The Kansas Legislature on Friday approved $20 million in loan relief for customers of wholesale natural gas suppliers, who were hit with skyrocketing utility bills following last February’s deep freeze.
The bill redirects a portion of the $100 million previously earmarked for loans to help municipal-owned utilities recover from extraordinary electric or natural gas costs after last winter’s cold snap.
The loan program was funded from the Pooled Money Investment Board, which invests money from the state general fund.
The bill would commit $20 million for loans to help customers of natural gas wholesalers who were hit with extraordinarily high bills following the prolonged period of subzero temperatures in February.
The treasurer’s office said that about $65.7 million had already been approved for municipal utility loans although that number could still change.
The legislation passed Friday limits loans to $500,000 that would need to be repaid over three years with interest of up to 3.25%.
“It’s such an urgent need,” said Republican state Rep. Blaine Finch, who organized the effort to put the new loan program together.
Finch said the program is not a give-away, but helps wholesale gas customers to more easily absorb a sudden spike in their bills.
“It doesn’t eliminate the cost. It’s not a grant. But it does help spread that cost so these institutions can stay open.”
It was not unknown how wide of an impact the bill would have since natural gas wholesalers are unregulated by the Kansas Corporation Commission and there was no apparent way to get an immediate fix on how many customers they served.
Customers of wholesale natural gas suppliers tend to be high volume users such as school districts, hospitals, churches and larger businesses.
There have been some anecdotal examples of how wholesale natural gas customers have been affected by soaring prices.
The legislation could benefit the Shawnee-Mission School District, which buys natural gas from a third-party wholesaler and was hit with a $1.6 million gas bill in February.
There have been other examples, especially in the agriculture sector where a feed mill in Leoti, Kansas saw a 2,000% increase in its natural gas bill.
The mill’s monthly bill went from about $26,000 in January to $462,000 for February.
There also was an example of a grain elevator that reported a natural gas bill of $154,000 for February. It’s typical gas bill ran about $5,400 a month.
“It’s a real issue,” said Alan Cobb, president and CEO of the Kansas Chamber of Commerce.
“The wholesalers are not the problem,” Cobb said. “If their bills don’t get paid, they go out of business.”
Cobb said some customers are working out individual payment arrangements with different wholesalers.
“We’ll see how much of an impact it has,” Cobb said of the new loan program.
“It should have a positive impact,” he said.
Treasurer Lynn Rogers would administer the program. If signed into law, Rogers said he wants to get the program rolled out by the first week of May.
“From our work on the Cty Utility Loan Program,” Rogers said, “we knew there was more need to help others struggling with extraordinary utility costs.”