seen since 2010, Alexander said. 

At 10 a.m. today, natural gas was trading at $5.65 per million British thermal units. At this time last year, the value was around $2.25 per million Btu, according to CU. 

“Despite all we do to control costs, we’re concerned that market pricing alone will significantly impact customers’ bills, and any severe weather conditions will add to our concerns,” said Gary Gibson, president and CEO of CU, in a news release. 

Gibson added CU purchases and stores natural gas when off-season prices are lower. CU also purchases natural gas through long-term supply agreements at discounted prices, as well as shorter-term fixed-price contracts and market purchases. 

Additionally, CU purchases financial hedges to provide additional protection against upward natural gas price movements, according to the announcement. 

“Even with that, market pricing is higher than it’s been in many years, which will result in higher utility bills,” Gibson said in the release. 

The utility passes its natural gas pricing on to the customers at the same cost it receives, dollar for dollar, according to the CU officials, and any increase in charges on utility bills is not a result of a CU base rate increase. 

“While our primary concern is natural gas pricing, all fuel types are seeing escalating costs,” Alexander said. 

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jeffmunzinger

Gary Gibson in public comments at an SBJ breakfast has stated that it costs no more to serve CU customers who live outside the city limits of Springfield. And yet, those customers pay a 10 percent premium for natural gas because they live outside the city limits. Although this charge is mandated by the city charter, Perhaps it's time to eliminate this surcharge. After all, these CU customers likely make most of their consumer purchases within the city limits, thereby paying city sales taxes, which comprise the largest share of city revenue.

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