Like most utilities, Kansas Gas Service experienced unusually high natural gas demand and a significant increase in natural gas market prices during Winter Storm Uri, back in February 2021. Ordinarily, the company collects gas costs from our customers the month following use. However, knowing the high cost of gas would have made our customer bills significantly more than usual, we worked diligently with our state regulators and stakeholders to find a solution to minimize the monthly impact to our customers.
You might have some questions if you've noticed a new charge labeled "Winter Event Securitized Cost" on your bill. We're here to answer them.
1. What is securitization?
Securitization is a process that allows the payment of costs by issuing bonds repaid over a longer time-period than a typical recovery period. Securitization has proven to be a lower-cost capital option compared to traditional financing, which commonly carries higher interest rates. Using securitization results in lower monthly bill impacts that are more manageable than the traditional utility recovery of gas costs and financing. The new "Winter Event Securitized Cost" charges on customer's monthly bills go toward repaying those bonds.
2. How does securitization benefit customers?
Securitization minimizes the immediate financial impact of Winter Storm Uri for our customers. Without this mechanism, customers would have paid more than $500 extra on their April 2021 bills.
3. How much will customers have to pay?
The average residential customer will see a fixed monthly securitization charge, labeled "Winter Event Securitized Cost" of $5.64 as a separate line item on billing statements.
The securitization charge will not apply to transportation service customers who purchase gas from third parties (energy suppliers and marketers).
4. Does Kansas Gas Service profit from securitization charges?
Kansas Gas Service does not profit from securitization charges. Instead, the charges recover the extraordinary costs incurred during Winter Storm Uri that the company paid on behalf of its customers and the related financing costs the company is paying over a 10-year period. This is one way a regulated company can recover those costs.
Some may not be aware that the cost of gas has always been a pass-through to our customers. This means we do not markup nor profit from the cost of gas – our customers pay what we pay for the gas they use.
For answers to more frequently asked questions, visit KansasGasService.com/securitization.
You might have some questions if you've noticed a new charge labeled "Winter Event Securitized Cost" on your bill. We're here to answer them.
1. What is securitization?
Securitization is a process that allows the payment of costs by issuing bonds repaid over a longer time-period than a typical recovery period. Securitization has proven to be a lower-cost capital option compared to traditional financing, which commonly carries higher interest rates. Using securitization results in lower monthly bill impacts that are more manageable than the traditional utility recovery of gas costs and financing. The new "Winter Event Securitized Cost" charges on customer's monthly bills go toward repaying those bonds.
2. How does securitization benefit customers?
Securitization minimizes the immediate financial impact of Winter Storm Uri for our customers. Without this mechanism, customers would have paid more than $500 extra on their April 2021 bills.
3. How much will customers have to pay?
The average residential customer will see a fixed monthly securitization charge, labeled "Winter Event Securitized Cost" of $5.64 as a separate line item on billing statements.
The securitization charge will not apply to transportation service customers who purchase gas from third parties (energy suppliers and marketers).
4. Does Kansas Gas Service profit from securitization charges?
Kansas Gas Service does not profit from securitization charges. Instead, the charges recover the extraordinary costs incurred during Winter Storm Uri that the company paid on behalf of its customers and the related financing costs the company is paying over a 10-year period. This is one way a regulated company can recover those costs.
Some may not be aware that the cost of gas has always been a pass-through to our customers. This means we do not markup nor profit from the cost of gas – our customers pay what we pay for the gas they use.
For answers to more frequently asked questions, visit KansasGasService.com/securitization.
