Sep. 19—Bids from gas suppliers for 2024 were opened in the meeting of Northeast Oklahoma Public Facilities Authority Sept. 18, and a new insurance package was approved.
Two vendors presented the bids from natural gas suppliers for 2024. Mackenzie Haff from BlueMark Energy and Jason Turk with Clearwater Enterprises, turned in sealed bids, and Jim Reagan, general manager of NOPFA, accepted them before the start of the meeting.
"We put out bids and requirements for the bidders, and this puts me in a spot here, but we only had one bidder that met the requirements," said Reagan.
The specific requirement of which Reagan spoke is the language that was to be omitted from the bids that would remove the burden of fluctuating prices for gas from NOPFA.
"Section 4.3 in the North American Energy Standards Board contract specifically refers to period of daily balancing during operational flow orders," Haff said. "And that is not something that a supplier regulates. If an OFO is called, or a period of daily balancing is called, suppliers are required to meet those requirements of those OFOs. So we can't remove that language from the NSESB."
The NSESB is an energy standard agreement that is adopted by all types of users, so there is a reason that language is in there and can't be removed, because of the storm of February 2021, Haff said.
"If that type of language was in [your] contract, you wouldn't have had a [$7 million] invoice [for February 2021]," Haff said. "The invoices across Oklahoma were crippling."
Oklahoma Natural Gas did not call an OFO during February 2021, and those fees were still passed to NOPFA, Haff said.
"I just want everyone to understand why that language is in there," Haff said.
The language omission has been in place since 2011, and this puts the risk on the supplier, not NOPFA, Reagan said.
"We could have an argument over it if nobody had bid, but we've got a supplier that [omitted the language]," Reagan said.
Clearwater Enterprises was awarded the bid for $3.88 per MMBtu, thermal unit of measurement for gas, minus .0525 (5 cents) on gas daily.
Bryan Beckman, of Beckman Co., presented to the board a proposal for renewal of insurance policies.
The premium summary stated that a 6.5% increase on general liability, mainly due to the increase in payroll. Auto insurance decreased by 1%, and that may go down further. Property insurance had an increase of 6.76%.
"Overall, there is just about a 2% increase for all the premiums," Beckman said.
Reagan recommended the board approve the proposed insurance package and it was approved.
After the meeting, Reagan explained more fully about the language required to be left out of any bid.
"It identifies who is responsible for imbalance charges as far as the buyer and seller," Reagan said. "I asked it to be removed because I want the seller to be responsible for the imbalance charges, and [the seller] charges you premium prices."
As an example, Reagan said that if NOPFA agreed to use 1,000 cubic feet, the seller is going to hedge at 1,000 cubic feet for NOPFA for a month.
"We might use 1,020, and then we get charged a premium price for that 20, and with the [4.3 language] in the contract we would get charged for that," Reagan said.
A pipe runs gas to a lot of people, Reagan said. A portion is allotted to NOPFA, and if that amount goes over the allotment, NOPFA is taking gas from other people.
"They do charge you a premium price," Reagan said.
If NOPFA does not use all of that allotment, the seller sells that unused gas at a premium price, the gas daily or first of the month price, whichever the company goes by.
"We technically buy the gas we use [since that 2011] period," Reagan said.
The prices can be volatile, and change every few minutes. Right now, the prices are stable, Reagan said.
If this bid happened in February, it would be much higher, Reagan said.
Leaving the language out discouraged companies from bidding on the year's supply of gas to NOPFA, Reagan said.
"It's a risk on the supplier, but we have one that's taken that risk," Reagan said.
The winter of 2021 was so bad that more gas was used than anticipated.
"We borrowed the money to cover the $7 million dollars [from the February bill] and that's more than we use in a year," Reagan said.
The price went from $2-$4/1,000, to $1,200/1,000, Reagan said.
"That was over the weekend and we didn't see it until Monday, and it was done," he said.
NOPFA borrowed two-thirds and used one-third of the reserves to pay it off. NOPFA had a year to pay off the loan.
"We asked the customers to pay a third up front and the other two-thirds off in a year's time," Reagan said. "I was very, very proud of our customers; it was amazing."
The next NOPFA meeting will be Oct. 16 at 1 p.m. at the office, 103 N. College, in the conference room.
(c)2023 the Tahlequah Daily Press (Tahlequah, Okla.)
Visit the Tahlequah Daily Press (Tahlequah, Okla.) at www.tahlequahdailypress.com
Distributed by Tribune Content Agency, LLC.