LYONS, Kan. — Representatives of the Kansas Municipal Gas Agency met with the Lyons City Council Monday to provide an overview of how the natural gas is purchased for the city.
Director of Natural Gas for KMGA Dixie Riedel and General Manager Paul Mahlberg outlined for the council how gas is procured for the 47 cities that are part of KMGA, which was formed in 1990 by 27 cities including Lyons to pool supply and volumes for balancing purposes on natural gas purchases. For Lyons, gas is purchased off the Black Hills Energy system which in turn is connected to the Southern Star Central pipeline.
An overview of gas prices was provided going back to 2000, and it was noted that since Winter Storm Uri in 2021 there has been a spike in gas prices. A cold snap each winter.
In the wake of the February 2021 polar vortex KMGA began researching for methods to mitigate exposure to these price spikes in the daily index market, which included bidding on storage for Lyons.
While an attempt to secure storage for Lyons in 2022 was not successful, KMGA was able to get an agreement with a company that did. Wood River Energy works with a number of entities including several Kansas school districts to procure gas,
Under the current agreement with KMGA, five cities procure gas through daily index pricing index pricing in their portfolio, two contract on a fixed price and the rest on a combination. Riedel said through this arrangement, the city of Lyons realized a savings of around $70,000 in gas costs during a cold snap in January 2024.
One thing that was brought up during the discussion was that the gas bills Lyons residents receive will reflect gas usage that occurred from 4-6 weeks prior to when bills are issued, which factored some concerns that led to Tuesday’s presentation.
