City of Yale talks bankruptcy as gas supplier sues for price spike balance

Jul. 14—According to agendas posted by the City of Yale, the town's water and sewer authority will be meeting at 11 a.m. Friday to discuss declaring bankruptcy. It will consider whether to retain outside counsel for the action.

Yale's action is in response to attempts by BlueMark Energy, the town's former natural gas supplier, to collect more than $1.5 million, City Attorney Roger McMillian told the News Press. The bill started at roughly $1.9 million and the town has been able to pay about 20% of it so far.

The town of about 1,000 people, 20 miles east of Stillwater on State Highway 51, is one of the handful of small Oklahoma towns that received huge gas natural gas bills from their suppliers after prices spiked over a two-week period in February 2021 known as Winter Storm Uri.

They don't have the resources to pay those bills and haven't been able to get any relief from their debt.

Sen. Tom Dugger, R-Stillwater, said the State Legislature issued bonds last year to help larger cities with their obligations stemming from Uri.

Now it's created a fund to help the smaller towns with the most critical needs.

"This is the small city version of what we did a year earlier," Dugger said.

The program will be administered by the Oklahoma Department of Agriculture, which is in the process of developing rules and policies for it.

Secretary of Agriculture Blaine Arthur has assured Rep. John Talley, R-Stillwater, the agency is doing that as quickly as it can. But certain things have to be done.

Talley said he understands that but it's frustrating because the process is "moving at the speed of government."

The agency can't make any promises on an exact timeline but hopes to have it ready by fall, Deputy Commissioner JanLee Rowlett said.

Oklahoma Municipal League Executive Director Mike Fina said the cluster of towns that need help is concentrated in an area between Stillwater and Tulsa. The list includes Yale, Hallett, Jennings, Oilton and Mannford.

Those towns all operate small systems and had limited gas infrastructure and options for suppliers, Fina said.

Yale Mayor Jason Brown told the News Press he was unable to make a statement on the Water and Sewer Authority's possible bankruptcy declaration, but he shared the agendas in a public Facebook group and urged residents to get involved.

"As the Mayor of Yale, I would like to take this time to encourage any of our citizens with concerns about the future of our town, to attend these two meetings," he wrote.

Out of the towns, Dugger is most concerned about Yale and Oilton at the moment because they're being pressured to pay before the assistance program can get up and running.

On May 26, Gov. Kevin Stitt signed SB 1091 into law, creating the February 2021 Winter Storm Grant Revolving Fund.

The program will provide grants for small towns that faced "extraordinary costs" or "extreme purchase costs" for natural gas and received dramatically higher bills from their providers during the specified period. They will be required to document their costs.

The legislation sets up a revolving fund to help municipalities with populations of 3,500 or less that operate small utility systems not regulated by the Oklahoma Corporation Commission and haven't received assistance through securitization, a process for having debts rolled into a note that can be paid over time.

Another bill, SB1058, provides $5 million in funding for the grants.

Larger utilities regulated by the Oklahoma Corporation, like OG&E, have already received approval to pass increased costs along to their customers under a securitization plan that spreads the payments out over several decades.

"It's estimated that simply passing through $748.9 million in fuel costs would have resulted in the average residential consumer being charged an unmanageable amount of more than $400 dollars in one month just for the storm," Oklahoma Corporation Commission Chair Dana Murphy said when the OG&E decision was announced in December. "Under the agreement, that is lowered to $2.12 a month, with the reimbursement spread out over 28 years using the state's new securitization law."

Dugger, Fina and Talley all said they hope Yale's leaders will not choose to declare bankruptcy when help is on the way.

They also said they don't understand why BlueMark Energy is choosing to sue when it knows a program is being developed that will ensure it gets paid.

In light of the circumstances, Dugger is urging the Department of Agriculture to move as quickly as possible.

"We need to do it correctly, just faster," he said.