photo by: Carlos Moreno
In a typical February, the small Wabaunsee school district just west of Topeka pays a natural gas utility bill of about $4,300. This year its bill was more than $53,000.
It’s not because classrooms were cranking up the heat. Wabaunsee is just one of hundreds of school districts in Kansas hit by an unprecedented spike in wholesale natural gas prices during February’s record-setting winter storm. Now the state is stepping in with $20 million in loans to help.
“For a lot of districts you’re talking about their entire annual budget for natural gas being used really to pay for an eight-day period,” said Austin Harris, the director of member engagement at the Kansas Association of School Boards.
During those eight days, temperatures across much of the state and central part of the United States reached well below zero. Wichita, for example, set a record for consecutive days with a high below 20 degrees.
The extreme cold not only increased the demand for natural gas, but also broke some of the infrastructure that transports the gas to customers. This created a huge imbalance in the supply of natural gas and the demand.
During the height of the winter storm, the wholesale natural gas price went from about $2.50 per unit to more than $650 per unit.
“No one anywhere could have anticipated that kind of an increase,” Kansas State Treasurer Lynn Rogers said.
The spike caused businesses, school districts and cities exposed to wholesale prices to see their bills increase 10 to 15 times normal. Many smaller cities can’t afford that.
The Legislature quickly passed a plan making $100 million dollars available in low interest loans to the cities impacted. They’ve issued about $80 million dollars so far.
State officials are now using the remaining $20 million of that fund to open up loans to school districts and businesses.
The loans would be issued by local banks, but funded by the state. School districts and businesses can get as much as $500,000 to be paid back within three years.
“These loans are going to be paid back, the state is not going to be at risk,” Rogers said. “But it is an issue that we don’t have a lot of resources to keep doing this each and every year.”
Even with the loan programs, the spike in natural gas prices will have long-lasting impacts. The Wabaunsee school district said even with spreading out the extra cost over several years, it has to pay $1,000 more a month than usual. That’s real money for a small district of about 450 students.
Larger school districts aren’t immune, either. The Lawrence School District saw its bill go from $54,000 to $498,000. A district spokeswoman said it is currently in negotiations with its supplier for price reductions. Because there is potential for a lawsuit, she wouldn’t comment any further.
Harris said figuring all of this out will be a slow process for some districts and could last through the end of the year.
“Everyone is kind of scrambling to figure out how they cover the costs,” Harris said, “and what resources are available.”
The Kansas attorney general has opened an investigation into whether natural gas companies illegally price gouged during the winter storm and took advantage of customers during a time of emergency.
“It’s really on the shoulders of the attorney general to make sure that this doesn’t happen again,” Rogers said, “and the folks that gouged will be paying for this or pay us back.”
• Brian Grimmett reports for Kansas News Service.