Contract Payoff Results in Savings for K-System Natural Gas Customers

Midwest Energy’s K-system natural gas customers will see a significant decrease in their bills next month, thanks to the end of obligations related to a long-term supply contract.

When Midwest Energy purchased retail natural gas facilities from KN Energy in April 1998, Midwest entered into a $24 million obligation to buy out a long-term gas supply contract that had above-market prices.  The cost of this contract payoff was embedded in the delivery charge of K-system customers’ bills for the past 20 years.

Effective Mar. 1, 2019, this obligation is fully paid, and K-system customers will see an immediate decrease in their monthly delivery charges.  Based on average 2018 gas volumes, expected annual average savings will be:

Residential:                                      $33/year
Commercial:                                    $71/year
Irrigation:                                       $536/year
Commercial – Transport :              $303/year
Irrigation-Transport:                       $475/year

”Buying out of the above-market contract in 1998 was less expensive than continuing to take the gas,” said Pat Parke, Midwest Energy’s Chief Executive Officer.  “Now our K-System gas customers will see even more benefits from local customer-ownership of the system.”

If customers have any questions about the payoff, or the effects on their bills, they can contact Bob Muirhead, Vice President of Customer Service, at 785-650-2502.