Manager warns of sharp gas price spikes and billing impact after OFO and extreme cold
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Summary
General Manager Jeremy told commissioners an Operational Flow Order and extreme cold drove gas prices sharply higher in late January, leading to several days of unusually high procurement costs and potential customer-billing impacts.
General manager Jeremy briefed the Hutchinson Utilities Commission on the effects of an Operational Flow Order (OFO) issued Jan. 15 by Northern Border Pipeline and extreme cold that elevated gas market prices and procurement costs.
"On January 15, we got an operational flow order from Northern Border Pipeline," Jeremy said. He outlined how regional pipeline constraints and freezing conditions pushed day-ahead prices from typical levels around $3–$4/MMBtu to intraday peaks above $70/MMBtu during the storm window. Jeremy reported that the utility spent about $300,000 on gas in the first 22 days of the month and nearly $800,000 in the subsequent five days.
He warned commissioners that modeling at the time showed extended cold could keep prices elevated into February, and staff would evaluate hedging and billing options and return with recommendations. Commissioners discussed the market causes and described the sharp price movements in frank terms; one commissioner characterized some pricing behavior as "price gouging." The commission did not take a formal vote on tariffs or surcharges at the meeting but instructed staff to continue analysis and report back.