I just received a letter from Jo-Carroll Energy with "urgent information about your natural gas bill." Along with recent articles in the local papers, this suggests a PR campaign by Jo-Carroll to justify a huge jump in our next utility bill. However, Michael J. Casper's exercise in CYA leaves unanswered a few questions about the justification for this hit.
We can stipulate that February was a cold month and that our heating bills would jump due to increased gas use, but clearly Jo-Carroll is anticipating bills far higher than the usual seasonal increase. Mr. Casper cites production problems in Texas and Oklahoma along with huge jumps in spot market prices for natural gas and suggests we can thank our lucky stars that "Jo-Carroll's natural gas contract and gas storage strategies" protected us from even higher bills. It is those natural gas contracts that invite questions.
Industries usually hedge their purchases of critical materials by contractually locking in the price of future purchases. Automobile producers routinely contract to purchase rare earth metals for catalytic converters at an agreed upon price. If the price of palladium spikes, they get to buy it at the lower contracted price. If it drops, however, they still pay the higher contract price. While it is a gamble, both sides benefit from the relative stability of contracted prices.
Mr. Casper's citation of spot market gas prices suggests that Jo-Carroll was forced into the spot market by a failure to adequately hedge their purchase of natural gas. Citing the cost of natural gas as "a pass-through" simply suggests that Jo-Carroll didn't bother to hedge their gas contracts because they could always whack customers for the cost, whatever it is. Framing this hit as a way "to clearly show our members the financial impact of this extreme event" rubs salt into the wound, as it also clearly shows Jo-Carroll's customers the financial impact of poor decisions in contracting for natural gas.
However, we can do something besides accepting Mr. Casper's faux expression of concern and applying to energy assistance programs to help pay the bill. When Illinois deregulated utilities and allowed customers to buy their energy from providers other than the local utility, co-ops such as Jo-Carroll successfully lobbied to exempt themselves, leaving their customers captive to their monopoly.
It is time to rethink the co-op exemption. If you are unhappy with your utility bill, write or call your state legislators and the governor and tell them you would like the same privilege of getting your utilities from alternate providers enjoyed by most of the citizens of this state.