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CWC OKs natural gas contract with Seminole
May 15, 2014 - By Katie Roenigk, Staff Writer
Seminole Energy Services will continue providing natural gas to Central Wyoming College during fiscal year 2015.
The CWC Board of Trustees approved the contract during a regular board meeting in March.
Ron Granger, CWC's vice president of administrative services, said the college has been working with Seminole for the past several years.
"They've always offered us a great program," he said in his report to the board. "I hope we can stay with Seminole Energy. They contact me monthly so I always know what's going on with the prices."
Changes in the natural gas market are difficult to predict, Granger said, especially recently. His Seminole representatives help him stay up-to-date with current and projected natural gas prices so he can choose the best strategy for buying the resource.
"The last several years are examples of the complexity and uncertainty of purchasing natural gas," he wrote in his memo to the board. "In this uncertain market I try to lock in a low cost to guard against a significant financial impact if natural gas prices increase dramatically in any one month."
At this point, he said, most experts believe the price of natural gas will rise over the next year.
For the past 10 years, the cost for natural gas services at CWC has been based on a market index combined with a fixed price set 11 years ago, Granger said.
During this fiscal year -- June 2013 through May 2014 -- CWC "locked in" a fixed price for up to 90 percent of its monthly historical average usage at a rate of 41 cents per therm, he continued. The remaining natural gas was purchased at the first-of-month Colorado Interstate Gas market rate plus 6 cents.
For the upcoming year, Seminole is offering three fixed-price contract pricing options -- for six, 12 and 18 months -- with the adder of 3.5 cents per therm.
According to Seminole's website, "market index prices are generally quoted in two parts; the index value and the adder.
"The index value represents the value of wholesale gas into the pipeline or at the market center represented by that index. The adder includes all the other costs to deliver the gas into the distribution system. ...
"The adder is constant for the entire Choice Gas Program year while the index value changes from month-to-month."
The college can purchase natural gas based on the CIG index first-of-month market index each month, or pay a fixed price for up to 90 percent of the school's historical average monthly usage.
"This will allow the college the flexibility to track market changes and prices and select a mix to meet college needs," Granger said.
CWC's facilities, like most buildings, require more gas in the winter when temperatures are lower. Granger said usage shows an upswing of 47,900 therms in the winter, down to 2,560 in the summer.
The college has been purchasing natural gas for more than 10 years under the Choice Gas program.