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Council OKs long-term gas purchase

Council OKs long-term gas purchase

January 26th, 2011 in News

In an effort to keep residential customers' rates steady, the Fulton City council voted to commit to purchasing 50 percent of its natural gas for the next five years during its regular meeting Tuesday night.

"Now or very close to now is a very opportune time (to buy)," Director of Administration Bill Johnson advised council members during discussions Tuesday night. "Right now prices are at a five-year low. We know we're going to be using the gas going into the future, and we like to try to maintain stability (with our rates)."

Johnson and Utilities Superintendent Darrell Dunlap were recommending the council approve the purchase of 25 percent of the city's natural gas from January 2012 through December 2016 - approximately 785,000 units - at a weighted average rate of approximately $5.38 per unit.

"Can you give me any negative reasons why we shouldn't get more than 25 percent?" Alderman Wayne Chailland asked. "We're trying to keep our utilities down. If we can buy today and can keep the price the same for the citizens, I'm for doing that.

"Twenty-five percent, I'm for doing that, 50 percent I'm even more for that."

Dunlap responded that the city's advisor with the Interstate Municipal Gas Agency (IMGA) believes that once winter is over, if there is still a good amount of natural gas storage, there could be more of a dip in prices, but said he could think of no reason not to purchase more.

"I can't give any negatives," Dunlap said. "There's a lot more risk of the price swinging up than dropping. We pulled 25 percent to talk about because we've never gone that far ahead before."

He did say IMGA does not recommend its customers commit to more than 75 percent of its usage in case of a warm winter.

Alderman Lowe Cannell said he agreed with Chailland's suggestion to buy more now with the guaranteed low rate.

"I'm thinking like Wayne is," Cannell said. "I hate to miss this opportunity to get it so cheap - I don't think it's going to get much cheaper."

Alderman John Pautz, however, said he would rather wait a bit before committing to so much of the city's projected usage.

"You said after the winter it might get lower. I'd rather hold until we see if it drops in the next couple months and buy the extra 25 percent then," Pautz said.

Chailland said the city still could have the option to commit to another 25 percent later even if it goes with 50 percent now.

"I'd rather be walking down the street and run into a constituent who says, "Boy, you messed up because it dropped,' and be able to say, "Yeah, but your rate stayed the same,' than to have them say, "Boy, you messed up because it went up and now my rate is higher,'" Chailland said.

"It's something we know we're going to need and have to buy," Cannell agreed. "If I know I'm going to need something, common sense tells you to buy when the price is low."

The council voted to approve the purchase of 50 percent of the city's natural gas for January 2012 through December 2016 at the weighted average of approximately $5.38 per unit.