Gas utility customers can expect to pay at least $4 over the next 16 years for service during Winter Storm Uri.
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Texas gas utility customers can expect to pay at least $4 more each month for the next 16 years because of a few days of high-cost gas, according to recently updated bond financing information.
The natural gas was consumed during Winter Storm Uri in 2021 and reached prices as high as $100 per million British thermal units — or more than 33 times higher than average. Utility customers needed the gas to heat their homes during the crisis and rather than charge customers promptly for it — as would be customary — utilities instead deferred the costs for later recovery.
And now the bill has come due. The storm lasted less than a week, but under a bond financing deal authorized by the Texas Legislature, customers of nine utilities will end up paying an extra monthly bill charge that will continue through 2039, according to an attorney associated with the Texas Natural Gas Securitization Finance Corporation (“TNGSFC”), that i is issuing the bonds.
Calculations Confirmed
Those calculations were later confirmed by the Railroad Commission, which, in a news release, reported that securitization charges of $1.10 per mCf for residential customers went onto customer begins beginning on Oct. 1. The charges will appear as line items through April 2039, and appear only on bills of customers of the participating nine utilities.
The billing charges may be adjusted periodically as financial conditions warrant. A typical residential utility user might consumer about 3.9 McF of gas each month. At that average consumption level, the “Customer Rate Relief Charge” — as it is called on bills — will add $4.29 to monthly bills.
Securitization Explained
In total, $3.5 billion in natural gas costs will be financed under the arrangement, known as “securitization.” Gas utilities received bond proceeds up front from the securitized financing, while their customers retire the bonds — plus interest — over the 16-year recovery period.
Utilities executives promoted securitization as a way to spread out the pain from what otherwise would have been massive billing spikes after Winter Storm Uri. One utility executive claimed during a 2021 legislative hearing that his company paid 22 times more than usual for natural gas during the crisis. Another reported that the commodity cost of natural gas spiked to levels 150 times greater than typical. “It would be like you’re going to fill up your gas tank during the storm … and instead of paying $50 to fill up your tank, the register there reads … $6,000 to $7,000,” one former utility official said in a media interview.
The Texas Railroad Commission authorized the securitization financing arrangement in November 2022, after receiving authorization from the Texas Legislature through the adoption of House Bill 1520 in 2021. However, a separate measure that would have tapped into the state treasury to pay off the bonds was rejected by the Texas Legislature in 2023. That provision — had it become law — would have saved Texans about $1 billion in interest, according to estimates.
Participating Utilities
Under the bond financing arrangement, Atmos Energy has securitized approximately $2 billion in fuel costs, CenterPoint approximately $1.1 billion and Texas Gas Service about $197.3 million. Other utilities to receive recovery through securitized debt include Corix Utilities (Texas) Inc.; EPCOR Gas Texas Inc.; Rockin’ M Gas; SiEnergy, LP; Summit Utilities Arkansas; Texas Gas Service Company, a Division of ONE Gas, Inc. (excluding the West Texas Service Area); and Universal Natural Gas, LLC.
Under a settlement with Atmos Cities Steering Committee and others, Atmos agreed to reduce its recovery by more than $9 million. Similarly, CenterPoint agreed to reduce its recovery by $39.7 million.
By law, gas distribution utilities such as Atmos, CenterPoint and TGS cannot profit from the sale of the gas commodity, but instead pass those costs directly to end users without markups. However, some gas suppliers made massive profits from the price surge, according to reports.
More information about the Texas Natural Gas Securitization Finance Corporation at their website, found here. The Texas Railroad Commission also has released information about the gas charges, that can be found here.