TOPEKA – The Kansas Corporation Commission (KCC) has approved a settlement agreement and financing order giving Atmos Energy authorization to issue securitized bonds to recover $92.7 million in deferred costs and associated carrying costs resulting from the 2021 Winter Storm Uri. The use of lower interest securitized bonds is expected to save ratepayers an estimated $8.5 million compared to recovery through traditional rates.
The exact amount of the winter weather recovery charge Atmos customers will see on their monthly bills won’t be determined until the bonds are issued due to variables such as term and interest rate based on current market conditions. However, based on the interest rate estimates provided during the proceeding, it was estimated the monthly charge would be approximately $5.78 per month over 10 years. Without securitized bonds, ratepayers would see charges of approximately $10.55 per month over five years using traditional ratemaking.
During the winter storm, the KCC ordered regulated utilities to do everything possible to continue providing natural gas service to its customers, defer the charges, and then develop a plan to allow customers to pay the unusually high costs over time to minimize the financial impact. The Commission emphasized it was in the public interest for Atmos to incur the extraordinary costs to ensure the integrity of the gas system and ensure continuous service to its customers. A lesser response could have resulted in catastrophic property damage and serious public safety implications, including potential loss of life.
In the wake of Winter Storm Uri, the Kansas Legislature passed the Utility Financing and Securitization Act, which allows utilities to use securitized bonds to pay for extraordinary costs at more favorable terms than traditional financing.
Wholesale natural gas prices are not regulated by the KCC or any other government entity. The U.S. Congress deregulated natural gas prices back in the mid-1980s. Prices are market driven by supply and demand. The Commission has stated that any proceeds recovered by Atmos resulting from state or federal investigations into possible market manipulation, price gouging, etc., will be passed on to customers.
Today’s order is available here.
A recording of today’s Business Meeting featuring comments by Commissioners, is available on the KCC YouTube channel.