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Iowa Utility Requests Natural Gas Rate Hike

Getting to the Bottom of Gas Delivery Charges

gas delivery costs iowa When the pandemic started to throttle down last year, so did energy prices, and everyone in Iowa and everywhere else could stop holding their breath. That was true whether they relied on propane, natural gas or electricity to keep their homes warm.

As one example of how far prices have fallen, the Henry Hub spot prices for natural gas had reached the stratosphere last summer, climbing to nearly $10 per million British thermal units (MMBtu). By early 2023, that price had slumped to about $2 per MMBtu, according to the U.S. Energy Information Adminsitration.

So, we could understand why a lot of folks were scratching their bewildered heads after they heard about the recent announcement made by Des Moines-based MidAmerican Energy Company: they intended to file a request with the Iowa Utilities Board to increase its natural gas delivery rates in Iowa by 6% per month. This would force their customers to cough up another $60 each year just to get natural gas delivered to their home.

But it had nothing to do with the market cost of the natural gas itself.

In its announcement, MidAmerican cited several factors in their request, including the necessity of several infrastructure projects and upgrades, new security standards prompted by growing cybersecurity and physical threats to the gas delivery system.

Why Do I Pay Delivery Charges?

Gas and electric utilities split the charges to its customers into two categories: supply charges (the actual cost of the fuel itself) and the rather confusing delivery charges, which could take up 50% or more of your total monthly bill. These fees not only compensate the utility for the cost of delivering natural gas (or electricity) to your home, but also for its operations and services, such as meter reading, repairing or improving infrastructure, employee salaries, etc.)

Private Companies, Not Monopolies, Deliver Propane in Iowa

Most propane suppliers do their best to limit imposing fees on their customers, other than mandatory ones required by government regulations, such as the Hazardous Materials fee. Ask your typical propane company in Iowa about this and they’ll tell you that limiting fees and being open and transparent with customers about their pricing is just the right way to do business.

One of the great benefits of being a propane customer is that you interact with private businesses that do not operate as monopolies. Unlike the imposing gas and electric utilities, propane companies are not franchised by the state to work exclusively within a service territory awarded to them.

That means that propane customers in Iowa remain free to shop around for a propane gas dealer that offers them the best price and service.

If anyone in government ever gets the “bright” idea to monopolize propane companies and force them to play under the same rules as utilities, we can tell them ahead of time that this could easily result in chaos, and adversely affect the quality of propane service that Iowans have come to rely on for so many years.

Or as a frustrated government official once said: “If it ain’t broke, don’t fix it!”

Read more about the benefits of staying with propane to keep your Iowa home warm, safe and comfortable. You can also learn about Propane vs. Electricity and Propane vs. Natural Gas.

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