The City of Fulton is joining forces with other small towns to prevent a spike in natural gas rates, Mayor Lowe Cannell announced Tuesday.
Fulton relies on the Panhandle Eastern Pipeline Company for its supply of natural gas. The city purchases the gas from a supplier, but the pipe gets it all the way from Kansas at a connection point near Hatton.
"We've been paying them for decades, and they're our sole provider," City Administrator Bill Johnson said.
Recently, he said, the company announced it would be increasing its rates from about 35 cents per decatherm of natural gas all the way up to $1.56 per unit. The jump would cost the city about $860,000 more per year, and it would result in the consumer rate going from $7.50 per unit to $8.75-$9.
Johnson estimated an average household in Fulton uses about 20 decatherms per month during the winter, meaning the rate increase could tack an extra $30 onto that monthly bill.
Fulton is far from the only small town affected by the proposed rate change. The town has been invited by the Interstate Municipal Gas Agency to join an effort to dispute the rate increase with the Federal Energy Regulation Commission.
According to its website, IMGA is an Illinois-based nonprofit organization that works with local governments for gas supply risk-management and to advocate for customer needs, among other services. This will be Fulton's first time working with the group, but Johnson said its reputation is solid.
Most of the municipalities involved are located in Illinois and are much smaller than Fulton, Johnson said, with Fulton's gas consumption making up about half the entire group's total. Being farther away from Kansas, the Illinois towns face an even larger rate increase.
Johnson is hopeful disputing the rate increase will result in the increase being smaller.
"The cost to dispute will be between $200,000-$500,000, probably close to the lower end, and Fulton's share will be about half," Johnson said. "FERC has indicated it wants to settle, and there's a good likelihood Panhandle will come back with an offer. They want to avoid depositions."
Darrell Dunlap, Fulton's utilities superintendent, said sitting back and watching the dispute play out would likely result in Fulton missing out on any benefits. Generally, he said, when FERC negotiates a lower rate with a gas company, only parties that participate in the intervention get to claim the lower rate.
Fulton City Council members voted unanimously to authorize Resolution 3361, which gave Cannell permission to sign documents with the IMGA and join the dispute.
"I think it's criminal that Panhandle can just do this," said John Braun, Ward 2 council member.