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Town of Ignacio sets flat rate for natural gas rates to help offset price spike

Residents will be disconnected if they do not pay their bills by May
Rising natural gas prices have town officials in Ignacio working to alleviate the financial stress imposed upon residents. (Martha Irvine/AP Photo)

Ignacio town council members agreed Monday to charge residents a flat rate for gas use this winter in the face of rising prices.

The price will be capped at $16 per Mcf (1,000 cubic feet), though the rate could be increased or decreased monthly upon review from board members.

Ignacio town clerk and treasurer Tuggy Dunton said the town recently had a $368,692.71 bill from Southern Ute Utilities Division.

“We can only have $250,000 in our checking account at any given time,” Dunton said. “We contacted the tribe, and they allowed us to pay the gas portion of the bill in two separate installments.”

The meeting then shifted to residents, and what households can expect on their utility bills moving forward.

“The direction of the board’s last meeting was to look at other options,” Dunton said. “We’ve looked at the idea of budget billing. Set a rate and that rate remains the same throughout the year. It would not fluctuate with the tribal rate. It would be sufficient to cover this high spike we had at the beginning of the year, and we will make adjustments as needed.”

Dunton said it was the recommendation of staff to make temporary changes for 2023, with a flat rate currently set at $16 per Mcf.

“We’ll review the monthly gas rates on a monthly basis to ensure the town’s costs to the tribe will be covered by the end of the year,” she said. “During 2023, the board will have the authority without the need for another public hearing to adjust the natural gas rate, either increase it or decrease it to cover unanticipated expenses throughout the year. If we have another spike like we did, we’re going to need to look at it again.”

Ignacio resident Mandy Brown complimented board members for working on the issue before addressing her concern.

“The flat rate is the reason I’m here,” Brown said. “I know the gas prices are high throughout our nation. I know staff has been tasked with a heavy burden, but flat rate at $16 per Mcf is exorbitant. I’ve never seen anything like it.”

Dunton said the board will look at proposing late fees for past due bills in April after the winter months have passed.

“In May, we would disconnect for anyone who is behind,” she said.

Officials sent a memo to Ignacio residents at the beginning of January warning of a 220% increase in natural gas rates from December. The SUUD blamed low regional storage levels in the San Juan Basin, which occurred because of an increased natural gas demand in the Western United States, pipeline infrastructure limitations, and reduced flow from Canada to the Pacific Northwest, according to a Southern Ute Utilities Division public service announcement.

U.S. Energy points to below-average natural gas inventories being caused by a record consumption of natural gas in the electric power sector in 2022. The strong demand for natural gas over the summer led to a reduction in net injections into U.S. working natural gas storage, U.S. Energy reported.

“These are extraordinary times,” said Trustee Alison deKay. “We really think we have a good plan. If for some reason this doesn’t work, this is going to be a recurring agenda item every month.”

molsen@durangoherald.com

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