Delayed shipments of coal combined with high natural gas prices are likely to cause increases in household utility bills, Fremont Utilities is warning its customers.
Officials with the utility have been trying to get the word out so that customers aren’t surprised by higher bills, said Jeff Shanahan, general manager.
The problems facing the small utility northwest of Omaha reflect the tight constraints that other energy providers also face. Consumers across the country are expected to pay higher bills this winter as natural gas prices increase.
But Fremont Utilities is among those utilities that are facing extra costs now because of the delicate balance it must keep between providing electricity and natural gas to its 12,000 customers.
The issue in Fremont is complex. Here is what’s happening, according to Shanahan:
In Fremont — unlike Omaha — a single utility provides electricity, natural gas and water. In Omaha, one utility provides electricity while another provides water and natural gas. This means that Fremont Utilities confronts, in-house, all the problems that might separately beset Omaha Public Power District and Metropolitan Utilities District in Omaha.
Fremont operates an electric power plant that can run on coal or natural gas.
It also operates a network of natural gas pipelines that feed natural gas into local businesses and homes.
Fremont, overall, is limited in how much coal and natural gas it can receive. The coal limit is weather-related and the natural gas limit is set by contract.
Each year, to get around those limits, Fremont stockpiles coal before winter sets in. That’s because from about November to March, winter weather interferes with coal shipments (coal ships in open-air cars, which means rain or snow, combined with cold weather, can freeze the coal into a solid block).
Fremont hasn’t been able to build up its normal coal stockpile this year because coal shipments from Union Pacific are running behind. Shanahan estimates that Fremont has received about 50% of its normal supply of coal from UP.
Asked about the delays, Union Pacific said it was dealing with an increased demand for coal shipments due to rising natural gas prices.
“With the change in natural gas prices, we are seeing an increase in demand for coal,” UP spokeswoman Robynn Tysver wrote via email. “As a result, we are working very closely with customers to match our resources with demand.”
It isn’t clear whether UP will be able to accelerate shipments to utilities such as Fremont to help them catch up. Tysver said UP expects the pressure on its coal shipments to increase in the near term.
“We will continue to work both internally and with customers to increase our ability to efficiently deliver coal,” she wrote.
Queried about its supply of coal, officials with OPPD did not directly address whether it, too, is seeing delays. OPPD’s coal is shipped in by BNSF Railway, not UP.
“We are managing our coal deliveries from BNSF Railway to minimize impacts on our system reliability and costs,” OPPD spokeswoman Jodi Baker wrote via email.
To prepare for winter, Fremont has shifted to burning coal and natural gas to generate electricity, which is allowing it to conserve coal.
The rub for consumers is that natural gas is more expensive than coal, and the increased fuel costs are being passed on to them.
Shanahan said customers having difficulty with their bills can seek help through the utility’s heat assistance program at the Fremont Area United Way. Fremont residents who want to donate to the utility’s heat assistance program, dubbed Care and Share, can call customer service at 402-727-2600.
It’s imperative, Shanahan said, that the utility build up its coal supply so that it has more flexibility this winter if natural gas prices spike as expected. The goal is to provide some protection against price shocks this winter.
The utility won’t be able to fully protect its customers from rising natural gas prices, he said. That’s because the market for natural gas overall is going up and the utility simply passes those costs along.
Shanahan said Fremont isn’t at risk of running out of fuel. The issue, he said, is balancing costs and guaranteeing reliability.
“We will be able to provide electricity and natural gas to our customers,” he said. “It’s just that costs are going up, and we’re trying to do what we can to save money and provide reliability.”
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The Lon D. Wright Power Plant, with a train in the foreground, is pictured Tuesday in Fremont. The problems facing Fremont Utilities reflect the tight constraints that other energy providers also face.