City of Vicksburg to absorb natural gas increase totaling $1.6 Million

Published 3:11 pm Tuesday, November 2, 2021

The city of Vicksburg will absorb an increase in natural gas prices that could cost it more than $1 million, Mayor George Flaggs Jr. said Monday.

Flaggs said at Monday’s meeting of the Board of Mayor and Aldermen that the price the city pays for natural gas from its provider, Symmetry Energy Solutions, has doubled since 2020, adding that as the owner/operator of the system, “The city of Vicksburg is prepared to pay this additional expense estimated at $1.6 million without passing the cost on to the city gas customers.”

According to the U.S. Energy Information Administration, the price for natural gas in October 2020 was $2.39 per million British thermal units of gas. In November 2020, the price was $2.61 per MMBtu. As of Tuesday, the cost was $5.52 per MMBtu, according to information from the New York Mercantile Exchange or NYMEX.

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Flaggs said the decision comes after a meeting with representatives with Utility Management Corp., the city’s natural gas consultants.

While it is hard to predict the type of winter the area will experience, Flaggs said, he would not recommend the board pass the increase to the city’s estimated 9,000 gas system customers. He said there is sufficient money in the gas department’s estimated $5 million reserve fund to cover the rate increase.

“I don’t think we should raise the rates and give the raises (to employees) at the same time; it just doesn’t make any sense,” Flaggs said. “I can’t guarantee there won’t be a rate increase next year but I think it’s counter-productive for us to raise the rate and give the raises at the same time.

“I prefer cutting raises and cutting employees before we start to continue to pass on the cost of gas to people on fixed incomes and the poor people of this city. I refuse to do it,” he said.

Flaggs said city officials would monitor gas prices.

According to the consultants, city accounting director Doug Whittington said, the city’s $1.6 million loss is based on gas prices remaining level through March.

“We’re going to lock in on half of what we used last year,” Whittington said. “So we at least hedge ourselves by locking in on half our gas, to make sure we’re only losing $800,000 if gas prices go up.”

The city used 413,000 MMBtu last winter, he said and presently has 96,000 MMBtu in storage.

“We don’t know (if gas prices will drop); anything can happen in the world. We’re keeping half our gas at the $800,000 loss. Then we’re going to monitor (the cost) daily,” he said.

“If we have a real warm winter then the gas may come down below what we’ve locked in and then we’ll start looking into that. We’re hoping for a mild winter and to not lose any more than $1.6 million,” Whittington said.

About John Surratt

John Surratt is a graduate of Louisiana State University with a degree in general studies. He has worked as an editor, reporter and photographer for newspapers in Louisiana, Mississippi and Alabama. He has been a member of The Vicksburg Post staff since 2011 and covers city government. He and his wife attend St. Paul Catholic Church and he is a member of the Port City Kiwanis Club.

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