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Council reviews three-year gas-sales and transportation agreement with Wood River Energy
Summary
City staff and Wood River Energy outlined a proposed three-year natural-gas sales and transportation agreement that the vendor says would guarantee about 5% monthly savings versus MidAmerican Energy pricing and shield the city from extreme market events; council members asked questions about hedging, contract term and administrative fee savings.
Sioux City officials reviewed a proposed three-year natural-gas sales and transportation agreement with Wood River Energy during the council meeting.
Craig Gurch, regional sales director for Wood River Energy, told the council the contract would guarantee the city would pay roughly 5% less for gas than it would under MidAmerican Energy’s commodity pricing. “We’re gonna be 5 percent less than what you would pay with MidAmerican,” Gurch said, and he added the contract removes gas-transportation administrative fees the city otherwise would pay, which he estimated at about $25,000 a year. Gurch also said the full-requirements contract would protect the city from extreme pricing events such as Winter Storm Uri: “Our contract guarantees you’re not going to be impacted by those pricing events when gas hits $350 on a day.”
Council members pressed Wood River and staff on details. One councilmember asked whether the city could hedge through fixed-price products instead of the vendor’s approach; Gurch said Wood River offers more complex hedging but that historically the city has shown limited appetite for hedging risk. Utilities director Tom Pingel confirmed the deal under discussion is structured to resemble prior practice and that the proposed term would run through November 2027 if approved.
Gurch said the agreement is a guaranteed-savings contract and that the vendor will coordinate with MidAmerican to deliver gas and manage meters. He added that nothing substantive in contract language or pricing structure is changing from the previous contract other than the term. Council members asked about contract mechanics and risk; staff described the item as intended to give the city price certainty and administrative-fee savings while keeping delivery and meter management with MidAmerican.
The item was presented among other utility contract resolutions and staff said any final contract would be reviewed and returned to the council for approval after negotiation of terms.
Next steps: staff will complete negotiations on the proposed agreement and return a final contract for council consideration.
